| Reference Date | Version | July 27, 2024 | 1.0 |
| Keywords | Compressed Biogas (CBG), Energy Security, Sustainability, Circular Economy, Policy Support, Biogas |
| Legislation(s)/Policies |
|
| Jurisdiction | India |
Introduction
Presently, natural gas accounts for 6.7% of India’s total energy basket.
The “2030 Vision” Natural Gas Infrastructure in India Report by Industry Group for Petroleum & Natural Gas Regulatory Board initially targeted achieving at least 20% share of natural gas in the primary energy mix by 2030.
The target was later revised to 15% by 2030 during the launch of the Gas4India campaign in September 2016.
As per the Petroleum Planning & Analysis Cell, India’s total natural gas consumption during FY 2023-24 was 67512 million metric standard cubic meters (mmscm), of which 31795 mmscm came from LNG imports while 35717 mmscm came through domestic production.
Production trends indicate that domestic natural gas production has not increased significantly and LNG imports continue to remain high.
Keeping in mind the twin goals of energy security and sustainability, indigenous generation and consumption of natural gas must be encouraged through circular economy approaches.
Compressed Biogas (CBG) plants may emerge as a crucial component in realizing the circular economy vision emphasized by the Hon’ble Prime Minister of India during the launch of Mission Lifestyle for Environment at COP26 in Glasgow in 2021.
Biodegradable organic waste or biomass such as agricultural residue, cattle dung, sugarcane press mud, municipal solid waste and sewage treatment plant waste produce biogas through anaerobic decomposition.
The biogas is purified to remove hydrogen sulfide (H2S), carbon dioxide (CO2) and water vapor and thereafter compressed as CBG.
India has abundant biodegradable organic waste resources and commercial production of CBG can significantly contribute toward achieving natural gas energy mix targets for 2030.
This article examines the initiatives undertaken at both Centre and State levels to promote indigenous generation, distribution and consumption of CBG across the value chain and the factors impeding growth of the sector.
CBG – Law Making Power
The Constitution of India provides the basis for law-making powers vested in Parliament and State Legislatures.
Parliament has exclusive power to make laws in respect of matters enumerated in List I (Union List) of Schedule VII.
State Legislatures have exclusive powers over matters enumerated in List II (State List).
Both Parliament and State Legislatures have powers with respect to matters included in List III (Concurrent List).
Although ‘Biogas’ is not specifically mentioned in Schedule VII, the value chain intersects with multiple legislative subjects.
Union List
- Foreign treaties and agreements
- Foreign exchange and currency
- Foreign loans
- Import and export regulations
State List
- Local Government administration
- Public health and sanitation
- Agriculture and agricultural research
Concurrent List
- Forests
- Economic and social planning
- Trade, production and distribution
- Cattle fodder and related sectors
CBG Actions at the Central and State Levels
Centre Initiatives
Over the last decade, several policy initiatives have been undertaken by the Central Government to promote investments and growth in biofuels including CBG.
The Government also launched the Global Biofuels Alliance during the G20 Summit in 2023 together with several countries including the United States, Brazil, Italy, UAE and Singapore.
| Central Policy / Scheme | Details |
| National Policy on Biofuels (2018) | The Ministry of Petroleum and Natural Gas launched this Policy to promote biofuels. The Policy was amended in June 2022 and targeted 20% ethanol blending in petrol by ESY 2025-26. |
| GOBARdhan Scheme | The Scheme aims to convert waste into wealth and promote circular economy principles. It supports conversion of cattle dung and agricultural residue into biogas, bio-CNG and CBG. |
| SATAT Scheme | The SATAT Scheme aims to create an ecosystem for producing CBG from waste and biomass sources. It targets production of 15 MMT of CBG from 5000 plants and encourages entrepreneurs to supply CBG to Oil Marketing Companies. |
| National Bioenergy Programme | Provides central financial assistance for Waste-to-Energy plants generating CBG and BioCNG projects based on project performance. |
| Agro Infrastructure Fund | Provides financing support for post-harvest infrastructure and CBG plant establishment with interest subvention and credit guarantees. |
| RBI Priority Sector Lending Directions | Recognizes renewable energy and agriculture infrastructure including CBG projects as eligible sectors for priority sector lending. |
State Initiatives
Implementation of CBG schemes depends heavily upon State-specific factors such as feedstock availability, infrastructure and local policy support.
