After ethanol in petrol, it’s now Bio-CNG’s turn

India's government is steering the nation towards clean fuel alternatives, with a new scheme focused on Bio-CNG, also known as Compressed Biogas or CBG. This shift begins with the approval of GOBARdhan, or the National Circular Bioenergy Scheme, with a budget of Rs 23,731 crore. Effective from FY 2026-27 to FY 2035-36, the scheme aims to boost India's domestic production of CBG tenfold. But what exactly is CBG and what role does it play in the fuel landscape of India?

CBG is a renewable gas produced from organic waste through a process of anaerobic digestion. This process generates biogas, which is purified and concentrated to create methane-rich biogas. This gas can then be compressed and used as CBG. Essentially, CBG is a renewable alternative to natural gas, derived not from underground fossil reserves, but from waste materials. It can be integrated into the existing gas ecosystem and used as a transport fuel.

The government's move towards CBG is motivated by several factors. India's demand for natural gas is increasing across various sectors, while the country also generates vast amounts of agricultural residue, cattle dung, and other organic waste. The GOBARdhan scheme aims to convert this waste into energy, addressing two significant issues simultaneously - reducing waste and lessening dependence on imported fossil fuels.

The scheme aims to create a circular economy, where waste is transformed into fuel, manure, employment, and rural income.

Under GOBARdhan, several measures are being taken to stimulate the growth of the CBG industry. CBG producers will have assured off-take from City Gas Distribution entities, with the obligated CBG volumes increasing over time. A stable administered CBG price of Rs 2,110 per MM Btu has been introduced to provide revenue predictability to producers.

Capital assistance of up to Rs 2 crore per tonne per day of installed CBG capacity is also available for eligible greenfield and brownfield projects. A pipeline network for Bio-CNG is being established to improve connectivity and reduce evacuation costs.

Moreover, a Credit Guarantee mechanism has been proposed to support financing for smaller developers and MSMEs, potentially lowering collateral requirements. A CBG Ecosystem Challenge Fund has been established to bolster the industry at the district level, focusing on feedstock mapping, infrastructure, technology adoption, and organic manure value addition.

The scheme also highlights the potential economic benefits for farmers, who can earn income through feedstock aggregation, plant operation, and organic manure production.