Compressed biogas (CBG) has steadily gained an important role in India’s energy mix. With a growing emphasis on adopting circular economy practices and accelerating the transition towards cleaner and more sustainable energy sources, CBG has gained recognition as a promising alternative. Produced using feedstock such as municipal solid waste, cattle dung and agricultural residue, the adoption of CBG offers several notable advantages. Apart from environmental benefits, CBG also holds significant potential to lower the country’s import dependence.
Initiatives such as policy support and technological advancements in production and operations are helping address challenges faced at the initial stages and placing the sector on a growth trajectory. This is complemented by the CBG blending targets set forth by the government, higher plant capacities and quality standards. At a recent Indian Infrastructure conference, industry experts highlighted the progress in CBG adoption over the years, challenges faced, recent trends, the role of government initiatives and the future outlook. Edited excerpts…
Sanjeev Kumar Bhatia
Indraprastha Gas Limited (IGL) has a positive outlook on the CBG sector and is working towards supporting the same. Beyond government mandates to invest in at least 10 CBG plants, IGL’s internal targets are higher. It plans to establish 15-20 CBG plants, primarily within existing geographical areas (GAs) and select strategic projects outside.
In the Delhi-National Capital Region (NCR), access to land parcels is predominantly through government bodies like the Municipal Corporation of Delhi and other government land-owning agencies unlike outside the NCR, where other options of land acquisition are available. Hence, efforts are under way to partner with engineering, procurement and construction (EPC) contractors, technology providers and feedstock-rich industries such as sugar mills, including through joint ventures (JVs).
Over the past two years, the sector has evolved significantly. It was earlier characterised by limited technology providers and EPC contractors and heavy reliance on imported equipment.
Today, new players have come up, technology has stabilised, and indigenous equipment availability has increased to over 90 per cent in many cases. Plant capacities have also increased from the earlier 2 tonnes per day (tpd) to now standing at 5 tpd or more.
IGL looks for plant capacities of at least 10 tpd while making investments. Further, the Development of Pipeline Infrastructure (DPI) scheme has been a notable initiative. It provides flexibility for both city gas distribution (CGD) companies and CBG producers to invest in pipelines and avail incentives through the DPI portal.
From a CBG perspective, quality has been the biggest concern. Earlier, CBG was sold mainly through retail outlets, a standalone arrangement with limited network impact. Injection into medium-density polyethylene (MDPE) pipelines was also undertaken; however, quality parameters were not stringent enough.
Further, in regions like Muzaffarnagar, Meerut, Karnal and Kaithal, where biomass availability is high, plant concentration is witnessing an upward trend. This puts limitations on CBG uptake and challenges in absorbing the entire quantity of CBG into the MDPE network.
Steel pipelines have emerged as the next best option. However, concerns exist regarding its sensitivity to moisture, oxygen and sulphur, which are present in CBG, and require the monitoring of stricter parameters for quality. It necessitates a higher methane concentration of up to 98.5-99 per cent, compared to the 95-96 per cent acceptable in MDPE networks. While this requires additional investment, larger and more experienced players are increasingly accepting the need for higher quality standards.
On the cost side, capital costs typically range between Rs 60 million-Rs 80 million per tpd. For example, IGL’s municipal solid waste (MSW)-based plant with a capacity of 4 tpd saw an investment requirement of Rs 320 million. The current procurement price is linked to around 85 per cent of the average compressed natural gas (CNG) retail price, which seems to be appropriate. Any further increase would require subsidies, and pricing must remain balanced within the circular economy framework.
In terms of transportation, pipeline injection is undisputedly the best and the only mode. Cascade transport is expensive, adding Rs 8-Rs 9 per kg, and poses safety risks. In Delhi, pipeline injection, whether through steel or MDPE pipelines, is the preferred solution, owing to large demand in Delhi/NCR and vast network of pipeline
Looking ahead, while the CBG blending obligation is set to reach 5 per cent, IGL aspires to go beyond this and achieve 10 per cent over the next five to seven years.
“The Development of Pipeline Infrastructure scheme has been a notable initiative. It provides flexibility for both CGD companies and CBG producers to invest in pipelines and avail incentives.” Sanjeev Kumar Bhatia
Harsh Nupur Joshi
ONGC Green Limited, established in February 2024, oversees all green businesses, including solar, wind, storage, green hydrogen and offshore wind. We currently manage 2.5 GW of capacity, have recently awarded a 300 MW greenfield solar project, and have 600 MW under tendering. Our goal is to reach 10 GW by 2030, backed by a Rs 1,000 billion investment plan.
ONGC Green is at an early stage in the CBG sector and is pursuing two approaches – the formation of JVs with experienced technical partners and an EPC-based in-house development. While the initial approval was obtained for two JVs, one did not materialise. Despite this, ONGC Green remains committed to achieving the government-mandated target of 25 CBG plants.
The company is also pursuing an in-house development route, given challenges related to land availability and feedstock. It is currently developing two 5 tpd Napier grass-based CBG plants at Ankleshwar and Hazira in Gujarat, with EPC tenders in the final stages of preparation. It is being carried out on ONGC-owned land, thereby addressing one of the major bottlenecks in CBG development.
