In recent years, Italy has witnessed a proliferation of agricultural biogas plants. This article argues that institutional factors have played an important role in their diffusion. It describes the state and evolution of agricultural biogas in Italy, and then investigates the extent to which institutional pressures have been influential in shaping organizational models of biogas production. It finds that the dominance of one particular organizational model is the result of an isomorphic process in which a monopolistic market, legal structures, and subsidies play a role. The prevalence of this organizational model, however, does not lead to the effective use of biogas production, and furthermore it results in low environmental efficiency. For a more sustainable development of bioenergy, Italian policy-makers should reform the existing institutional framework by reorganizing subsidies, liberalizing the management of gas grids, and involving farmers in local projects. (c) 2013 Elsevier Ltd. All rights reserved.