Compressed Biogas has a future

Context: Recent government data stated a growth in the number of compressed biogas (CBG) plants set up in India- from only 19 functional plants in 2020 to 125 currently in 2024.

Major Highlights: 

• In October 2018, the Union government launched the ‘Sustainable Alternative Towards Affordable Transportation’ (SATAT) initiative. It aimed for 5000 CBG plants with a total output of 15 million tonnes a year by 2023-24.
• While the government release mentions 125 plants, the SATAT portal says only 77 plants have been commissioned (target 5000 plants), and only 17,801 tonnes of gas was sold in 2024-25.

Background:

• To promote clean energy transition, the government has set a goal of reaching up to 15% of energy supply from Natural Gas from the present level of about 6%.
  • Only 54% of CO2 is emitted in producing electricity from Natural Gas as compared to what is emitted in producing the same amount of electricity from coal. 
  • However, there is high import dependence on Natural gas (50% of the total gas consumed is imported). 
• This challenge can be addressed to a large extent by blending domestically produced Compressed Biogas (CBG) with Natural Gas .

What is Biogas?

• Biogas is produced when bio-degradable organic materials/wastes such as cattle-dung, biomass from farms, gardens, kitchens, industry, poultry droppings, night soil and municipals wastes are subjected to a scientific process, called Anaerobic Digestion (A.D.) in a Biogas Plants. 

• Biogas contains about 55-65 % of methane, 35- 44 % of carbon dioxide and traces of other gases, such as Hydrogen Sulphide, Nitrogen, water vapour, Nitrogen, Carbon monoxide and Ammonia.
• The presence of water vapor, H2S, and CO2 make biogas very corrosive and unsuitable to be used as fuel.

• The digested slurry produced from Biogas Plants as a by-product is a better source of nutrient enriched organic manure for use in Agriculture. It not only helps in improving the crop yield but also maintain soil health.

What is Compressed Biogas (CBG)?

• The biogas is purified to remove hydrogen sulfide (H2S), carbon dioxide CO2), water vapor and compressed as Compressed Bio Gas (CBG), which has methane (CH4) content of more than 90%.
• CBG has calorific value and other properties similar to CNG and hence can be utilized as green renewable automotive fuel. Thus it can replace CNG in automotive, industrial and commercial areas, given the abundance biomass availability within the country.
• The most widely used technologies for biogas upgrading are water scrubbing, Pressure Swing Adsorption, membrane, and chemical scrubbing. Of these technologies, water scrubbing and Pressure Swing Adsorption are considered to be most appropriate on a small scale due to low cost and easy maintenance. 

Note- CNG stands for ‘compressed natural gas’. Bio-CNG is a renewable fuel obtained by purifying biogas – in contrast to CNG, a non-renewable source of energy. 

What are the benefits of Compressed Biogas

• Import reduction of natural gas and crude oil.
• Waste management- Utilization of agricultural residue, cattle dung and MSW.
• Providing additional source of revenue to the farmers, increasing rural employment and amelioration of the rural economy.
• Towards self-sufficiency in energy & providing a buffer against energy security concerns and crude/gas price fluctuations.
• A boost towards fulfilment of National commitments in achieving climate change goals.

What are the challenges involved in scaling CBG?

• Funding Issues: The Ministry of Petroleum and Natural Gas has issued multiple letters of intent  to the entrepreneurs to show that the targets under SATAT scheme are met. However, in reality the banks are not extending loans to entrepreneurs for more than one project, despite having multiple letters of intent.
• Feedstock availability: The feedstock for CBG (primarily agricultural residue) is seasonally available and of varying quality. This leads to inconsistency in supply of raw materials.
• High cost of production: CBG plants are typically set up in rural areas (where the feedstock biomass is available) and the gas is produced in low-consumption centres. Due to the lack of nearby demand, the producers have to incur additional costs in storage and transportation of CGB. Preliminary processes like collection, transportation, and segregation of raw material also increase operational complexity. 
• Uncertain price realisation: Given the uncertainty in offtake (demand), the surplus gas is either flared or sold in the local market at unpredictable prices. E.g., In the SATAT scheme, oil marketing firms provide prices for transportation CBG only up to 25 km, leaving producers to bear additional costs.
• Lack of supporting infrastructure: Lack of infrastructure to inject CBG into natural gas pipelines for transportation and distribution, hinders the scalability of CBG. 
• Lack of skilled workforce: The production process requires skilled technicians, but the shortage of trained manpower exists. 
• Standardisation issues: No specific standards exist in India for installation, operation, and maintenance of CBG plants.
• Lack of incentives: For E.g., Currently, there is no mechanism for trading, purchasing, and monitoring of green attributes of CBG, such as carbon credits or premiums. Owing to which, the CBG scheme has not been able to encourage investors/ entrepreneurs to establish CBG plants.
• Low returns on Investments: CBG plants have a very low internal rate of return and that the pricing of gas is not remunerative to the marketing companies. The CBG prices are linked to natural gas prices (at 20 per cent discount) which further impacts profitability. 
• Funding Issues: The Ministry of Petroleum and Natural Gas has issued multiple letters of intent  to the entrepreneurs to show that the targets under SATAT scheme are met. However, in reality the banks are not extending loans to entrepreneurs for more than one project, despite having multiple letters of intent.

What are the steps taken by Government in this regard?

• National Policy on Biofuels 2018 emphasizes on promotion of advanced Biofuels including CBG. 
• Galvanizing Organic Bio-Agro Resources Dhan (GOBAR-DHAN) scheme to convert cattle dung and solid waste in farms to Bio-CNG (CBG) and compost. GOBAR-DHAN scheme proposes to cover 700 projects across the country.
• Central Financial Assistance (CFA) for Bio-CNG has been notified by Ministry of New and Renewable Energy. Financial assistance under the program is available for Biogas generation, Bio CNG generation, Power generation from MSW, Biomass Gasifier etc.
• SATAT Initiative: An initiative of Ministry of Petroleum and Natural Gas that promotes entrepreneurs to set up Compressed Biogas plants, produce and supply CBG to Oil Marketing Companies for sale as automotive and industrial fuels.