I. Background
India is strategically leveraging Compressed Biogas (CBG) to
address its multifaceted national objectives concerning energy security, waste
management, and climate change. The nation aims to significantly reduce its
reliance on fossil fuel imports, manage vast organic waste streams, and foster
a circular economy. This report details the multi-faceted support from both
central and state governments, outlining the tangible benefits, current
progress, and the roadmap for future growth in the CBG sector. A robust policy
framework, substantial financial incentives, and a clear market off-take
strategy characterize the government's approach. While significant strides have
been made, ongoing challenges in feedstock aggregation, affordable financing,
and regulatory streamlining persist, necessitating continued adaptive policy
measures to fully unlock India's immense CBG potential.
II. Introduction: The
Strategic Importance of Compressed Biogas in India
India's rapidly expanding economy faces a dual challenge: a
burgeoning energy demand, with approximately 77% of its crude oil and 50% of
its natural gas requirements met through imports, and a pressing waste
management crisis. The country generates an estimated 62 million metric tons of
waste annually, of which only 70% is collected, and a mere 12 million tons
undergo treatment, leaving a substantial 31 million tons to be disposed of in
landfills. Traditional waste disposal methods, including uncontrolled landfilling
and open burning, are significant contributors to methane emissions, a potent
greenhouse gas, and exacerbate air pollution. In response to these critical
issues, India has committed to ambitious climate goals, including a national
objective of achieving net-zero emissions.
Compressed Biogas (CBG) emerges as a pivotal solution within
this complex landscape. Produced from diverse organic waste streams through
anaerobic digestion, CBG is a clean, renewable fuel with properties comparable
to Compressed Natural Gas (CNG). Its production process effectively transforms
various feedstocks, such as agricultural residue, cattle dung, municipal solid
waste (MSW), and food scraps, into a high-value energy source. The adoption of
CBG not only reduces greenhouse gas emissions and improves air quality by
mitigating practices like stubble burning
but also offers a viable alternative to fossil fuels, thereby bolstering
India's vision of energy access, efficiency, sustainability, and security. The
consistent emphasis on India's simultaneous struggles with energy import
dependency, massive waste generation, and environmental pollution underscores a
deliberate, multi-pronged policy approach by the Indian government. CBG is
strategically positioned as a transformative solution because it offers synergistic
benefits: enhancing energy security by reducing Liquefied Natural Gas (LNG)
imports , contributing to environmental sustainability by managing waste and
reducing emissions , and fostering rural economic development through job
creation and supplementary income for farmers. This integrated approach is a
key underlying theme of India's broader bioenergy strategy.
III. Central Government
Support for Compressed Biogas (CBG)
The Central Government of India has implemented a comprehensive
suite of policies and initiatives to foster the growth of the CBG sector,
addressing various aspects from production incentives to market integration.
A. Flagship Initiatives
The Sustainable Alternative
Towards Affordable Transportation (SATAT) Initiative
The SATAT initiative, launched by the Ministry of Petroleum
& Natural Gas on October 1, 2018, is designed to incentivize entrepreneurs
to establish CBG plants and supply the produced fuel to Oil Marketing Companies
(OMCs). This scheme initially set an ambitious target of producing 15 MMT of
CBG from 5,000 plants by 2023. While this initial target proved highly
ambitious and was not fully realized, the scheme has successfully generated
significant interest, evidenced by over 2,000 Letters of Intent (LOIs) issued.
As of November 30, 2024, 80 CBG plants have been commissioned under SATAT, with
an additional 72 plants reported to be in various stages of construction.
Furthermore, in the fiscal year 2024-25, 94 CBG plants collectively sold 31,423
tons of CBG.
A crucial aspect of SATAT is the assured off-take and pricing
mechanism. OMCs provide a long-term off-take pricing agreement, typically
spanning 10 to 15 years, with a basic price of ₹46 per kilogram (plus 5% GST)
for CBG that adheres to the IS 16087:2016 quality standards. This guaranteed
off-take and stable pricing mechanism is a critical policy lever specifically
designed to de-risk investments in the nascent CBG sector, thereby attracting
private entrepreneurs and fostering market confidence. It acknowledges that a
predictable and stable market for the end product is as crucial as capital
subsidies for ensuring long-term project viability. The government's adaptive
approach, evident in adjusting the target for commissioned plants to a more
realistic 1000-1200 large-size plants by 2030 , demonstrates a willingness to
recalibrate based on ground realities and implementation challenges.
