Policy enablers needed to strengthen India’s Bio-CNG sector

Compressed biogas, or Bio-CNG, is likely to play a crucial role in promoting India’s transition to a sustainable energy ecosystem. Bio-CNG is a green renewable automobile fuel with calorific value and other qualities similar to compressed natural gas (CNG).

The Bio-CNG potential in India is estimated at 62 million metric tonnes (MMT) per annum, of which the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme aims to tap 15 MMT.

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The scheme plans to achieve this by installing 5,000 Bio-CNG plants across the country by 2023-24. 

The government of India has created an enabling ecosystem to promote Bio-CNG in the country by introducing various national-level programmes. But the sector needs much more attention and policy enablers. 

The five most crucial challenges and tentative policy frameworks are listed below:

Sustainable financing

The setting up and maintenance of a Bio-CNG plant involves a huge capital investment.

Tax reforms with the complete exemption of Goods and Service Tax and customs duty on plant equipment and machinery must be implemented to provide impetus to the Bio-CNG industry.

A sum of Rs 600 crore has been sanctioned for five years under the ‘Waste to Energy Programme’, released by the Union Ministry of New and Renewable Energy.

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The scheme aims to incentivise Bio-CNG plants run on urban, industrial and agricultural wastes. This amount is meagre if the envisioned target to install 5,000 large Bio-CNG plants under the SATAT initiative is to be achieved.

Instead, a separate Production Linked Incentive Scheme, focussing on Bio-CNG, needs to be launched. Bio-CNG has been included in the list of priority sector lending by the Reserve Bank of India. Still, attractive interest rates also need to be announced to augment these bioenergy plants.

Moreover, the government needs to motivate industries to channelise their corporate social responsibility funds to support large-scale Bio-CNG projects. Additionally, a formal mechanism to avail carbon credits generated using these Bio-CNG units should be implemented.

Distribution Infrastructure

Currently, oil marketing companies (OMC) procure Bio-CNG from plants on a ‘best endeavour’ basis. This leaves plant owners at a disadvantage if their product is left unsold.

Instead, long-term agreements with guaranteed 100 per cent off-take of Bio-CNG could ensure potential investors about the favourable product market and promise them financial stability.

Furthermore, it could de-risk their investment in technology, installed machinery and maintenance cost.

“Due to low off-take demand by the OMCs, the largest paddy straw-based Bio-CNG plant (33 TPD) in India is currently operating at 5 TPD capacity,” said Ashish Kumar, managing director, Verbio India, a biofuel producer.

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There is a strong need to develop the gas distribution network to mobilise and utilise the Bio-CNG that is produced, he said.

Industry experts believe that the gas distribution network must be built and connected with Bio-CNG plants to supply bio-methane at targeted sites like industries, CNG selling stations and city gas pipelines.

They also feel that a district-wise, cluster-level gas storage infrastructure could be built to store surplus Bio-CNG, which is generated.

CNG tractors should be incentivised and marketed widely to strengthen the market of Bio-CNG plants operating in rural areas. For plants operating in urban areas, running city buses on Bio-CNG is a great way to procure 100 per cent gas and reduce air pollution simultaneously.

One such proven, successful instance is that of Indore city. Here, some 400 buses ply on the Bio-CNG generated from municipal solid waste — by tapping a plant generating 18 metric tonnes of bio-methane daily. 

Market for slurry

The slurry or the digestate obtained after the anaerobic digestion process forms a significant fraction of the by-product.

It primarily consists of inorganic nutrients and substances such as cellulose and lignin. These substances help to improve the soil’s hygroscopicity and permeability while reducing erosion and enhancing the overall agricultural conditions.

India will presumably produce 50 MMTPA of solid organic digestate once the 5,000 Bio-CNG installations are operational.

The Bio-CNG plants across the country will have the capacity to manage at least 3,125,000 acres annually, according to a projected digestate application rate of 16 tonnes per acre.

However, the off-take mechanism of the Bio-CNG digestate is currently not in place. Therefore, public and private sector fertiliser companies must be encouraged to procure this organic digestate from bioenergy plants.

Based on the quality of the digestate, a fair procurement price can be fixed by the government.

“The central government could initiate an umbrella scheme to off-take, upgrade, build and market bio-fertiliser / organic fertiliser obtained from the biogas plant, said AR Shukla, president of the Indian Biogas Association.

It will cater to improving the economics of the Bio-CNG plant and also help in lowering environmental pollution by minimising and / or replacing the use of chemical fertilisers, Shukla added.

Separate ministry for bioenergy 

Currently, there is no single ministry that regulates and deals in the Bio-CNG sector.

The ministries of — new and renewable energy, petroleum and natural gas, chemicals and fertilisers, agriculture and farmers’ welfare, housing and urban affairs; environment, forest and climate change — are all involved in one way or another.

However, inefficient, inter-ministerial delays ultimately trouble those who have invested in bioenergy plants.

Therefore, there is a strong need to set up a new ministry for bioenergy and biofuels — that can act as a single-point regulatory authority and deal with issues ranging from financing to the procurement of end products. 

Biomass supply chain

The biomass supply chain must be well managed to cater to the feedstock demand of Bio-CNG plants.

It involves the collection, processing, logistics and storage of agricultural feedstock in a window of about a month. Tractor, raker and bailer are the three major types of equipment required to uproot agricultural waste from the farms.

There is also an immediate need to develop advanced mechanisms for decentralised biomass management equipment at the village level. 

Alternatively, biomass aggregators and supply chain management companies could be employed through standardised contracts to take care of the biomass value chain. 

Moreover, the machines that collect agricultural feedstock must be efficient and smart. They should be integrated with advanced artificial intelligence sensors to analyse feedstock quality, vehicle tracking and data transfer. 

It is time that these policy enablers are considered and acted upon so that strategies can be developed for immediate, mid-term and long-term action.

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