By definition, anaerobic means lacking air or lacking oxygen.   Anaerobic digestion is the process in which volatile organic materials are broken down in the absence of oxygen.  This biological process produces a gas, sometimes called biogas, principally composed of methane and carbon dioxide.

Waste treatment in this fashion uses the same process which naturally occurs in decomposing organic mud at the bottom of marshes or in landfills.   Technological advances in this area have recently made the viability of this process more visible. 

The process of anaerobic digestion occurs in three major steps: liquefaction, acid production, and biogas production. Different anaerobic bacteria are involved with each step. During liquefaction, liquefying bacteria decompose the organic matter from fibrous, insoluble materials, such as carbohydrates, fats and proteins into useable-sized molecules, such as sugars. Acid-forming bacteria can then work on these liquefied, soluble compounds, converting them into volatile organic acids (these are the acids that can cause extremely offensive odors). Finally, methane-forming bacteria convert the volatile acids into biogas. Biogas consists of approximately 60% methane, 40% carbon dioxide, and trace amounts of water vapor, hydrogen sulfide, and ammonia. The biogas can then be used as a fuel. The methane is generally burnt on site for heating or to produce electricity on a small scale.

In order to speed digestion, the digester will require an energy input to retain the material at elevated temperatures (optimally between 68°F and 104°F - the mesophilic range, or up to 140°F – within the thermophilic range).  

What could not be liquefied and the volatile acids that were not converted into biogas, remains in solid form.  This effluent consists of the fibrous material that has many similar properties to that of aerobically generated compost, but there are several key differences.  

Comparing to the other processes that are used solely to convert waste for the purpose of electricity generation, anaerobic digestion is about twice as productive as total landfill gas power, but only a third as efficient as mass burn, and only a fifth as fruitful as gasification.

It is important to note that this process does not remediate 100% of biodegradable waste.   As such, this process on its own is not going to provide a completely sustainable waste management solution.

Anaerobic Digestion as Oposed to Aerobic Composting:
Large initial investment – On a cost per processing ton basis, in-vessel aerobic composting is far more cost-efficient
Higher operating costs – Anaerobic digestion requires meticulous consistent temperature control due to temperature maintenance requirements.   Foreign matter, and different ratios of waste input can throw off the whole process
System startup can be slow and difficult - methane-producing bacteria are slow growing
Methane is difficult to warehouse - methane is a volatile gas at normal temperatures and  pressures
Labor-intensive sorting – Due to the sensitivity of anaerobic digestion, this process requires more thorough screening of incoming refuse
Does not biodegrade 100% of the input waste - Complete volatile solids destruction does not occur (on average only 30-50% of sludge volume).  This waste still needs to be dealt with.
Footprint and layout requirements are far less flexible
Output is generally not 100% free of pathogens, protozoa and weed seeds.
Anaerobic digestion is a batch process.  A batch process, inherent in the use of this technology will create a waste bottleneck and could generate severe odor problems.   A continuous flow system means that there is minimal to no staging of the input feed stock.