India announces mandatory biogas blending for domestic use from 2025-26

The compulsory blending obligation will be 1 per cent of total CNG and domestic PNG consumption for FY26, 3 per cent for FY27, and 4 per cent for FY28. The obligation mandates 5 per cent blending from FY29. A Central Repository Body (CRB) will be responsible for monitoring and implementing the blending mandate.

“The key objectives of the CBO (compulsory blending obligation) are to stimulate demand for CBG in CGD sector, import substitution for liquefied natural gas (LNG), saving in forex, promoting circular economy and to assist in achieving the target of net-zero emission, etc,” the petroleum ministry said. According to Petroleum Minister Hardeep Singh Puri, this decision will encourage investments worth around Rs 37,500 crore and facilitate the establishment of 750 CBG projects by FY29.

Biogas is an energy-rich gas produced by anaerobic decomposition of biomass. It is produced from sources like agriculture residue, cattle dung, sugarcane press mud, municipal solid waste, and sewage treatment plant waste, among others. It can be burned directly as a fuel, or purified and upgraded by removing carbon dioxide, hydrogen sulfide, and then compressed to make CBG. The CBG has methane content of more than 90%, which is similar to commercially available natural gas in composition and energy potential.

India is a major consumer of natural gas and depends on imports to meet around half of its requirement. The country’s natural gas consumption is only set to rise in the coming years given the government’s aim to increase the share of natural gas in the primary energy mix to 15 per cent by 2030 from a little over 6 per cent at present. Increased production of CBG could help India in reducing reliance on natural gas imports.

In October 2018, the government had launched the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme, under which 5,000 CBG plants were envisaged by 2023 to produce 15 million tonnes of CBG. The scheme’s objective was to encourage entrepreneurs to set up CBG plants across the country and supply the gas to public sector oil companies.

SATAT, however, has so far failed to attract enough entrepreneurs. As per latest official data, just 48 CBG units have been set up under the scheme, and the total number of letters of intent (LoIs) issued under SATAT stands at 2,176. So far in FY24, just 9,548 tonnes of CBG has been sold.

In the past one year, the Parliamentary Standing Committee on Petroleum and Natural Gas has flagged the issue of slow progress on CBG on at least two occasions. The panel had observed that the SATAT scheme was “burdened” by lack of clarity and procedural hurdles, and was unable to enthuse investors and entrepreneurs.

The committee had also recommended financial assistance to entrepreneurs willing to set up CBG units and also called upon the public sector oil and gas companies to build CBG plants from their own funds to demonstrate the viability of such projects and instill confidence among potential investors.