India imports nearly 85 per cent of its crude oil and 50 per cent of its natural gas requirements. With a fast growing economy and rampant urbanisation, the country’s energy requirements are bound to increase. According to energy experts, compressed biogas (CBG) has the potential to evolve as an alternative fuel. Even though less explored and talked about, it is a clean, renewable and indigenous source of energy.
CBG is produced by processing biogas. The process involves reducing carbon dioxide content and maintaining more than 90 per cent quality of methane. CBG, also referred to as bio-compressed natural gas (CNG), can be used in vehicles that usually use CNG as a fuel. Section 52 of the Motor Vehicles Act (Ministry of Road Transport and Highways, 1998) offers provisions for use of bio-CNG in private vehicles.
Government initiative for CBG adoption in India
The central government has been working towards increasing CBG adoption in the country through various policies and schemes. In 2018, it issued the National Policy on Biofuel. The primary objective of the policy was to increase biofuel application in the transportation and energy sectors.
With the aim of producing CBG from various biomass sources, the Ministry of Petroleum and Natural Gas in 2018 launched the Sustainable Alternative Towards Affordable Transport (SATAT) programme. Under this programme, oil marketing companies such as Indian Oil Corporation Limited (IOCL) and Hindustan Petroleum Corporation Limited (HPCL) have tied up with CBG producers to distribute gas through their network. The ministry aims to set up 5,000 CBG plants in India by 2023 at an estimated investment of Rs 2 trillion. As of August 2022, letters of intent for 3,497 CBG plants have been issued and 37 plants have been commissioned. Apart from the efforts of the central government, states have come forward to promote CBG. Haryana, Punjab, Uttar Pradesh and several other states have formed state-level committees for implementation and monitoring of SATAT.
In January 2022, the North Delhi Municipal Corporation signed an MoU with Indraprastha Gas Limited for setting up CBG plants and integrated CBG-CNG fuel stations in North Delhi. This will help in in-situ processing of wet waste and utilisation of biodegradable waste.
The Ministry of New and Renewable Energy (MNRE) also extended financial support of Rs 10 million per 12,000 cubic metre per day for biogas generation and Rs 40 million per 4,800 kg per day for bio-CNG generation, with a cap of Rs 100 million per project. This scheme was valid till March 2021. It will continue for the period of 2022-26 only to meet the already created liabilities and no new projects will be sanctioned. Meanwhile, the Reserve Bank of India has also categorised CBG plants in the priority sector for lending. The State Bank of India has released a specific policy to finance CBG projects and other banks are also adopting similar policies for financing.
Recently launched plants
The largest CBG plant in Asia was inaugurated at Lehragaga, Sangrur, Punjab, in October 2022. Commissioned with a foreign direct investment (FDI) of Rs 2.2 billion, it has a production capacity of 6 tonnes per day (tpd). The project will be expanded to process 300 tpd of paddy and produce 33 tpd of CBG. The CBG produced will be supplied to IOCL outlets. It is a move directed to enable ex-situ management of crop stubble in Punjab.
In February 2022, one of India’s biggest CBG plants was announced in Indore, Madhya Pradesh. It has the capacity to process 550 tonnes of waste and produce 17,000 kg of CBG daily. The Indore Municipal Corporation (IMC) has tied up with the plant and will purchase 50 per cent of the fuel to operate its CNG buses. IMC also plans to provide sufficient segregated waste to the plant to ensure adequate feedstock for its biogas production.
Trouble spots
The key issues that will impede the adoption of CBG in India are lack of waste segregation at source and the need for significant capital investment. For a CBG plant to function properly, it is imperative that the waste fed into it is segregated into organic and inorganic at source. If this is not properly implemented, the plant may not confer any benefits. Despite being mandated in the Solid Waste Management Rules, 2016, segregation of waste at source in India is minimal.
Opportunities and investments under CBG
CBG has huge potential to evolve into an alternative fuel in the coming years. Owing to its high calorific value of 5,000 kCal per cubic meter CBG will emerge as an affordable, indigenous, sustainable and environmentally friendly option. It can be used both as a transport fuel as well as for domestic and other commercial purposes. According to the SATAT scheme, CBG has properties almost similar to CNG, therefore, a vehicle that operates on CNG can use CBG without any modification.
As per data available on the geographic information system-based Waste Mapping Tool, MNRE, India generates a total of 623 million tpa of solid waste and 20,395 million cubic metres of liquid waste. This waste has the potential to create 43,737 tpd of bio-CNG. The adoption of CBG will not only help create an alternative fuel but also enable waste management.
According to research by IIT Guwahati, if harnessed properly, bio-CNG can replace around 4,000 tonnes of India’s diesel consumption per day. In addition to this, the solid by-products of a CBG plant can be used as bio-manure. According to estimates under SATAT, 5,000 planned CBG plants will generate 50 million tonnes of bio-manure a year. The use of bio-manure helps in increasing crop yield.
The biggest advantage that can be leveraged to increase the future market of CBG in India is the strong backing of cost effectiveness and low-emission vehicles. The ever-increasing prices of CNG and piped natural gas in the country (especially after the 40 per cent hike in natural gas prices) is also expected to make the CBG sector more lucrative for the industry.
Owing to huge agro waste, the state of Punjab offers lucrative opportunities for CBG projects. HPCL is setting up a project of capacity 100 kl 2G ethanol per day based on paddy straw and other agro residue in Bathinda. The plant is expected to be completed by February 2023. The Punjab Energy Development Agency (PEDA) has also allocated 41 additional CBG projects. Of these, five are in Ludhiana and four each in Jalandhar, Bathinda and Gurdaspur, and three each in Moga and Hoshiarpur. These projects will consume nearly 1.65 million tonnes paddy straw yearly. The setting up of these plants is expected to entail private investments to the tune of Rs 12 billion. PEDA has tied up with GAIL for the offtake of CBG through their pipelines. Meanwhile, according to PEDA, 300 more projects having 10 tpd capacity each can be set up in Punjab.
In August 2022, HPCL also announced plans to establish a cow dung-to-CBG plant at Sanchore, Rajasthan. It will use 100 tpd of cow dung to produce CBG. The project is expected to be completed in one year. Meanwhile, Uttar Pradesh plans to produce 500 tpd of CBG in the next five years.
In addition to efforts made by state governments, private companies such as Reliance Industries and Adani New Industries Limited (ANIL) are planning to set up two CBG plants each and invest Rs 5 billion-Rs 6 billion in the CBG sector. While ANIL plans to set up 40 mtpa plants in Uttar Pradesh and Gujarat, Reliance Industries is still finalising the location for setting up two plants of similar capacity. Reportedly, ANIL has plans to use its existing city-based gas network to use CBG in cooking fuel. Meanwhile, Reliance Industries is expected to explore the use of CBG at its fuel outlets in India for the vehicular segment. EverEnviro Resource Management Private Limited, a fully owned subsidiary of Green Growth Equity Fund, plans to construct 14 CBG facilities in the country at an estimated investment of Rs 10 billion.
Going forward, increased financial assistance and subsidies, clubbed with stricter implementation of waste segregation and management rules, will enable the growth of the CBG sector and help in meeting the energy demands of the country in a more sustainable and affordable manner.
