While the Union Government’s latest push for Compressed Biogas (CBG) provides a more stable framework for offtake, industry observers and senior government officials say the next major imperative is to establish an efficient supply chain for procuring, storing and managing feedstock. This will be critical to ensuring both the viability of CBG plants and the quality of their output.

Press mud, agricultural residues such as paddy and wheat straw, and animal manure are among the most commonly used feedstocks for CBG production. However, each has its own logistical challenges, particularly because of seasonal availability, transportation requirements and storage constraints.

With the aim of accelerating the growth of CBG in India, the Union Cabinet on August 9 approved a revamped GOBARdhan (Galvanising Organic Bio-Agro Resources Dhan) scheme with an outlay of ₹23,731 crore. The scheme, which will remain in place until 2036, seeks to increase CBG production nearly tenfold.

Speaking to The Hindu, Gaurav Kedia, Chairman of the Indian Biogas Association (IBA), emphasised that the type of feedstock and the proximity of a CBG plant to its source are crucial for ensuring a consistent supply. He also cautioned against long-distance transportation that could undermine the environmental benefits of CBG by increasing fossil-fuel consumption.

“Supply chain feasibility becomes important. We see [within] 25-km radius as a viable option,” Mr. Kedia said.

A senior government official similarly stressed that the quality of feedstock is critical, as it directly influences the quality of CBG produced and the long-term sustainability of a plant.

Press mud and cattle dung, according to Mr. Kedia, need to be sourced close to the plant because of their high moisture content and perishable nature. Paddy straw, by comparison, can be transported over longer distances, but it must first be baled and stored appropriately.

Cattle dung presents a further challenge because it is typically dispersed across a wide geographical area. Collecting and transporting sufficiently large quantities may therefore prove economically unviable. Press mud and paddy straw also pose seasonal supply challenges.

Press mud is the solid residue left after sugarcane processing. Since sugar mills generally operate for only four to five months a year, the material must be stored temporarily and transported to CBG plants in a timely manner.

Paddy straw, meanwhile, is available mainly during the harvesting periods of Kharif and Rabi crops. Collection must be completed within a short window—typically around 15 days—before farmers prepare their fields for the next crop. This makes rapid collection and field clearance essential.

Storage creates another set of challenges. Large quantities of agricultural residue must be stored in a manner that prevents fire hazards, particularly during the summer months. During the monsoon, the feedstock must also be protected from moisture, which can affect its quality and suitability for processing.

Another important component of the supply chain is farmer outreach. Mr. Kedia said an aggregator-based model could help bridge the gap between farmers and CBG plants.

“The prescribed model is to have an aggregator to supply the feedstock. Farmers may not want to enter into a legally binding contract like industries for social reasons, and this is where an aggregator pitches in to facilitate the outreach and supply [CBG plants] the feedstock,” he stated.

The senior government official said aggregators could also provide farmers with bio-slurry generated during the CBG production process, which can be used as an organic fertiliser.

Depending on the technology used, gas yield from cow dung is approximately 6%, while paddy straw and other agricultural residues can yield around 10% or more, they said, adding the resulting bio-slurry can subsequently be returned to farmers for use as an organic fertiliser, creating an additional link between CBG production and agricultural activity.

Industry observers and officials also recommend that CBG plants be designed to process multiple feedstocks rather than depend on a single source.

A diversified feedstock mix could make plants more resilient to seasonal fluctuations while improving their bargaining power in procurement, according to Mr Kedia.

The senior government official suggested that a plant having a complementarity of press mud and sugarcane could be an ideal set-up.

Published – August 22, 2026 07:38 pm IST

Tensions in West Asia continue to keep global energy markets on edge. India imports nearly 85% of its crude oil needs, much of it from West Asia, and supplies faced disruptions due to the Israel-U.S.-Iran war. While the government has diversified its crude oil suppliers, around 90% of India’s LPG imports still transit through the Strait of Hormuz, making any instability in the region a potential risk to India’s energy security.

Over the years, India has pushed several initiatives to promote alternate fuels like compressed biogas to reduce dependence on imported fuel, tackle agricultural waste and support rural incomes. But despite ambitious targets and policy support, progress has remained limited.

