India’s Biogas Push: New Policies and Potential for a Greener Future

Blog . 4 min read

Aug 14, 2024

India’s Biogas Push: New Policies and Potential for a Greener Future
In recent months, the Indian government has implemented a series of significant policy changes aimed at boosting growth and investment in the biogas sector, highlighting a renewed commitment to biofuels and biogas. Major announcements have included the phased rollout of E20 fuel—gasoline blended with 20% ethanol, with a target for full nationwide availability by 2026. Additionally, the government has unveiled plans to establish 500 new Waste-to-Wealth plants under the GOBARdhan scheme and has launched a unified portal from the Ministry of Jal Shakti to streamline the registration of biogas projects, providing centralized information on investments and projects. On the global stage, India’s partnership with the Global Biofuel Alliance—alongside the U.S. and Brazil—further underscores its efforts to facilitate knowledge sharing and technology transfer in biofuel advancements.

Why Increasing Biogas Projects is Essential for India
Expanding biogas projects offers multiple environmental and economic benefits. Biogas helps manage waste effectively, reduces greenhouse gas emissions, and boosts renewable energy production. Additionally, the digester sludge from biogas plants can be repurposed as organic fertilizer, creating a circular nutrient cycle that returns valuable nutrients to the soil. Importantly, biogas production using waste instead of food crops also mitigates greenhouse gas emissions without the negative impact on land use associated with crop-based biofuels.

Biogas is also an effective alternative to natural gas, thanks to its high methane content (between 45% and 75%). When purified by removing carbon dioxide and impurities like hydrogen sulfide, biogas can achieve methane levels close to 90%, making it comparable to natural gas. This purified form, called biomethane, is “pipeline-ready” and can be fed into the gas grid as a non-fossil fuel. Compressed biogas (CBG) can even replace compressed natural gas (CNG) for vehicle fuel, given that both have the same composition and are compatible with CNG vehicles.

Economic Benefits of Biogas
Our estimates suggest that replacing 20% of India’s natural gas consumption with biogas and biomethane by 2030 could help reduce LNG import bills by approximately $29 billion between 2025 and 2030, assuming steady growth in the natural gas sector and 550 MSCMD (million standard cubic meters per day) of gas consumption by 2030.

The main obstacles have been an underdeveloped market ecosystem, complex clearance processes, and limited financial incentives. Until recently, the sector lacked unified pricing, and obtaining necessary permissions was cumbersome. Disjointed support from multiple government departments and ministries also created confusion and slowed down implementation.

New Policy Changes Bring Hope
In 2021, the government introduced the National Bioenergy Scheme to consolidate support across departments, facilitating biogas projects and making funding more accessible. The GOBARdhan initiative also serves as an umbrella program, promoting organic waste conversion into biogas and CBG. Additionally, recent policies have enhanced CBG’s market appeal by adjusting CBG rates to match rising global gas prices. A mandate requiring natural gas companies to procure 5% of their gas from CBG sources has also spurred private sector interest, with two major players—Reliance Industries and Adani Group—announcing plans for 100 and five CBG plants, respectively, in the coming years.

Tackling Feedstock Challenges
Biogas production also depends on a consistent supply of suitable feedstock, which varies greatly. A 2-standard cubic meter biogas plant can meet the cooking needs of a five-member household, but a single household may not produce enough waste for efficient biogas generation. This requires feedstock mapping to connect biogas facilities with sources of agricultural and industrial waste, avoiding the use of food crops and supporting sustainable production.

To support feedstock utilization, the government has introduced market development assistance for biogas slurry, priced at $18 (Rs. 1,500) per tonne. This initiative aims to overcome usage barriers and encourage farmers to adopt fermented organic manure (FOM), potentially reducing the government’s fertilizer subsidy burden, which currently matches the estimated Rs. 1.75 trillion ($21 billion) cost of establishing 5,000 SATAT plants.

Moving Forward: Building a Sustainable Biogas Ecosystem
For the biogas sector to reach its potential, India needs a robust market ecosystem with increased private sector participation. CAPEX-based incentives should gradually shift to generation-based incentives to ensure consistent production. Enhanced infrastructure for CBG distribution, such as transport networks, refueling stations, and storage facilities, is essential. The government’s focus on biofuels has already sparked renewed interest among major corporations, with more private players expected to join as market viability improves.

India is clearly intent on establishing a thriving biogas sector. However, closing policy and infrastructure gaps is critical to building a comprehensive market system that supports sustainable biogas operations and contributes to a cleaner, self-reliant energy future. With continued policy support, investment, and collaboration, India’s biogas sector is poised to play a transformative role in reducing the country’s dependence on fossil fuels and advancing toward a low-carbon economy.

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