Blending 20 per cent compressed biogas (CBG) with compressed natural gas (CNG) could make the overall CNG fuel carbon neutral on a life cycle basis, according to a new study, which argues that India’s transport transition will require different fuels and technologies for different vehicle segments rather than a single replacement for petrol and diesel.
The study, Study on Comparative Assessment of Vehicular Fuels in India’s Energy Transition: A Multi-dimensional Approach by The Energy and Resources Institute (TERI), assesses petrol, diesel, CNG, electricity and liquefied natural gas (LNG) across two-wheelers, three-wheelers, private and commercial four-wheelers, light commercial vehicles (LCVs) and heavy-duty vehicles (HDVs) under current and 2030, 2040 and 2050 scenarios.
TERI’s analysis says no fuel consistently scores highest across technical, environmental, economic, social and geopolitical parameters. It therefore recommends a phased transition in which the relative role of each technology changes according to vehicle type, application, infrastructure availability, operating conditions and the stage of the transition.
The study found that CNG currently offers a relatively balanced option across several passenger and commercial applications, while electric vehicles (EVs) have an economic advantage in high utilisation of two and three-wheelers. CNG has low life cycle costs for passenger cars, taxis, buses and heavy-duty trucks, while LNG is identified as an economically attractive alternative to diesel for long-haul freight.
The report’s assessment of CBG is significant because it sees the existing CNG network as a platform that can increasingly carry domestically produced biomethane. Public EV charging stations increased from about 1,760 in 2021 to more than 39,000 in 2025, while CNG stations increased from about 1,315 in March 2018 to more than 8,600 in March 2026, according to the report.
The report says India’s GOBARdhan National Circular Bioenergy Scheme, approved in 2026 with an outlay of Rs 23,731 crore, provides for assured CBG offtake through city gas distribution (CGD) entities, pipeline connectivity and capital assistance. It also provides for a CBG obligation of 3 per cent in 2026-27, 4 per cent in 2027-28 and 5 per cent from 2028-29 for the CNG transport and piped natural gas domestic segments.
The study estimates India’s total prognosticated CBG potential at about 70 million tonnes, compared with natural gas consumption of around 53 million tonnes. It says CBG could therefore become an increasingly important component of the natural gas consumed in India and help reduce the carbon intensity of the gas ecosystem.
Gaurav Kedia, Chairman, Indian Biogas Association, said the potential of CBG had been highlighted by both TERI and NITI Aayog. “Both TERI and NITI Aayog have highlighted the enormous potential of CBG. The fact that just 20 per cent CBG blending with CNG can make the entire CNG vehicle stock carbon-neutral on a life-cycle basis shows what this pathway can achieve. CBG addresses several priorities together: it is carbon negative, offers greater energy security and a stronger rural economy. That makes it a truly Atmanirbhar fuel for India.”
According to Subhash Kumar, Director General, Association of CGD Entities, and former Chairman and Managing Director and Director Finance, Oil and Natural Gas Corporation (ONGC), increasing CBG blending would progressively improve the environmental credentials of natural gas-based mobility.
“CNG has cleaner credentials and with increasing blending of CBG, the natural gas pathway will become progressively cleaner,” he said. “In today’s world witnessing global turbulence, integration of CBG in the national fuel system will not only result in an ever-cleaner NG/CBG based mobility ecosystem but it will also strengthen the national economy and will add people to the income of rural areas,” Kumar said.
The environmental case for CNG, however, comes against a more complicated price and supply backdrop.
The availability of natural gas was currently receiving greater attention than pricing amid global supply disruptions, A K Tiwari, member of the Petroleum and Natural Gas Regulatory Board (PNGRB), told Down To Earth on the sidelines of the report launch, “because there is less domestic gas, we have to take gas from outside and mix it with LNG. That is the area where the cost varies. So, there can’t be a uniform price.”
The government was working on taxation and other related issues affecting CNG, he said, adding that in the current crisis, ensuring availability was being prioritised over pricing.
“We are paying more attention to availability in place of pricing,” Tiwari said, adding that once external supply conditions stabilise, costs could come down and the benefit could eventually be passed on to consumers.
Tiwari linked the longer-term affordability of CNG to greater domestic production of CBG. “That’s why we are targeting domestic CBG blending, maximum CBG production, maximum CBG incentivisation, so that ultimately the price is controlled,” he said.
The comments come as the TERI study itself argues for reducing exposure to global energy supply chains by expanding domestically produced fuels such as CBG while strengthening the agrarian and rural economy.
Scaling up CBG, however, will depend not only on production but also on collecting feedstock and connecting plants to the gas distribution network.
Tiwari said feedstock collection and incentives for those involved in collection were among the areas that needed attention. If 5,000 CBG plants operate at about 50 per cent capacity, they could collectively produce around 30 to 40 million cubic metres of gas, although he described this as a rough estimate that could vary depending on yield.
On distribution, he said CGD companies had a mandate to connect CBG plants in their geographical areas to the nearest point in the network. Models for incentivising pipeline construction were being discussed. Where CBG could not be consumed by the nearest CNG station, the gas could potentially be fed back into the main pipeline network.
The TERI study does not position CNG as a universal alternative to electrification. It finds that EVs have the lowest ownership costs among two-wheelers and three-wheelers under current market conditions, largely because of lower operating costs and high utilisation. But it also identifies inadequate charging infrastructure, payload limitations, technology maturity, battery related environmental impacts and dependence on imported components and critical minerals as constraints in some segments.
Its economic assessment shows that the advantage of EVs becomes less pronounced as vehicle size increases. For heavy-duty vehicles, high capital and financing requirements remain a constraint despite lower operating costs.