A recent press release from the government stated that there has been an “impressive year-on-year growth” in the number of compressed biogas (CBG) plants set up in India, “from only 19 functional plants in 2020 to 125 currently”.

Well, here is something that is not so impressive: In October 2018, when the government launched the ‘Sustainable Alternative Towards Affordable Transportation’ (SATAT) initiative, it said it aimed for 5,000 CBG plants, with total output of 15 million tonnes a year (equivalent to 54 million MMSCMD, or metric standard cubic metres per day, of natural gas), by 2023-24. 

While the government release mentions 125 plants, the SATAT portal says 77 plants have been commissioned, and 17,801 tonnes of gas was sold in 2024-25 — a far cry from 15 million tonnes.

The initiative has faced several challenges such as unremunerative pricing and lack of infrastructure to move the gas. 

However, according to industry sources, these issues have largely been resolved and things are looking better, even though the trajectory is not yet good enough for the target. 

Deceptive practice 

That the CBG scheme has not taken off as expected was noted, back in December 2022, by a report of the Standing Committee on Petroleum and Natural Gas. It observed that the scheme “has not been able to encourage investors/ entrepreneurs to establish CBG plants”.

It also flagged several hurdles in the scheme’s implementation, including the multiple letters of intent that the Ministry of Petroleum and Natural Gas issued “to show that targets under the scheme will be met”. Without mincing words, the committee said it “found the practice to be deceptive on the part of MoPNG and oil and gas marketing companies”. Moreover, when entrepreneurs approached banks for loans towards setting up CBG plants, “the banks are not extending loans for more than one project to entrepreneurs with multiple letters of intent”.

It also noted that “CBG plants have a very low internal rate of return” and that the pricing of gas “needs to be remunerative to the marketing companies”.

Improved scenario

Mohit Gupta, COO, GPS Renewables, however insists that things are looking better. Reliance, Adani and several other big players have announced projects. Also, the median size of projects has gone up. When the SATAT scheme was launched, it was assumed that each plant’s capacity would be 5 tonnes a day, but most plants are now planned for 15-20 tpd, some even 40 tpd. Based on the announcements, Gupta reckons that, in three years, India could have at least 500 plants (it takes roughly ₹100 crore to set up one plant). In terms of capacity, these would be equivalent to 2,000 plants of the originally envisaged size. But that is still far short of the targeted 5,000. 

A critical issue that remains unaddressed, says Gupta, whose company has announced it would set up eight CBG plants in a joint venture with Oil India Ltd, is the regulation for injecting the gas into pipelines. Today, you can sell the gas only within a certain geographical limit. Since CBG plants are typically set up in rural areas, where the feedstock biomass is available, the gas is produced in low-consumption centres. To supply to high-consumption centres, such as cities, it needs to be transported by road in cylinders. If CBG companies are allowed to transport the gas via pipeline, its reach and business prospects would improve. The government is said to be looking into this. 

Today, CBG prices are linked to natural gas prices (at 20 per cent discount). The Indian Biogas Association has called for a ₹10-15 per kg premium to CNG, to recognise the green credentials of CBG.