Compressed Biogas (CBG)- Potential and Its Challenges

According to a report by the Delhi-based think tank Centre for Science and Environment (CSE), Uttar Pradesh holds a remarkable position in India’s renewable energy landscape, with the potential to generate 24% of the nation’s compressed biogas (CBG). 

About Compressed Biogas (CBG)

• Refers: Compressed Biogas (CBG) is a renewable gaseous fuel produced through the anaerobic digestion of organic matter like agricultural residues, animal dung, food waste, and municipal solid waste.
• Production: It requires purification of biogas (to remove impurities like carbon dioxide, hydrogen sulfide, and moisture). 
  • This refined and compressed gas, containing over 90% methane, becomes CBG, boasting properties similar to conventional compressed natural gas (CNG).
• Characteristic Features: Compressed Biogas (CBG) is exactly similar to the commercially available natural gas in its composition and energy potential. 
  • It has high methane content. CBG has calorific value and hence can be utilized as green renewable automotive fuel.
    • Calorific value is the measure of the energy content of a fuel, indicating the net heat released during combustion.
• Various Applications: 
  • Transportation: Compressed Biogas (CBG) can power vehicles like cars, buses, and trucks, contributing to cleaner transportation and reduced emissions in urban areas.
  • Industry: Industrial facilities can utilize CBG to meet their energy demands, replacing fossil fuels and lowering carbon footprint.
    • A carbon footprint is the total amount of greenhouse gases (including carbon dioxide and methane) that are generated by human actions. 
  • Power Generation: CBG can be injected into natural gas pipelines or used for electricity generation, diversifying the energy mix and promoting renewable sources.
  • Cooking and Heating: CBG can be used for cooking and heating in homes and commercial establishments, providing a clean and sustainable alternative to conventional fuels.
• Latest Advancements in Compressed Biogas Technology:
  • Waste Pretreatment: Improved pretreatment methods enhance biogas yield and efficiency from diverse feedstocks.
  • Upgradation Technologies: Novel membrane-based and pressure swing adsorption (PSA) technologies offer efficient and cost-effective biogas purification.
  • Biorefineries: Integrating CBG production with biorefineries unlocks opportunities for producing valuable bio-based products like fertilizers and chemicals.

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Need for Compressed Biogas (CBG)

• Combating Climate Change: Compressed Biogas (CBG) offers a significant reduction in greenhouse gas emissions compared to fossil fuels. By replacing traditional fuels, it helps mitigate climate change and its detrimental effects.
• Waste Management: The use of organic waste for CBG production not only converts waste into valuable fuel but also reduces landfilling and associated environmental pollution.
• Energy Security: CBG offers a domestic source of energy, decreasing dependence on imported fossil fuels and enhancing energy security.
• Economic Opportunity: The CBG sector presents exciting job creation opportunities in areas like plant operation, waste collection, and transportation.

India’s Initiatives for Compressed Biogas (CBG)

• Phased Mandatory Blending: In the 2024 interim budget, India announced the phased mandatory blending of Compressed Biogas (CBG) in CNG (for transportation) and PNG (for domestic purposes), which marks a significant step in India’s journey towards a green gas-based economy.
  • Aim: To make the gas supply chain green and address the growing concerns of environmental degradation and the need for cleaner energy sources. 
  • The government aims to balance the demand-supply equation for clean fuel by incorporating bio-fuels into the energy mix, thus achieving sustainable energy transition.