In addition, ONGC Green is exploring opportunities in MSW-based projects and agri-residue-based plants in Chhattisgarh and Uttar Pradesh.
Economic viability is strongest for plants with a minimum capacity of 5 tpd, although returns remain modest compared to conventional oil and gas projects.
CBG blending obligations beginning at 1 per cent and gradually increasing to 5 per cent play a critical role in driving sectoral growth, much like the renewable purchase obligation for renewables. While the blending mandate is moderate at present, it should be enhanced as production scales up and a sufficient number of plants become operational.
For the company, CBG forms an integral part of the net-zero strategy, and has a positive impact on the environment, public health and the reduction of imports. While the policy focus was earlier on ethanol, the focus must now be placed on boosting CBG production.
In terms of future targets, our approach is to first stabilise four to five plants, gain operational experience, establish technology and then scale up to 25 plants with a total capacity of around 125 tpd by 2030, involving an estimated capex of Rs 10 billion.
Government support has been substantial, including market-linked pricing, assured incentives for organic manure, blending mandates, DPI support for pipeline connectivity and the upcoming carbon credit mechanism, all of which significantly improve project viability. Off-take assurance has already reached around 70 per cent and is expected to approach 100 per cent in the near future.
Additionally, state-level incentives, such as land offered at Rs 1 per square metre in Chhattisgarh for public sector undertakings, along with support from states like Uttar Pradesh and Odisha, are further strengthening the ecosystem.
“CBG blending obligations beginning at 1 per cent and gradually increasing to 5 per cent play a critical role in driving sectoral growth, much like the renewable purchase obligation for renewables.” Harsh Nupur Joshi
Lav Kumar
The International Energy Agency recently published a biogas outlook highlighting biogas as the fastest-growing gaseous fuel, globally. Under the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, India currently has around 130 commissioned plants.
The GOBARdhan portal, on the other hand, records around 163 commissioned plants, which also includes plants that have a capacity of less than 2 tpd. In terms of volumes, oil and gas marketing companies procured around 42,000 metric tonnes of CBG during the last financial year. The actual production is, however, higher, as several producers carry out sales through their own retail outlets, which are not fully captured in official procurement data.
While SATAT initially envisioned 5,000 CBG plants, the early years were focused on understanding and building the CBG system, with CBG being relatively new in India.
Biofuels depend on domestic feedstock and differ from other regions like Europe or the US. Hence, technologies required adaptation and could not be directly replicated.
Today, technology has stabilised, and most new plants achieve healthy plant load factors. Those initial years helped lay the foundation, and India currently witnesses over a 110 per cent year-on-year growth in CBG production.
Further, there were also constraints on the offtake of CBG by CGD entities and oil and gas marketing companies.
However, with the launch of the CBG-CGD Synchronisation Scheme, offtake clarity has improved significantly, with around 70 per cent of CBG currently being sold through this scheme.
CBG growth is closely linked to CNG expansion. However, many CBG plants are located in rural areas where CNG penetration is still limited. CBG can help build a platform for future CNG penetration in these regions, making the two fuels complementary.
On the feedstock side, experiences from the biomass-to-power sector, particularly in Punjab and Haryana, indicated that regional concentration led to rising biomass feedstock prices.
Many regions still have a nascent agri-residue collection ecosystem. Hence, initiatives such as the Biomass Aggregation Machinery scheme and state-level incentives are aimed at reducing feedstock aggregation costs for CBG producers, developing the ecosystem and lowering costs.
Standards have been put in place to ensure quality is maintained. BIS standard IS 16087 governs biogas or biomethane quality. The revised IS 16087:2025 now puts CBG quality at par with CNG for pipeline injection. All requirements, such as ensuring total sulphur content is below 10 ppm, a minimum of 95 per cent of methane content and other specifications, are now included.
Moreover, in the recent price revision, CBG prices have been converted to an energy equivalent basis for both the 
SATAT and CBG-CGD Synchronisation schemes, implying that producers supplying higher-quality CBG will earn higher revenue, which is a strong ecosystem enabler.
Further, a recent revision under the DPI scheme provides financial assistance for injecting CBG into trunk pipelines, with incentives covering up to 50 per cent of the project cost.
Going forward, clusters are likely to emerge in different parts of the country, where CBG from multiple plants is aggregated and injected into trunk pipelines.
Earlier, plants had an average size of 5-6 tpd. Newer plants now have a capacity of 10 tpd or higher, with agri-residue-based plants targeting a capacity of 15-20 tpd.
Larger plants benefit from good economic viability in comparison to smaller plants, thereby reducing per-unit costs. On the cost side, capital costs average between Rs 70 million-Rs 80 million per tpd of CBG capacity.
(Mr Lav Kumar’s views expressed above are his personal views and do not represent the views or positions of the Ministry of Petroleum and Natural Gas or the Centre for High Technology in any manner.)
“With the launch of the CBG-CGD Synchronisation Scheme, offtake clarity has improved significantly, with around 70 per cent of CBG currently being sold through this scheme.” Lav Kumar