GOBARdhan Yojana
The Galvanizing Organic Bio-Agro Resources Dhan (GOBARdhan)
initiative was launched in April 2018 as a component of the Swachh Bharat
Mission (Grameen). Its primary objective is to transform organic waste, such as
cattle dung and agricultural residues, into valuable resources like biogas,
CBG, Bio-CNG, and organic manure. The scheme actively promotes waste-to-energy
projects in rural areas by providing subsidies and financial support. The Union
Budget 2023-24 set a target for establishing 200 new CBG plants under
GOBARdhan, with 75 of these specifically designated for urban areas. As of
December 4, 2024, 37 CBG plants are reported as functional under the GOBARdhan
scheme, with an additional 133 plants in various stages of development towards
the budget announcement target. Notably, the number of functional CBG plants
under this initiative has seen impressive year-on-year growth, increasing from
just 19 in 2020 to 125 currently. Financial assistance includes a subsidy of
₹37,000 per unit for biogas plants and
up to ₹50 lakh per district for setting up community-level biogas plants under
Swachh Bharat Mission-Grameen Phase II (2020-2026).
This initiative demonstrates a sophisticated and holistic policy
design that simultaneously addresses rural economic upliftment, environmental
sanitation, and renewable energy generation. By focusing on decentralized
production models and leveraging locally available waste resources (cattle
dung, agri-residue), it aims to create sustainable livelihood opportunities and
significantly improve hygiene in rural areas, directly supporting the
achievement of Open Defecation Free (ODF)-plus status under SBM-G. The strong
emphasis on the production and utilization of organic manure
(bio-slurry/Fermented Organic Manure) as a valuable byproduct further
underscores the government's commitment to a circular economy model.
Ministry of New and Renewable
Energy (MNRE) Bio-Energy Programme
The MNRE actively supports biogas projects through its
Bio-Energy Programme, offering Central Financial Assistance (CFA) and
incentives for power generation and thermal applications. Under the Waste to
Energy Programme, substantial financial support is provided: for new Biogas to
CBG plants, a CFA of ₹4.00 Crore per 4800 kg/day capacity is available, capped
at a maximum of ₹10.00 Crore per project. For projects converting existing
biogas plants to CBG, the CFA is ₹3.00 Crore per 4800 kg/day, also with a maximum
of ₹10.00 Crore per project. A special, enhanced CFA (20% higher) is provided
for projects located in Special Category States (e.g., North Eastern states,
Himachal Pradesh, Uttarakhand, Jammu & Kashmir, Ladakh) and for projects by
Registered Gaushalas that primarily use cattle dung as feedstock.
Eligible applicants encompass a wide range of entities,
including companies, LLPs, NGOs, Trusts, Cooperatives, Special Purpose Vehicles
(SPVs), Joint Ventures, Gaushalas, local bodies, and private developers.
Projects must involve the installation of new machinery to qualify. The
application process is streamlined through the BioURJA Portal, requiring an
initial proposal submission, followed by in-principle approval from MNRE.
Plants must be commissioned within 24 months (for CBG & Power Projects) and
demonstrate a minimum 80% Plant Load Factor (PLF) for 3 months to claim the
full CFA. An advance subsidy, up to 50% of the CFA, can be released during the
construction phase for SATAT-linked projects that have secured a loan covering
at least 50% of the total project cost. The MNRE is also in discussions for the
second phase of the National Bioenergy Programme, which has a total allocation
of ₹1,700 crore. This comprehensive financial support mechanism signifies a
strategic effort to de-risk initial capital investments and ensure long-term
operational efficiency. The performance-linked disbursement encourages robust
project planning, construction, and sustained operation, while the advance
subsidy for SATAT-linked projects highlights effective inter-ministerial
coordination and a concerted push for faster deployment by alleviating upfront
financial burdens. The differentiated incentives for special category states
and gaushalas aim for equitable regional development and targeted feedstock
utilization within the CBG sector.