• Target Enhancement: The Union government has set a goal to increase the proportion of gas in the energy mix to 15% by 2030 from the current 6.5% in order to establish India as a gas-based economy.
• National Policy on Bio-Fuels 2018: It advocates for the advancement of biofuels, including CBG. This policy framework is designed to stimulate investment and innovation in the biofuel sector.
• Sustainable Alternative Towards Affordable Transportation (SATAT) Scheme: It aims to establish 5,000 CBG plants by 2024, targeting 15 million metric tonnes (MMT) of annual production.
  • To boost the utilisation and adoption of CBG and improve the SATAT scheme, in November 2021, the National Biofuel Coordination Committee announced phase-wise compulsory integration of CBG into both CNG for transportation and piped natural gas (PNG) for the domestic segment within the city gas distribution (CGD) sector. 
  • This compressed biogas obligation (CBO) will remain optional until 2024-25 and blending obligations will become mandatory beginning 2025-26. 
  • India announced mandatory biogas blending for domestic use from 2025-26.
    • The compulsory blending obligation will be 1% of total CNG and domestic PNG consumption for FY26, 3% for FY27, and 4% for FY28.
    • As of March 2024, 53 CBG projects have been commissioned under the SATAT. 
• Financial Incentives: The government offers subsidies, grants, and loans to encourage CBG plant establishment and waste-to-wealth creation.
  • In November 2022, the Ministry of New and Renewable Energy notified the National Bioenergy Programme. It offers central financial assistance (CFA) for various components relating to power generation, biogas/bio-CNG generation and briquette/pellet manufacturing, with biomass as one of the major feedstock sources. 
    • It has allocated a budget of Rs 5.64 billion for the period 2023-24 to 2026-27 to facilitate the acquisition of biomass aggregation machinery (BAM). 
  • CBG Certificates: IGX (Indian Gas Exchange) is already working on creating a CBG certificates market, which will create an additional revenue stream for CBG producers. 
  • City Gas Distribution (CGD) Networks: IGX would facilitate trading and help discover prices transparently, thereby helping generate demand and triggering investments in the CBG sector.
    • It is for those who cannot buy CBG since it’s not available can meet their obligations by buying these certificates.
  • RBI has also notified that Loans to start-ups (up to ₹50 crore) for setting up CBG plants are included under priority sector lending. 
  • As per the Business Plan of IREDA for FY 22 to FY 26, financial assistance to CBG is part of the disbursement targets.
• Regulatory Support: Streamlined licensing processes and favorable policies like blending mandates for CBG in CNG further boost growth.
  • The Ministry of Road Transport and Highways in 2015 has officially sanctioned the use of bio-compressed natural gas (bio-CNG) for vehicles.
  • The amended Energy Conservation Act empowers the Centre to mandate consumption of a particular non-fossil fuel in laid down proportion.

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Significance of Compressed Biogas (CBG)

• Reduced Import Dependency: By substituting natural gas and crude oil with Compressed Biogas (CBG), India aims to alleviate its heavy import bills and enhance energy security.
  • Western UP, particularly Muzaffarnagar, Meerut, Saharanpur, Bijnor, Bulandshahar and Aligarh, is rich in feedstock availability and houses the majority of the state’s functional and upcoming CBG plants.
• Environmental Impact: The conversion of agricultural residue and municipal solid waste (MSW) into CBG will significantly mitigate emissions, addressing national climate change commitments.
• Economic and Social Advantages: The CBG sector promises to bolster the rural economy through additional revenue streams for farmers and creating employment opportunities, thereby contributing to the Swachh Bharat Mission by promoting responsible waste management.
• Stubble Burning Solution: With only 25% of crop residue currently being utilized, CBG production offers a sustainable alternative to stubble burning, a major air quality concern.
• Others: The future of CBG looks bright, fueled by growing environmental concerns, supportive government policies, and technological advancements. 
  • With continued research and development, CBG holds the potential to become a mainstream fuel, contributing significantly to a cleaner and more sustainable future.
  • India’s natural gas production stands at 34,000 million standard cubic metres of gas (MMSCM), while its consumption is at 64,000 MMSCM, resulting in a significant deficit of 30,000 MMSCM. This deficit, accounting for 47% of the total consumption, is met through imports. CBG can help plug this gap.

