India’s air pollution regulator has issued show-cause notices to six coal-fired power plants near Delhi for failing to meet mandatory biomass co-firing targets.
The proposed environmental compensation of ₹61.85 crore is among the largest enforcement actions under the 2023 biomass co-firing rules.
Data shows nearly 80 per cent of biomass used by thermal power plants nationally is consumed in the Delhi NCR, reflecting stronger enforcement rather than higher availability.
While higher biomass costs are allowed as a pass-through in power tariffs, non-compliance persists, raising questions about a pay-and-pollute approach.
The lack of clarity on how penalty funds will be used weakens the environmental credibility of the co-firing regime beyond the NCR.
The Commission for Air Quality Management (CAQM) in National Capital Region (NCR) and Adjoining Areas has issued show-cause notices to six coal-based thermal power plants (TPPs) located within a 300 km radius of Delhi for failing to meet mandatory biomass co-firing requirements. The notices, issued on December 23, 2025, propose environmental compensation (EC) amounting to Rs 61.85 crore, making this one of the most significant enforcement actions under the biomass co-firing regime so far.
The action follows a review of compliance data for 2024-25 submitted by the Union Ministry of Power. CAQM found that the plants failed to meet even the minimum biomass usage required to avoid penalties under the Environment (Utilisation of Crop Residue by Thermal Power Plants) Rules, 2023. These rules mandate that all coal-based TPPs in NCR use at least 5 per cent biomass along with coal. For 2024-25, plants using less than 3 per cent biomass attract environmental compensation.
These plants are located in Punjab, Haryana and Uttar Pradesh — states whose power sector emissions directly influence air quality in Delhi-NCR, particularly during winter pollution episodes.
A recent assessment by the Centre for Science and Environment (CSE) highlighted why CAQM’s enforcement stands out nationally. During 2024-25, thermal power plants across India consumed over 1.62 million tonnes of biomass. Nearly 80 per cent of this — about 1.3 million tonnes — was consumed by plants in the Delhi-NCR region.
This concentration is not due to higher biomass availability in NCR states. Several non-NCR states, including Andhra Pradesh, Bihar, Karnataka and Rajasthan, generate large volumes of surplus crop residue but reported little or no biomass use in power plants during the same period. CSE’s analysis shows that non-compliance remains widespread across the country, with NCR being the exception rather than the norm. The difference lies in institutional oversight: NCR plants operate under CAQM’s statutory directions, periodic reviews and penalty-backed enforcement.
Biomass-based co-firing is often viewed as less lucrative than coal due to supply-chain issues and price volatility. However, CSE analysis suggested this argument warrants closer scrutiny. In the NCR, benchmark prices for biomass pellets range from Rs 2.32 to Rs 2.58 per 1,000 kcal. While this exceeds the cost of domestic coal, the regulatory environment is designed to bridge this financial gap, recognising the higher fuel costs involved.
The additional cost of biomass co-firing is allowed as a pass-through in electricity tariffs. Plants under regulated tariffs can recover it through energy charges, while plants operating under competitive bidding can claim it under change-in-law provisions.
The framework therefore assumes biomass will cost more than coal and explicitly permits recovery of that cost. Cost alone does not explain persistent non-compliance, particularly in the NCR where tariff recovery is clearly allowed.
The 2023 rules introduce a graded environmental compensation framework, with penalties increasing as biomass usage declines and rates rising further from 2025-26 onwards. This effectively builds a system where penalties are an integral part of the compliance architecture, rather than an exceptional response.
However, the notification detailing the calculation of environmental compensation is largely silent on a critical question: what happens to the money collected. There is no explicit provision outlining whether environmental compensation (EC) funds will be earmarked for air pollution mitigation, biomass supply-chain strengthening, support to pellet manufacturers, or stubble management interventions. In the absence of such clarity, environmental compensation risks functioning primarily as a fiscal instrument rather than a targeted environmental tool.
This lack of transparency becomes more significant as penalty amounts scale up. If non-compliance continues and EC collections rise, the absence of a clear utilisation framework weakens the environmental rationale of the mechanism.
CAQM’s jurisdiction is limited to Delhi-NCR and adjoining areas. Outside this region, enforcement of biomass co-firing norms rests with other regulatory authorities, where similar institutional focus and penalty-backed oversight are largely absent. CSE’s study indicates that this has resulted in patchy and inconsistent compliance across the rest of the country, despite adequate biomass availability and a uniform national policy mandate.
The contrast highlights a structural gap. While NCR operates under a dedicated airshed-based regulator with enforcement powers, the rest of the country lacks a comparable mechanism to ensure implementation. As a result, biomass co-firing remains concentrated in one region, even though the problem of stubble burning and coal-based pollution is far wider.
CAQM’s current action is not final. These are show-cause notices, and the concerned power plants have been asked to submit explanations. It is not yet clear whether the proposed environmental compensation will be imposed in full, revised, or accompanied by stronger enforcement directions under the CAQM Act.
What is clear is that the policy framework now normalises penalties as part of compliance. Whether this leads to behavioural change or entrenches a pay-and-pollute approach will depend on how enforcement evolves — both within NCR and beyond it. For Delhi’s air quality, and for the credibility of biomass co-firing as a national pollution control measure, that distinction will matter.