Budget 2023-24: Rs 10,000 crore for 500 compressed biogas plants

5% CBG mandate to be introduced for all organisations marketing natural and biogas
Of the new plants, 200 will also be potentially used for vehicles to draw CBG fuel. Photo: iStock
Of the new plants, 200 will also be potentially used for vehicles to draw CBG fuel. Photo: iStock

Finance Minister Nirmala Sitharaman announced 500 new ‘waste to wealth’ plants under Galvanizing Organic Bio-Agro Resources Dhan scheme (GOBARdhan) in the Union Budget 2023 on February 1, 2023. The plants will promote a circular economy in the country, she said. 

“These will include 200 compressed biogas (CBG) plants — 75 in urban areas — and 300 community or cluster-based plants at a total investment of Rs 10,000 crore,” Sitharaman said.

The FM announced in her speech:

In due course, a 5 per cent CBG mandate will be introduced for all organisations marketing natural and biogas. For a collection of biomass and distribution of biomanure, appropriate fiscal support will be provided.

The new GOBARdhan scheme is an upgrade and an expansion of the old one of the same name, launched in 2018 by the Department of Drinking Water and Sanitation. However, this scheme limited itself to cluster or community-level biogas plants, for instance, for Anganwadis or farms. 

The 200 units will also be potentially used for vehicles to draw CBG fuel, experts said.

Under the Swachh Bharat Mission Phase II, the scheme was given financial assistance up to Rs 50 lakh per district to 2024-25 from 2020-21, R K Singh, Union Minister for Power and New and Renewable Energy, said in a written reply in Lok Sabha on December 15, 2022.

“CBG was never a part of the initial scheme launched in 2018 because it is very different from biogas in terms of utilisation and constituents,” Atin Biswas, programme director of municipal solid waste at Delhi-based non-profit Centre for Science and Environment, told Down To Earth.

“Methane makes up less than 50 per cent of biogas, whereas it constitutes nearly 95 per cent of CBG. The former is scrubbed, purified and pressurised further to form CBG, which can be used as a renewable fuel in the vehicle sector. In contrast, biogas is utilised to power sugar mills and as a plant fertiliser,” Biswas explained.

Biswas’s team, led by CSE Director General Sunita Narain, was part of the interministerial committee with key departments concerning waste management. The team prepared a roadmap to develop a circular economy.

Prime Minister Narendra Modi released the report at the second national conference of chief secretaries early in January. Based on the committee’s recommendation to the Union government, they planned to establish 500 CBG plants across the country.

“The 10,000 crore investment will help propel the sector forward. Also, the 5 per cent mandate given to the natural gas manufacturers, as well as marketers, is a welcome move,” Biswas added.

In Sitharaman’s speech, she also announced that “to avoid cascading of taxes on blended compressed natural gas, I propose to exempt excise duty on GST-paid compressed biogas contained in it.”

This exemption will help the sector grow and develop a market of its own, Biswas added.

A waste-to-energy programme was established under the national bioenergy programme in previous allocations given by the Ministry of New and Renewable Energy. It had a budget outlay of Rs 600 crore for the period between 2021 and 2026.

“This programme, inter alia, supports setting up of plants for generation of BioCNG from urban, industrial and agricultural waste by providing central financial assistance (CFA),” an official statement by the MNRE read.

“The Ministry of Petroleum and Natural Gas, under the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, envisages setting up of 5000 BioCNG plants with a production target of 15 MMT of BioCNG by 2023-24,” the statement added.

SATAT initiative encourages entrepreneurs to set up BioCNG plants, produce and supply BioCNG to oil marketing companies for sale as automotive fuels, it further said. 

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