B. Enabling Policies and
Financial Mechanisms
Biomass Aggregation Machinery
(BAM) Scheme
The Ministry of Petroleum and Natural Gas (MoPNG) launched the
Financial Assistance Scheme for Procurement of Biomass Aggregation Machinery
(BAM) on February 2, 2024. This scheme directly addresses a significant
bottleneck in CBG production: the often slow, labor-intensive, and unmechanized
process of feedstock collection and management. A total budget of ₹564.75 Crore
has been allocated for this scheme for the period FY 2023–24 to FY 2026–27.
Under this scheme, a 4 TPD CBG project is eligible for a subsidy of ₹1.80
Crore, calculated on a pro-rata basis, with a maximum cap of ₹9 Crore per
project. To be eligible, plants must have a minimum capacity of 2 TPD, utilize
at least 50% agri-residue, and be registered on the GOBARdhan portal. This
scheme represents a crucial policy intervention designed to professionalize and
mechanize the feedstock supply chain, which is often a significant operational
and cost challenge for CBG plants. By subsidizing BAM, the government aims to
ensure a consistent, high-quality, and cost-effective supply of raw materials,
thereby improving overall plant efficiency, reliability, and long-term
viability. This proactive measure demonstrates a comprehensive understanding
that successful CBG production necessitates support across the entire value
chain, not just at the conversion facility.
Scheme for Development of
Pipeline Infrastructure (DPI)
The Government of India has approved the "Scheme for
Development of Pipeline Infrastructure (DPI) for injection of Compressed Biogas
(CBG) in City Gas Distribution (CGD) network". This scheme provides
financial assistance for establishing CBG-CGD grid connectivity for 100 CBG
projects. A financial outlay of ₹994.50 crore has been allocated for this
scheme for the fiscal years FY 2024-25 to FY 2025-26, with plans to support 50
projects in each year. The scheme offers a maximum financial assistance of
₹28.75 crore per project for the construction of pipelines (Steel/MDPE) up to
75 kilometers. An online portal for submitting applications under the DPI
Scheme was activated on September 1, 2024. This initiative is deemed crucial
for seamlessly integrating CBG into existing local gas grids, thereby enhancing
its accessibility and simplifying distribution, particularly for plants located
in rural areas. However, it is important to note that meeting stringent
pipeline injection standards requires advanced purification processes. This
scheme directly addresses the "last mile" connectivity challenge for
CBG, enabling its injection into existing City Gas Distribution (CGD) networks.
This is vital for expanding CBG's market reach beyond localized consumption, significantly
reducing transportation costs (which would otherwise involve cascades), and
facilitating its role as a mainstream energy source. It signals a strategic
shift in policy from merely incentivizing production to ensuring comprehensive
market integration and efficient delivery to consumers.
Compressed Biogas Blending
Obligation (CBO)
In a significant move, the National Biofuels Coordination
Committee (NBCC), chaired by the Union Petroleum Minister, approved the
introduction of phase-wise mandatory blending of CBG in both Compressed Natural
Gas (CNG) for transport and Piped Natural Gas (PNG) for domestic segments of
the City Gas Distribution (CGD) sector. This mandate is designed to stimulate
demand for CBG within the CGD sector, facilitate import substitution for
Liquefied Natural Gas (LNG), conserve foreign exchange, promote a circular
economy, and contribute to India's net-zero emission targets. The CBO will
remain voluntary until the fiscal year 2024-25. Mandatory blending will
commence from FY 2025-26 at 1%, progressively increasing to 3% in FY 2026-27,
4% in FY 2027-28, and reaching 5% from FY 2028-29 onwards. A Central Repository
Body (CRB) will be established to monitor and implement this blending mandate.