Challenges with Compressed Biogas (CBG)

• Limited offtake of Bioslurry: Bioslurry, also known as fermented organic manure, is a by-product of Compressed Biogas (CBG) production, and is often viewed as a disposal problem rather than a revenue source.
  • Further, given the uncertainty in offtake, either the surplus gas has to be flared or sold in the local market with price realisation uncertainty.
  • For example, in the SATAT scheme, oil marketing firms offer a price which includes transportation of CBG in cascades only upto 25 km and in case of low off take, there is no commitment to pay.
• Partial gas Offtake: The inconsistent purchasing of gas by oil and gas marketing companies leaves many plants operating below capacity. The absence of nearby CNG pipelines exacerbates this issue. 
  • For smaller plants (below 5 tonnes per day), gas transport through cascades is viable, but larger plants require direct pipeline access for optimal operation. 
• Seasonal Variability: CBG production depends upon seasonally available raw material and varying quality and uncertain supply chains are areas of concern as it is produced in remote areas closer to sources of raw material. 
  • Due to the seasonal availability of raw material, there are additional costs involved in storing and transporting it to either a petrol pump or to an injection point on the gas pipeline network.
• Others: 
  • Infrastructure Gap: Even in the fermented organic manure market, the by-product of Compressed Biogas (CBG) production has not matured. 
    • The CBG programme envisaged simultaneous development of linkages to the natural gas pipeline network for injection of CBG in the pipeline for blending and transport. This has not progressed.
  • Financing Difficulties: Banks are hesitant to finance CBG projects due to perceived risks and low margins, requiring high collateral and offering interest rates starting at 11.5%. 
  • Operational Inefficiencies: Such as gas leakage and suboptimal performance, stem from a shortage of trained personnel knowledgeable in biogas systems and operations. 
  • Feedstock Availability: Ensuring consistent and reliable feedstock supply across geographically diverse regions is crucial.

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Way Forward

• Diversification of Feedstock Sources: There is a need to diversify feedstock sources to include liquid effluents like spent wash from distilleries and industrial discharges, which can enhance plant viability and sustainability.
• Inclusive Approach: Emphasis should be on involving farmers as shareholders to ensure active participation and profit-sharing in bioenergy projects. 
  • Strategic planning and collaboration among stakeholders are required to overcome the challenges and unlock the full potential of Compressed Biogas (CBG). 
  • Also, international collaborations like the Global Biogas Alliance are promoting best practices and accelerating CBG adoption worldwide.
• Favouring Policies and Regulations: To achieve its potential, there is a need to provide subsidies, land for lease and other incentives. 
  • Among Indian states, UP has taken the lead in this sector with its ambitious bioenergy policy, allocating Rs 750 crore (2022-27) for CBG, while following the above mentioned incentives. 
• Ease Financial Hurdles: A government-backed guarantee programme is required to ease these financing hurdles and recommended the Reserve Bank of India oversee CBG project applications through a centralised portal to ensure transparency and efficiency. 
• Compressed Biogas (CBG) Market Development: The Oil Ministry’s report of the ‘Energy Transition Advisory Committee’ has identified several drivers for CBG Market Development such as CBG blending mandates for all CGD entities marketing CNG and PNG.
  • The report suggests trading CBG’s green attributes and the creation of an extra revenue stream for biogas producers by monetising these attributes. 
  • This strategy involves creating certificates that hold a premium value over standard natural gas.
• Compressed Biogas Certification Scheme: Currently, there is no system for trading, purchasing, and monitoring of green attributes of CBG. To address this gap, the CBG mechanism needs to be formulated. 
  • This scheme entails creating and managing a registry for CBG certificates (CBGCs). The gas is traded and transported similar to regular gas.
• Others: 
  • Technology Adoption: While advances are happening, wider adoption of cost-effective and efficient technologies is needed.
  • Infrastructure Progress: Building robust infrastructure for CBG transportation and distribution is essential.
  • Maintain Sustainability: Ensuring sustainable feedstock sourcing and minimizing land-use change are crucial for CBG’s long-term sustainability.
  • Public Awareness: Raising awareness about the benefits of CBG can encourage wider acceptance and adoption of this clean fuel.
  • Organisation of Events: To discuss the challenges faced by CBG producers, share successful practices, highlight opportunities for start-ups, raise awareness among district-level bioenergy committees, and educate farmer-producer bodies on the potential of bioenergy.
  • Establishing training centres for CBG operations.
  • Focus on establishing a coordinated institutional framework to facilitate research and development (R&D) in the CBG sector.

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Conclusion

As we move towards a more sustainable future, CBG presents a viable and promising solution. By capitalizing on its potential and addressing existing challenges, the World can pave the way for a cleaner and greener world powered by this renewable fuel.