Indian Biogas Sector Gets Boost with Increased Compressed Biogas Price

The government of India has also raised the price of Compressed Biogas (CBG) procurement from ₹1380 to ₹1478 per MMBTU. The Indian Biogas Association (IBA) has welcomed this as a step in the right direction for the financial sustainability of the sector. The hike in prices will surely encourage further CBG developers to invest and go for more scale-up, making India's bioenergy market stronger.

This decision, supported by the Ministry of Petroleum and Natural Gas (MoPNG) and the Oil Marketing Companies like GAIL, is a culmination of constant interaction with the industry stakeholders and the policymakers. This is one of the larger efforts towards encouraging growth of renewable energy in the nation. Although the new price places CBG on the same level as pre-tax CNG prices as the market anticipated, they are upset about the fact that the hike is not so significant that it will be visible in operational expenses and can be spent on the long-term plans. IBA has also complained that while an increase in price is a welcome development, it still falls short of requirements to allay some of the economic issues for CBG developers entirely.

The organization believes that yet another hike in price will provide more investment possibilities, especially from micro, small, and medium enterprises (MSMEs), which are crucial rural bioenergy drivers of growth. Such a move can be game-changer in terms of improving investment returns and mobilizing institutional financing, including foreign direct investment (FDI), into the sector. Gradual increase in the cost of procurement is considered essential to making CBG a sustainable fuel option.

The IBA believes that compensating CBG a premium, respecting its cleaner track record compared to fossil fuels, is imperative. It also advocates that a Green Certification Framework and a cap-and-trade be put into effect. Such an approach would require companies that have larger carbon profiles to pay for offsetting their emissions by buying green credits, which could provide a source of income for clean energy providers. The extra expenditure is for the government's initiative to encourage the use of clean fuel, particularly in rural areas where decentralized CBG will be able to directly spur local economies. Rural bioenergy plants can also improve the process of waste management by means of converting waste into a usable fuel source, enhancing the circular economy of the country and reducing the dependence on foreign fuels.

The IBA, in recent months, has been energetically providing recommendations to policymakers in an attempt to overcome certain operational bottlenecks that are threatening the viability of CBG plants. These include financing issues, scalability of projects, as well as regulation. The association has remained steadfast in pursuing government involvement in an attempt to develop a more conducive environment for bioenergy entrepreneurs.

Among the most spotlighted areas by the IBA is the use of CBG towards the clean mobility target of India. By scaling up production of CBG, India can reduce the transport sector's carbon footprint and enhance energy security. The sector can also contribute towards other nationwide objectives like enhanced utilization of waste and rural and semi-urban employment generation.

Keeping in view these overarching objectives, the IBA has also noted that bioenergy producers need to be given firm policy and incentive support. These include easier availability of credit, quick regulatory approvals, and guaranteed off-take arrangements for the produced gas. The association is of the opinion that efforts through these channels would bring about the rapid growth of the bioenergy industry and would contribute substantially towards India's energy transformation objectives.

The Indian Biogas Association has been a major driving force in promoting bioenergy since 2011 when it was formed and re-launched again in 2015. It continues to remain actively engaged with global associations such as the German Biogas Association as an effort towards further promoting best practice in sustainable waste management, along with biogas technology. The IBA endeavors to build a favorable policy environment along with promoting innovation and investments throughout the bioenergy value chain.

Apart from congratulating the price hike, the IBA has also praised the initiative of event organizers like Informa Markets, whose recent RenewX expo was a forum for discussion and cooperation on green energy. The organization is also busy engaging with public as well as private stakeholders to increase India's bioenergy footprint.

The rise in new prices is vindication of the Indian government's policy to promote cleaner fuels and economic growth in villages through decentralised energy systems. But long-run success will lie in sustained reforms and finance able to make the sector attractive for foreign and local investors alike.

With India going towards a greener energy future, the CBG sector can be the cornerstones of India's renewable energy policy. Policy stability, financial viability, and a sound regulatory framework will be crucial to such a role. The Indian Biogas Association remains a constant participant in the process with a voice advocating for policies which can propel India's bioenergy potential and help India realize its clean energy dreams.

Source/Credits:
Press Release – Indian Biogas Association, May 19, 2025