This mandatory blending is projected to facilitate significant investment
(around ₹37,500 crores) and the establishment of approximately 750 CBG projects
by 2028-29. This is arguably the most crucial policy shift, transforming the
market dynamic from incentivizing supply to mandating demand. It provides
long-term market certainty for CBG producers, ensuring consistent off-take, which
is vital for attracting larger-scale investments and achieving the ambitious
production targets. The phased implementation allows the industry to scale up
its production capabilities gradually, making this blending mandate a
cornerstone for the sustained growth and deeper integration of CBG into India's
national energy mix.
National Biofuel Policy 2018
The National Biofuel Policy 2018 serves as the overarching
framework that highlighted the increasing role of CBG in strengthening
indigenous bioenergy generation, distribution, and consumption across India.
The policy initially set indicative targets, such as 20% ethanol blending in
petrol and 5% biodiesel blending by 2030. Recent amendments to this policy
demonstrate the government's adaptive approach, including provisions to allow
more diverse feedstocks for biofuel production and, notably, advancing the 20%
ethanol blending target to ESY 2025-26 from the original 2030 timeline. The
policy's fundamental aim is to reduce India's energy import dependency. This
demonstrates the government's adaptive and proactive approach to biofuel
policy, responding to evolving energy security needs, feedstock availability,
and technological advancements. By broadening feedstock options, the policy
aims to enhance the economic viability and scalability of overall biofuel
production, including CBG, and to accelerate the national transition away from
fossil fuels. The advancement of blending targets signals a heightened urgency
and commitment to these renewable energy goals.
Priority Sector Lending
Status for CBG Projects
To facilitate financing, loans for CBG plants have been accorded
special treatment. The Reserve Bank of India (RBI) has expanded the scope of
priority sector lending to include funding for start-ups up to ₹50 crore and
loans specifically for farmers for the installation of CBG plants. This
classification is intended to improve access to funds from scheduled commercial
banks. This policy signals to financial institutions that CBG projects are a
national priority, encouraging them to offer more favorable lending terms, such
as potentially lower interest rates and extended repayment periods, and
reducing their perceived risk associated with these projects. It directly
addresses the identified challenge of "lack of affordable financing
options" and high capital expenditure , thereby stimulating investment and
accelerating project development by easing the financial burden on developers.
Proposed Tax Benefits and
Carbon Credit Mechanisms
The Indian Biogas Association (IBA) has actively advocated for
the creation of blanket corporate tax holidays for CBG production, specifically
proposing a complete tax waiver during the initial years of operation, to
attract greater investment into the sector. The IBA argues that such tax breaks
would enable CBG producers to offer their products at more competitive prices,
thereby boosting the adoption of CBG in India's energy mix and promoting the
utilization of agricultural residues instead of burning them. Additionally, the
IBA has proposed the development of a robust framework that would allow CBG
plant promoters to sell carbon credits on both international and domestic
platforms. This mechanism would not only create new revenue streams for
producers but also significantly assist the Indian government in meeting its
climate change targets. The potential of the carbon credit system as a
substantial revenue generator has also been highlighted by the Ministry of Jal
Shakti. These proposed financial incentives, particularly the corporate tax
holidays, are crucial for significantly improving the economic viability and
competitiveness of CBG production, especially given the high initial capital
costs. The emphasis on carbon credits aligns India's CBG sector with global
climate finance mechanisms, potentially attracting international investment and
further incentivizing sustainable practices. This approach moves beyond direct
subsidies to leverage market-based mechanisms, demonstrating a strategic
evolution in policy to foster long-term sustainability and profitability for
the sector.
IV. State-Level Biofuel
Policies and Incentives for CBG
Many Indian states actively provide additional support and
incentives for CBG projects, effectively complementing the central government's
initiatives. These state-specific policies are critical as they are often
tailored to address unique local conditions, specific feedstock availability
(e.g., agricultural waste, municipal solid waste), and regional economic
development priorities. This localized approach allows for more targeted
interventions and fosters a competitive environment among states to attract investments
in the CBG sector.
