Budget kick: Keep these factors in mind while setting up a Bio-CNG plant

Political and institutional support must be gained through a sustained and deliberate communication process in which Bio-CNG’s economic and environmental benefits are conveyed

By Rahul Jain
Published: Friday 03 February 2023
Union Finance Minister allocated Rs 10,000 crore towards setting up 200 compressed bio-gas plants and 300 community and cluster-based plants. Photo: iStock.

Union Finance Minister Nirmala Sitharaman has allocated Rs 10,000 crore towards setting up 200 compressed bio-gas (CBG) plants and 300 community and cluster-based plants.

“In due course, a 5 per cent CBG mandate will be introduced for all organisations marketing natural and biogas,” Sitharaman said in her budget speech on February 1, 2030.

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With the Centre announcing a five per cent CBG mandate and unveiling plans for new plants, the domestic market for CBG is likely to expand.

Bio-CNG, also known as CBG, is an advanced version of biogas, the dung-based energy that fuels cooking solutions in many Indian villages.

CBG has a calorific value equal to compressed natural gas. CBG is recognised as a green fuel globally and is produced using organic feedstock through anaerobic digestion. 

In order to accelerate the Bio-CNG plant installation across India, various sustainable initiatives and policies have been announced in the last five years.

Sustainable Alternative Towards Affordable Transportation (SATAT), the Ministry of New and Renewable Energy’s (MNRE) Waste to Energy program, Swachh Bharat Mission (SBM) and Galvanizing Organic Bio-Agro Resources (GOBAR) – DHAN are the major schemes in this front.

However, the successful deployment and functioning of the CBG plant need careful site selection or consideration of certain parameters, which are listed below.

Feedstock supply

Based on the target feedstock for CBG production, there could be four broad categories: Agricultural waste, animal waste, industrial waste and municipal waste. 

Agricultural products have more uniform quality and fewer impurities. The transportation of agricultural feedstock and stackable energy crops beyond 15 km is not economically viable due to their low energy content per volume and huge quantity. 

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Therefore, a biogas plant should be situated within a 15-kilometre radius of the readily available biomass. Considering safer feedstock sustainability metrics, the overall availability of agricultural residue in this 15 km radius should be four times the actual requirement.

It is advisable to fix at least 80 per cent of the feedstock supply using long-term agreements with either farmer-producer organisations or through contracts with secondary biomass suppliers. The quantity and quality of the supply obligations must be specified.

Ather Mehmood, a Bio-CNG plant investor near Bulandshahr in Uttar Pradesh, told Down To Earth:

Feedstock availability is the most important parameter I considered while setting up a 3.5-tonne capacity Bio-CNG plant. I selected a place where multiple feedstocks like agricultural waste, press mud and cow dung were available in adequate amounts within a 15 km vicinity.

The possibility of cultivating nappier grass in the surrounding area was also explored, Mehmood added.

Feedstock storage

A 50 cubic metre (m3) Bio-CNG production facility generally requires an area of 4,000 square metres (m2 ) to install digestion units, gas storage, purification compartments and other auxiliary machinery.

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Due to the limited availability of agricultural products during and after the harvesting season, extensive and expensive storage logistics are necessary for this waste category. It has been estimated that an additional space of 5,400 m2 is required for storage if the plant is operated using agricultural feedstock such as maise.

This areal footprint keeps on increasing while using less energy-intensive biomass is to be used. Moreover, the digestate generated from the bioreactors necessitates additional land requirements.

Therefore, a careful evaluation and management of storage space are needed. Additionally, it would be advisable to tap the storage facilities of the farmer-producing units.

Site selection

Clear ownership of the land to install the Bio-CNG plant helps in easy financing from banks and other potential investors. It also strengthens the investors’ confidence in the project and removes unnecessary delays that may arise due to agreements from multiple stakeholders.

Road access to the plant is crucial to ensure consistent supply and outflow of biomass. Geographically, industrial sites shall be given priority over green areas for landscape protection.

Soil stability must be ensured to save on additional non-essential investments to improve underground conditions. If the plant is automated and requires 24x7 power, the possibility of availing an independent feeder line from a nearby power substation needs to be explored.

Additionally, the bad smell and noise emissions from the plant cannot be escaped, and thus, a suitable neighbourhood must be selected so as to minimise conflicts in future. 

Product market

Compressed natural gas and organic fertilisers are the two main products that are obtained from the Bio-CNG plant. The marketability of the Bio-CNG must be ensured in the nearby 15-20 km radius by mapping the number of CNG pumps, availability of gas distribution grid, industries requiring CNG as fuel and estimation of CNG retrofitted automobiles.

The total demand in the area should exceed the production capacity so as to ascertain the right price and ensure that the product is sold without a problem. The other prominent product, which is the digestate, needs to be marketed and sold.

Digestate is an excellent soil conditioner which can be upgraded to a high-value organic fertiliser by enriching it with crop-specific nutrients. Large private gardens, greenhouses and organic agricultural lands need to be estimated to analyse the market size of the biogas digestate. 

Analyse competitors  

A minimum distance of 30 km from the other Bio-CNG plant or a similar set-up consuming the same biomass feedstock as input in the region, must be maintained. This will help save on the market conflict and uneven price rise due to competing interests for agriculture feedstock.


There are states that offer incentives to install Bio-CNG plants. Since these states have bioenergy policies in place, the process for regulatory clearances for Bio-CNG plant installation becomes easier and faster.

Uttar Pradesh, for example, has released an ambitious bioenergy policy in 2022 that promises a Rs 75 lakh incentive per tonne of Bio-CNG production.

Furthermore, free public land, electricity tariffs and tax exemptions, subsidy on farm equipment have also been announced. An online bioenergy portal to improve transparency and facilitate single-window clearance has been created as well. 

Institutional Support

Setting up a Bio-CNG plant is closely related to a strong policy. Political and institutional support must be gained through a sustained and deliberate communication process in which the project’s economic and environmental benefits to the region are clearly identified and highlighted.

A joint visit to a CBG facility with central or regional institutes has proved a best practice for imbibing better waste management or clean energy generation practices. 

The fulfilment of these parameters will ensure the viability and long-term sustainability of Bio-CNG plants, which is a significant and defining factor in India’s move towards cleaner energy.

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