India’s successful energy transition hinges on the ability to diversify the energy mix. More importantly progressive energy transition depends on the indigenous economically viable clean energy solutions available to large sections of users.
Often, the promising and emerging domestic clean energy solutions struggle to make meaningful impact due to other competing clean energy options. Some of the extremely promising clean energy solutions get policy backing but fail to convert intentions into groundbreaking actions. Occasionally such options remain at the epicentre of media coverage and policy briefing.
For instance, the National Biofuel Policy highlighted the increasing role of compressed biogas (CBG) to strengthen indigenous bioenergy generation, distribution, and consumption. Considering the critical role of CBG in reducing India’s energy import dependency, especially imported Liquefied Natural Gas (LNG), the government launched Sustainable Alternative Towards Affordable Transportation (SATAT).
As per SATAT website, SATAT scheme received 2227 active letters of intent (LOI). Under SATAT, 94 CBG plants sold 31422 tons of CBG in 2024-25, with an average sales of 334.26 tons per annum per plant, which means average sales of 0.91 ton per day (tpd).
Government continues to enhance adoption of CBG by creating the enabling ecosystem for CBG production, transmission, and consumption. To facilitate CBG business, the government introduced a scheme for procurement of biomass aggregation machinery, with a financial outlay of ₹564.75 crore (FY 2023-24 to FY 2026-27). Under this scheme, the government can grant financial assistance of ₹1.8-9.0 crore to a project with plant capacity of 4tpd.
Also, the government allocated ₹994.50 crore (FY 2024-25 to FY 2025-26) to create pipeline infrastructure to inject biogas produced from CBG plants into the City Gas Distribution (CGD) networks. The scheme aims to provide financial assistance to 100 CBG plants, 50 each in FY 2024-25 to FY 2025-26.
As per this scheme, the minimum plant capacity should be 2 ptd. To encourage installation of large scale CBG plants, the scheme gives preference to plant capacity above 5 tpd. This scheme offers a maximum financial assistance of ₹28.75 crore per project for constructing pipelines (Steel/MDPE) up to 75 km.
In addition, the CBG-CGD synchronisation scheme facilitates higher penetration of CBG through obligatory blending in compressed natural gas (CNG) and piped natural gas (PNG). To ensure greater integration of CBG into the gas grid, the government targets to achieve CBG blending obligation (CBO) of 1 per cent by financial year 2025-26. Gradually CBO to reach 5 per cent by FY 2028-29 and subsequently upto 10 per cent .
The CBO mandates obligations on the part of CGD entities to ensure adequate off-take of CBG. GAIL (India) Limited – the nodal organization for the CBG-CGD synchronisation will continue to play a major role in improving CBG penetration in the market.
Further, the CBG due to its green origin is eligible for green certification for trading purposes. These provisions create a supporting environment for greater integration of CBG into the economy.
Despite government support for promoting CBG, the CBG industry continues to face financial bottlenecks. To improve better access to funds from the scheduled commercial banks, Reserve Bank of India places CBG under priority lending sector. Government has directed banks to facilitate loans for the SATAT and other CBG linked schemes.
Initially SATAT targeted 5000 CBG plants across the country. Considering the market scenario, setting up 1000-1200 large size CBG plants by 2030 could be more realistic. Assuming ₹65 crore average investment per plant, the CBG industry will require deploy ₹58,500-₹71,500 crore for setting up additional 900-1100 large size CBG plants by 2030.
The CBG industry can offer 15000-17000 direct jobs for plant operations & maintenance and 45,000-50,000 indirect jobs in the CBG value chain. For the CBG market development the PSUs like Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited, Oil India Limited, ONGC, and GAIL (India) Limited are stepping up investment. Increasing investment from the private sector will complement the public investment and boost market growth.
In the CBG value chain farmers play an important role in supplying the raw material for CBG plants. Educating the farmers about the potential benefits of waste-to-energy can help better implementation of government schemes. The CBG industry can help the income enhancement of millions of farmers through valorization of agri-waste material.
New CBG plant commissioning requires improved market dynamics which include better affordable technologies, easy financing, efficient supply chain, support of states and access to trained manpower. Technology development for feedstock optimization and efficient utilisation of CO2 from the CBG plants is very important for higher productivity.
Cost effective and indigenous technology can improve the efficiency of CBG plants. Further, for waste based CBG plants, affordable technology for waste segregation and processing can help setting up more plants in urban areas.
(The author is Professor, Department of of Management Studies Rajiv Gandhi of Petroleum Technology, Jais)