Detailed Analysis of
Incentives in Key States
Gujarat
Gujarat has taken significant strides in promoting Compressed
Biogas (CBG) plants by offering a comprehensive suite of generous subsidies and
incentives under its renewable energy initiatives. The state provides a Capital Subsidy of 25% of the eligible
fixed capital investment (eGFCI), capped at ₹40 Crore for regular CBG plants
(with investment less than ₹200 Crore) and up to ₹200 Crore for Mega CBG
Projects (investment exceeding ₹200 Crore). This subsidy is disbursed in 20
quarterly installments over a period of 5 years. Operational Assistance is offered at 15% of the operational cost,
with a maximum of ₹5 Crore per year for regular projects and ₹25 Crore per year
for mega projects. To stimulate employment, an Employment Generation Incentive provides 50% of the employee
Cost-to-Company (CTC), with specific caps of ₹50,000 per male employee and
₹60,000 per female employee, alongside EPF
Assistance covering 100% of EPF contributions for female employees and 75%
for male employees. An Interest Subsidy
of 7% is available on loans up to ₹100 Crore (maximum ₹7 Crore per annum), with
an additional 3% for loans exceeding ₹100 Crore (maximum ₹20 Crore per annum)
for a period of 5 years from plant commissioning. Furthermore, the state offers
a 100% Electricity Duty Exemption
for 5 years. For Mega Projects, the government appoints a dedicated Single
Point of Contact (SPOC) officer to streamline approvals and provide
infrastructure support. Urban Local Bodies (ULBs) are mandated to provide
Municipal Solid Waste (MSW) at no cost to Waste-to-Energy projects, ensuring
feedstock availability.
Uttar Pradesh
Uttar Pradesh has enacted its "Uttar Pradesh State
Bio-Energy Policy- 2022," valid for five years, aiming to significantly
boost bio-energy production, with a primary focus on Bio-CNG/CBG. The policy
explicitly addresses the environmental crisis and loss of soil fertility caused
by agricultural waste burning, promoting bio-energy as a sustainable
alternative. Financial incentives include a 100% Electricity Duty Exemption for 10 years from the start of
commercial production , and a 100% Stamp
Duty Exemption on land purchase or lease specifically for establishing
plants or feedstock collection/storage facilities. A 100% exemption from Development Charges levied by
development authorities is also provided. An Upfront Subsidy for Biomass Collection Equipment includes an
additional 30% subsidy (up to ₹20 Lakh) from the state government for equipment
like rakers, balers, and trollers, complementing central government schemes. A Production-based Subsidy for bio-energy
units is offered, specifically ₹75 lakh per ton for Compressed Biogas (CBG),
with a maximum cap of ₹20 crore. Regulatory ease is facilitated through deemed
exemption from land ceiling and simplified conversion of agricultural land to
non-agricultural land for bio-energy purposes. For investments of ₹50 crore or
more, an Approach Road up to 5 km
connecting the unit to the main road will be constructed by the government.
Bio-Manure, a byproduct, is recognized and promoted by the Agriculture
Department, with mandatory sale at licensed fertilizer shops. The Uttar Pradesh
New and Renewable Energy Development Agency (UPNEDA)'s Bioenergy website
provides a Single Window Online
Clearance Gateway, facilitating applications and increasing transparency.
Punjab
Punjab is actively working towards launching its State Policy
for Biofuels, which aims to efficiently utilize biomass waste, particularly
paddy straw, to address the significant issue of stubble burning. As of June
2024, Punjab has 4 operational CBG projects with a total capacity of 85 tonnes
per day (tpd). An additional 7 projects (79 tpd) are expected to be operational
by December 2024, and 27 more CBG projects are in various pre-project phases.
Memorandums of Understanding (MoUs) have been signed with GAIL Limited and
Hindustan Petroleum Corporation Limited (HPCL) to establish 10 CBG projects
each, with total capacities of 150 tpd and 100 tpd respectively. Current state
incentives include exemptions from land stamp duty and registration charges,
electricity duty during construction and testing phases, and waivers on change
of land use and external development charges. Panchayat land is also made
available on long-term lease for project development. The draft policy proposes
State Financial Assistance (SFA) of
approximately ₹25 million per 4.8 tpd CBG project, with a maximum SFA of ₹50
million per project, to be provided to new project developers on a first-come,
first-served basis. It also suggests Road
Tax Exemptions for vehicles running on CBG, varying based on vehicle
category. Additionally, there is a strong focus on green hydrogen production
from farm waste, with proposed capital subsidies up to ₹15 crore per project
for biomass-to-green hydrogen initiatives.
