Britain has fallen well behind much of Europe when it comes to utilising manure from farms and waste from abattoirs and food processors to create gas and electricity. But that could soon change.

Looking at the cows on his dairy farm in Devon, Winston Reed does not see what many environmentalists do: animals burping up vast quantities of methane, a greenhouse gas 21 times more potent than CO2. He is more concerned with what comes out of the animals' other end - and it offers hope for the planet.

As Reed says: "The poo from four cows can produce enough energy to heat and light a house for a year." Unlike the methane that cows and other ruminants exhale as their stomachs convert grass into milk, and which is believed to be responsible for up to a quarter of "manmade" methane emissions worldwide, the gas in their manure can be harnessed as a force for good. And the same goes for all other forms of organic waste that would otherwise rot in landfill sites.

Reed, 35, is seeking planning permission to build an energy centre on his farm, in a rural community on the outskirts of Tiverton, near Exeter, taking in manure from local farms and waste from local abattoirs and food processors. It would not be the first of its kind in the UK, but it would be by far the most ambitious - creating electricity to light 6,000 local houses and £700,000 worth of heat for local industries, including a sawmill plant making wood pellets for biomass boilers.

Since Tiverton's population is only 20,000, it will go a long way to making the town self-sufficient in energy, he says. More than that, it will help address the issues of food and fuel security by making them more sustainable, at a time when both are in short supply. The plans hinge on a technology called anaerobic digestion (AD).

Organic material is fed into heated tanks, where natural fermentation breaks it down into methane and carbon dioxide - the same basic ingredients as natural gas. This biogas can then be burned to generate electricity in a combined heat and power plant, or, as many countries in Europe do, upgraded so it could be fed into the gas grid or used in vehicles modified to run on compressed natural gas. The only byproduct of the process is an organic fertiliser.

Such alchemy has been worked for decades in some parts of Europe - Germany has 3,000 on- farm AD plants - but has been relatively unknown in the UK, except in the sewage-treatment industry. Play catch-up That, however, is something that the Department for Environment, Food and Rural Affairs (Defra) wants to change.

This month, three Defra ministers met with representatives from agriculture, the supermarkets, waste and water and energy companies, as well as local government, to discuss how Britain could play catch-up with Europe. The department sees the potential not only in terms of generating renewable energy but also in addressing the issue Gordon Brown highlighted at the G8 summit last month: the amount of food Britain wastes.

According to the Waste and Resources Action Programme (Wrap), UK households throw away almost a third of the food we buy: that's 6.7m tonnes of food waste. The CO2 generated in producing food that is wasted, and then the methane it gives off as it decomposes in landfill sites, results in the equivalent of 18m tonnes of avoidable CO2 emissions a year, Wrap says. About a tenth of local authorities offer weekly food waste collection, but Defra wants to see this increased, and last year's waste strategy for England urged local authorities to consider AD for all their food waste.

There are only a few large-scale AD plants in the UK, including one in Ludlow, south Shropshire, that processes 80 tonnes of kitchen and garden waste a week from 20,000 local homes and businesses. But earlier this year, Defra announced it would spend £10m to get more of these off the ground.

Under proposed changes to the government's funding scheme for green electricity, AD plants will from next April earn double the Renewables Obligation credits, which can be swapped for cash. However, Reed says the real key to success for AD may lie with major food retailers rather than the government. Many have been looking into AD as a solution for cutting food waste for some time. Another pressing problem faced by supermarkets striving to cut their carbon footprints - the difficulty of sourcing "green electricity" - could also be solved by AD.