This review examines the drivers behind the adoption of on-farm anaerobic digestion in Germany where there were more than 4000 plants operating in 2009. In Australia, only one plant is operating, at a piggery in the State of Victoria. Germany's generous feed-in-tariffs for renewable energy are typically given the credit for promoting investment in on-farm anaerobic digestion. But the particular biophysical and socio-economic character of farming in the country provided the fertile ground for these financial incentives to take root. Energy security has also been a major driver for the promotion of renewable energy in Germany since it imports over 60% of its energy needs. In contrast, Australia is a net energy exporter, exporting about two-thirds of its domestic energy. Although it has considerable potential for application in Australia, anaerobic digestion is unlikely to be widely adopted unless new incentives emerge to strongly encourage investment. Stronger Australian regulation of manures and effluent may serve as an incentive to a limited extent in the future. Yet the experience in Germany suggests that regulation on its own was not sufficient to encourage large numbers of farmers to invest in anaerobic digestion. Even with generous incentives from the German government, increasing construction costs and the rising cost of energy crops can put the financial viability of anaerobic digestion plants at risk. Unless improvements in efficiency are found and implemented, these pressures could lead to unsustainable rises in the cost of the incentive schemes that underpin the development of renewable energy technologies. Crown Copyright (C) 2011 Published by Elsevier Ltd. All rights reserved.