Rajasthan
Rajasthan has introduced a dedicated policy for CBG as an
integral part of its broader Rajasthan Integrated Clean Energy Policy, 2024,
aiming to boost bio-energy projects and biofuel utilization. The state offers a
100% Electricity Duty Exemption for
7 years for captive use, and in perpetuity if no power is injected into the
grid. A 75% exemption on Stamp Duty
and a 25% reimbursement of stamp duty are provided. Similar benefits apply to Land Conversion Charges, with a 75%
exemption and 25% reimbursement. A 100% reimbursement for 7 years on Mandi Fee / Market Fee for agricultural
raw materials used for CBG production is also offered. The policy includes
exemption from Pollution Control Board
Fees for obtaining Consent to Establish (CTE) and Consent to Operate (CTO).
SGST Benefits include
investment-linked State Goods & Services Tax (SGST) reimbursement as per
Rajasthan Investment Promotion Scheme (RIPS-2024) guidelines. Furthermore, a
100% exemption on Transmission &
Wheeling Charges for captive use is provided, along with full banking
facility without restrictions on withdrawals during peak hours. CBG projects in
Rajasthan are also eligible for Central Financial Assistance (CFA) under
various MNRE schemes, including capital subsidies (₹4 crore per 4800 kg/day
capacity), interest subvention (up to 2%), performance-based incentives (₹0.50
per kg of CBG produced for three years), bio-manure assistance (₹1 crore per
4500 tonnes per annum), and infrastructure funding (pipeline connectivity up to
2 km).
Madhya Pradesh
The Madhya Pradesh government has implemented a comprehensive
'Scheme for Implementation of Biofuel Projects in Madhya Pradesh,' covering all
aspects of biofuel production. The scheme offers up to ₹200 Crore in Basic Investment Promotion assistance,
disbursed in 7 equal annual installments. For Infrastructure Assistance, 50% assistance, up to ₹5 Crore, is
provided for developing basic infrastructure (power, water, gas, roads) if
private or undeveloped government land is acquired. Waste Management/ETP/STP Assistance offers 50% assistance up to ₹5
Crore for developing waste management systems and up to ₹10 Crore for Zero
Liquid Discharge (ZLD) Effluent Treatment Plants (ETP), disbursed in two annual
installments. A 100% Electricity Duty
Exemption for 10 years is granted , along with a 100% exemption from Energy Development Cess & Cross-Subsidy
Surcharge for 10 years. A 50% reimbursement on Stamp Duty for the purchase of private land for the project is also
available. Revenue land can be provided at 50% of the circle rate for
establishing and operating bioenergy projects. The state agriculture department
mandates the sale and purchase of Bio-manure
from bio-CNG projects at all licensed fertilizer shops.
Haryana
The
Haryana Bio-energy Policy, 2018, is designed to attract private investment in
biomass-based power, bio-CNG, and biofuel production, while also supporting
R&D in bioenergy technologies. The policy includes a 100% waiver on Cross-Subsidy, Transmission, and
Distribution Charges; a 100% exemption from Octroi for biomass fuels; and a 100% Entry Tax Exemption on project supplies. No fee is required for
consent to establish or operate bioenergy plants. It provides exemption from External Development Charges (EDC),
scrutiny fees, and infrastructure development charges, along with a 100%
exemption from Stamp Duty and
Registration Fees in select blocks. Land
Support provisions allow agricultural land to be utilized for biomass
projects, and Panchayat land is available for lease for 35 years at reasonable
rates, with no land-use change approval required for bioenergy projects.
Organic fertilizers produced from bioenergy plants are promoted by the
Agriculture & Farmer Welfare Department, with free trials conducted by
State Agriculture Universities.V. Swachh Bharat Mission and Waste-to-Energy Integration
The Swachh Bharat Mission (SBM) stands as a foundational
initiative integral to India's waste-to-energy endeavors, particularly in the
promotion of Compressed Biogas (CBG). SBM-Urban 2.0, launched on October 1,
2021, for a five-year period, places a strong emphasis on the scientific
management of all waste fractions, including biodegradable waste. Concurrently,
SBM-Grameen Phase II, active from 2020 to 2026, directly supports the
establishment of community-level biogas plants under the GOBARdhan initiative.
