Biomethane can play a crucial role in achieving European climate goals and replacing natural gas. One way to increase biomethane production is through biological methanation, converting the remaining CO2 from biogas with hydrogen into methane. The required hydrogen is produced via electrolysis, making this technology also a valuable storage and balance solution for the energy grid. This study determines the ecological development potentials of biological methanation. For this purpose, different feedstock for anaerobic digestion are investigated as carbon source, effects of technological advances in electrolysis and biological methanation are determined and optimal modes of operation are evaluated. Results indicate that the biological methanation with an anaerobic digestion using manure as feedstock has the lowest greenhouse gas emissions. However, the biological methanation achieves the greatest reduction in emissions compared to traditional biomethane production (biogas upgrading with high pressurized water scrubbing) when using energy crops and reducing emissions from feedstock production. In the base scenario which represents the current state of technology, biogas from maize without additional methanation step produces 151.8 kgCO2eq/MWhCH4. In combination with biological methanation, biomethane can be produced in the future with CO2eq emissions of 121.4 kgCO2eq/MWhCH4. Other factors such as agricultural land occupation or water consumption show even more significant improvements. The main drivers of emissions are the electricity demand for the electrolysis and fugitive methane emissions. The study shows that there is great ecological potential in biological methanation, especially in the future with prognosed technological advances in electrolysis and biological methanation.