The search for an alternative fuel

Biogas is a mixture of methane, CO2 and small quantities of other gases produced by anaerobic digestion of organic matter. It can be processed and compressed to get Compressed Biogas (CBG). It is chemically identical to CNG; renewable, carbon-neutral and can be produced from waste. It can be used directly to produce electricity, heating or as an energy source for cooking.

India has also been trying to blend biogas into its gas supply for at least a decade. The push gathered pace in 2018, when the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative was launched with a target of establishing 5,000 plants by 2023. Only 132 are completed as of June 3, 2026.

The Centre launched the GOBARdhan (Galvanising Organic Bio-Agro Resources Dhan) scheme to increase CBG production. Under this ‘waste to wealth’ programme, the government offered grants of up to ₹50 lakh per district for community biogas plants. ₹564 crore was earmarked for the purchase of biomass collection machinery, while ₹994 crore was allocated to build pipelines connecting biogas plants directly to the gas grid.

However, progress on the ground has remained limited. The lack of infrastructure, poor private investment, difficulties in accessing formal credit and high upfront cost of technologies have stalled progress. Financial support from the government can make biogas projects economically viable. Other incentives, like accelerated depreciation and tax holidays, would also help attract private players.

Impact on cultivation patterns

The development of biogas has been uneven across the world, with Europe, China and the United States accounting for 90% of global production.

Germany is one of the largest producers in Europe, along with France, Denmark and the U.K. The fillip for the sector came in 2000, when Germany introduced the Renewable Energy Sources Act to incentivise production. Over the years, it introduced schemes to guarantee income to producers, gave bonuses to help operators increase their income and encouraged small-scale biogas plants. However, the country’s push for biogas triggered a “corn mania”, with maize cultivation rising sharply because it was highly profitable for farmers. Maize slowly started to replace other food crops. Over a decade later, the government was forced to step in and control this by introducing a cap on the use of maize in biogas plants.

This danger hits close to home. The Economic Survey 2026 noted that maize cultivation in India has increased sharply, potentially affecting crop diversity and food security. It noted that while the national maize yield increased from approximately 2.56 tonnes per hectare in FY16 to roughly 3.78 tonnes per hectare by FY25, the yields for soybeans, sunflower, rapeseed, peanuts and millets, among other crops, have either stagnated or declined.

While this trend could be attributed to technological advancements, ethanol pricing can be an important factor.

The government fixes administered per-litre ethanol prices based on the feedstock used. The price for maize-based ethanol is higher, while the price for rice-based ethanol is lower. The price for molasses-based ethanol is fixed between the two. Between FY22 and FY25, the administered price of maize-based ethanol grew at a compound annual growth rate (CAGR) of 11.7%, making maize more lucrative for farmers.

While maize’s area under cultivation and production jumped between FY22 and FY25, pulses output declined, while oilseeds and other cereals registered only modest growth. This shift is visible in States like Maharashtra and Karnataka, where maize is competing with pulses, oilseeds, soyabean, millets and cotton for land, water and labour.

India imports large quantities of pulses and edible oils to meet demand. Yet, instead of focusing on increasing production, the government’s policy might inadvertently disincentivise farmers from cultivating them. Over time, this could increase India’s dependence on imports and expose domestic food prices to greater volatility during supply shocks.

Denmark, which is targeting to use only biomethane in its gas system by 2030, offers a solution. The government discouraged the use of crops as feedstock, and the primary source is livestock manure and agricultural waste.

Government’s action plan

In 2023, the National Biofuels Coordination Committee approved a mandatory blending obligation. Gas distributors have been mandated to blend CBG into their supply from FY26. It would start at 1% and rise to 5% by FY29. In her Budget speech in February 2024, Finance Minister Nirmala Sitharaman said the phased blending of CBG in CNG for transport and Piped Natural Gas for domestic purposes “will be mandated.”

To meet these targets, the government is ramping up the establishment of plants. In August 2025, while responding to a query in the Lok Sabha, Minister of State Shripad Yesso Naik said, “A total 36 number of medium size biogas plants have been installed under the Biogas Programme of MNRE during the last three years.”

The question is whether the government can replicate India’s ethanol blending programme with CBG. In 2014, just 1.5% of petrol was blended with ethanol. By December 2025, it had hit 20%, five years ahead of the original 2030 target.

Published – July 14, 2026 07:00 am IST