The overarching mission aims to achieve a "waste to wealth"
transformation, converting organic waste into valuable resources such as CBG
and organic manure.
Under the Solid Waste Management (SWM) component of SBM-Urban
2.0, the Ministry of Housing and Urban Affairs (MoHUA) provides crucial central
financial assistance (CFA) for setting up Municipal Solid Waste (MSW)-based CBG
plants in urban areas. This financial support is tiered based on the Urban
Local Body (ULB) population, offering 25%, 33%, or 50% of the project cost,
with a maximum cap of ₹18 crore per 100 TPD feedstock for Bio-methanation
plants. The Union Budget 2023-24 further bolstered this integration by
targeting the establishment of 500 new "Waste to Wealth" plants under
GOBARdhan, which includes 200 compressed biogas (CBG) plants, with 75 of these
specifically earmarked for urban areas. As of December 4, 2024, the Ministry of
Housing and Urban Affairs reported that the construction of 67 CBG plants is
expected to be initiated by March 2025 under its purview.
A prime example of successful waste-to-energy integration is
Asia's largest municipal solid waste-based GOBARdhan plant, inaugurated by
Prime Minister Narendra Modi in February 2022, located in Indore, Madhya
Pradesh. This state-of-the-art facility processes an impressive 550 tonnes of
municipal organic waste daily, yielding approximately 17,000 kg of Bio-CNG gas
(equivalent to 17 TPD, with a consistent achievement of 15 TPD) and 100 tonnes
of high-quality compost. The plant is projected to achieve a significant CO2
emission reduction of approximately 130,000 tonnes per year, which is intended
for carbon credit generation. Operating with a high degree of automation and
divided into three shifts for continuous functioning, this facility exemplifies
the successful integration of waste management, renewable energy production,
and circular economy principles under the broader umbrella of the Swachh Bharat
Mission and GOBARdhan initiatives. The deep integration of the Swachh Bharat
Mission with CBG development signifies a comprehensive national commitment to
transforming waste from an environmental liability into a valuable resource. By
promoting decentralized processing and providing substantial financial
assistance specifically for MSW-based plants, the government is not only
addressing the burgeoning urban waste crisis but also simultaneously creating a
robust and diversified feedstock supply chain for CBG. The Indore plant serves
as a scalable and replicable model, demonstrating the significant economic and environmental
benefits of linking urban waste management with renewable energy production and
carbon credit generation, thereby strongly reinforcing the principles of a
circular economy.
VI. Current Status, Progress,
and Timelines of the CBG Sector in India
The CBG sector in India is undergoing a transformative phase,
driven by ambitious national targets and a supportive policy environment. While
initial targets were highly aspirational, the government has shown adaptability
in its approach, leading to steady progress.
Overall Progress Against
National Targets
The SATAT initiative,
launched in October 2018, initially set an ambitious target of establishing
5,000 CBG plants by 2023. As of November 30, 2024, 80 CBG plants have been
officially commissioned, with an additional 72 plants reported to be in various
stages of construction. In the fiscal year 2024-25, 94 CBG plants collectively
sold 31,423 tons of CBG. Recognizing the complexities of scaling, the target
has been realistically adjusted, with current expectations aiming for the setup
of 1000-1200 large-size CBG plants by 2030.
Under the GOBARdhan
initiative, the Union Budget 2023-24 set a target for establishing 200 new CBG
plants. As of December 4, 2024, 37 of these targeted plants are functional, and
133 are reported to be in various stages of development. The number of
functional CBG plants under GOBARdhan has shown significant growth, increasing
from just 19 in 2020 to 125 currently.
The CBG Blending
Obligation (CBO) is currently in a voluntary phase until the fiscal year
2024-25. Mandatory blending will commence from FY 2025-26 at 1%, progressively
increasing to 3% in FY 2026-27, 4% in FY 2027-28, and reaching 5% from FY
2028-29 onwards. This mandatory blending is projected to facilitate significant
investment (around ₹37,500 crores) and the establishment of approximately 750
CBG projects by 2028-29.