Uttar Pradesh
The Uttar Pradesh Bio Energy Policy, 2022 proposes aggregator models and long-term associations between entrepreneurs, farmers and aggregators.
The State provides multiple incentives including:
- 100% electricity duty exemption for ten years
- 100% exemption from stamp duty
- Subsidies for feedstock aggregators
- Support for Farmer Producer Companies
- Capital subsidies linked to production capacity
Gujarat
The Gujarat Waste-to-Energy Policy, 2022 promotes municipal solid waste utilization and renewable energy generation.
The Policy focuses on:
- Improving waste disposal systems
- Reducing land requirement for waste disposal
- Promoting investment and employment generation
- Providing land support and tax exemptions
Haryana
The Haryana Bio-energy Policy, 2018 aims to create a conducive environment for biomass projects and renewable energy growth.
The State provides:
- Use of agricultural land for biomass projects
- Lease of Panchayat land
- Fast-track electricity connections
- Transmission and distribution charge waivers
- Exemption from taxes and development charges
Implementation
According to GOBARdhan portal statistics, 694 CBG plants have been registered so far, but only 99 are operational.
The following table reflects the operational status of CBG plants in key States:
| State | Registered CBG Plants | Functional CBG Plants |
| Uttar Pradesh | 130 | 15 |
| Gujarat | 44 | 18 |
| Haryana | 53 | 10 |
Under the SATAT Scheme, only 38,368 metric tonnes of CBG have been produced so far against the target of 15 MMT from 5000 plants.
Mandatory blending obligations under SATAT are voluntary until FY 2024-25 and are expected to become mandatory from FY 2025-26.
(Source: Petroleum Planning & Analysis Cell, Snapshot of India’s Oil & Gas data – Apr, 2023)
According to GOBARdhan statistics, 1,309 biogas plants with capacity above 5 cubic meter/day have been registered, but only 842 plants are operational.
| State | Registered Biogas Plants | Functional Biogas Plants |
| Uttar Pradesh | 131 | 105 |
| Gujarat | 53 | 41 |
| Haryana | 36 | 15 |
Despite intensive policy support and promotional initiatives, the CBG industry has not achieved the anticipated level of success.
A substantial gap continues to exist between policy objectives and actual implementation.
Viewpoint
Generation of biomass will continue to grow and therefore addressing energy security and sustainability remains critical.
Challenges affecting the sector include:
- Unpredictability in long-term feedstock supply
- Issues relating to collection and segregation of feedstock
- Limited financial support across the entire value chain
- Lack of technology transfer
- Economic viability concerns
- Need for robust end-use markets
Several initiatives are moving in the right direction and integration across the value chain is gradually improving.
- CBG has been included under greenhouse gas mitigation activities for carbon credit trading under Article 6.2 of the Paris Agreement.
- Organic manure produced from CBG plants is being promoted to encourage organic farming.
- The introduction of tipping fee systems is helping increase waste transportation.
- India and Germany signed the Green and Sustainable Development Partnership Agreement in 2022 for technology collaboration toward achieving Nationally Determined Contributions.
However, the lack of a properly coordinated value chain continues to hinder the sector from realizing its full potential.
Policy support must therefore be strengthened across the entire value chain to balance the interests of all stakeholders and ensure consistency in implementation.
Legal Support for Green Credit Implementation
Sources
- This information was given by the Minister of State in the Ministry of Petroleum and Natural Gas, in a written reply in Rajya Sabha on December 18, 2023.
- https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1987803
Ashwini Panwar (Mr), Priyanshi Aggarwal (Ms) and Riddhi Rahi (Ms)
Associate at Alaya Legal
Associate at Alaya Legal