Number of Functional and
Under-Construction CBG Plants
While India has over 5 million biogas plants, most are
small-scale digesters. As of December 4, 2024, there are 125 functional CBG
plants specifically under the GOBARdhan scheme. Under the SATAT initiative, as
of November 30, 2024, 80 CBG plants have been commissioned, with an additional
72 plants currently under various stages of construction. Overall, the CBG
industry in India operates with a combined capacity of approximately 1 million
kg per day across 150 operational plants as of 2024. The government anticipates
commissioning a total of 750 CBG plants by 2028.
Project Implementation
Timelines
The timelines for project implementation vary based on plant
size:
●
Small Plant: Typically requires 6-12
months for implementation.
●
Medium Plant: Requires a longer
duration of 12-18 months.
●
Large Plant: Generally takes 18-24
months for full implementation.
Table 2: Key
Progress Indicators and Targets for CBG Development in India
While India has established highly ambitious CBG targets, the
actual pace of commissioning has been slower than initial projections. The
initial SATAT target of 5,000 plants by 2023 was highly ambitious, and the
current number of commissioned plants is significantly lower. However, the
government has subsequently introduced new facilitating schemes and adjusted
future targets, indicating a learning curve. This demonstrates an adaptive
policy evolution. The government's willingness to recalibrate targets and
introduce targeted support mechanisms, such as the Biomass Aggregation
Machinery (BAM) scheme and the Pipeline Infrastructure (DPI) scheme,
illustrates a pragmatic approach to overcoming implementation challenges and
ensuring the long-term viability of the sector. The phased mandatory blending
obligation is a testament to the government's commitment to creating a
sustainable demand for CBG, which is crucial for attracting further investment
and scaling up production.
VII. Conclusion
India's commitment to developing a robust Compressed Biogas
(CBG) ecosystem is evident through a comprehensive and evolving policy
framework, substantial financial incentives, and strategic market integration
initiatives. The central government, primarily through the SATAT, GOBARdhan,
and MNRE Bio-Energy programs, has laid a strong foundation by ensuring assured
off-take, providing capital subsidies, and promoting waste-to-wealth
conversion. The introduction of the Biomass Aggregation Machinery (BAM) scheme
and the Scheme for Development of Pipeline Infrastructure (DPI) directly
addresses critical supply chain and infrastructure bottlenecks, demonstrating a
holistic understanding of the sector's needs. Furthermore, the phased
implementation of the Compressed Biogas Blending Obligation (CBO) is a
transformative step, creating a guaranteed demand that is essential for
attracting large-scale private investment and ensuring long-term market
stability.
Complementing these central efforts, various state governments
have introduced tailored biofuel policies, offering a diverse array of
incentives such as capital and operational subsidies, exemptions from duties
and charges, and support for feedstock aggregation and bio-manure promotion.
This state-level customization allows for targeted development based on
regional feedstock availability and economic priorities, fostering a
competitive environment that benefits the overall growth of the CBG industry. The
deep integration of CBG initiatives within the Swachh Bharat Mission highlights
a synergistic approach to addressing both waste management challenges and
renewable energy generation, with the Indore Bio-CNG plant serving as a
successful model for urban waste-to-energy conversion.
While significant progress has been made, with a notable
increase in functional CBG plants and a clear roadmap for mandatory blending,
the sector continues to face challenges related to the high initial capital
expenditure, the need for efficient feedstock logistics, and the complexities
of regulatory clearances. The proposed tax benefits and carbon credit
mechanisms, if fully implemented, could further enhance the financial viability
and global competitiveness of CBG production. The adaptive nature of India's
policies, as seen in the recalibration of targets and the introduction of new
support schemes, suggests a proactive stance towards overcoming these hurdles.
The continued success of the CBG sector will depend on sustained policy
coherence, effective inter-ministerial and inter-state coordination, and
increased private sector participation, ultimately contributing significantly
to India's energy security, environmental sustainability, and circular economy
goals.
