By Rajat Mishra
The Union Budget tried to lay a roadmap for the country’s green and sustainable growth with a special emphasis on the circular economy by keeping Rs 10,000 crore for setting up biogas plants, a move hailed by the industry.
Industry leaders see this as a move in the direction for transition to a gas-based economy and have a 25% share of natural gas in India’s energy mix by 2030.
According to the Budget announcement, 200 compressed biogas plants, including 75 in urban areas, and 300 cluster-based plants will be set up.
Compressed biogas, or CBG, is produced by anaerobic decomposition of agricultural waste, sugarcane press mud and municipal waste. It can be used as a fuel for automobiles.
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“In recent years, there has been an increased push from the government for blending CBG with natural gas and promoting its adoption as a fuel, particularly in the transportation segment that uses CNG,” said Shailesh Tyagi, partner, Climate Change and Sustainability Services, EY India.
“At present, natural gas’s share in the energy basket is 6.4%, which is expected to grow to 15% by 2033. Accordingly, the growth of the compressed biogas industry can be seen if we directly index it,” said Gaurav Kedia, chairman of the Indian Biogas Association.
The government also announced that in due course, a CBG mandate will be introduced for all organisations marketing natural and biogas, and for the collection of biomass and distribution of bio manure.
“The government will give fiscal support for this,” FM Nirmala Sitharaman said during her Budget speech on Wednesday.
“The OMCs (oil marketing companies) have been mandated to provide a 5% share of CBG in the Union Budget,” said Kedia, adding that amounts to 2.5 million tonne per year if we see the country’s LNG requirement, which could only be around 50 million tonne.
Currently, entrepreneurs, corporations, dairies and others can set up plants for the generation of CBG on a commercial scale and it can be sold to industries or oil marketing companies (OMCs) under the scheme.
Many govt PSUs such as GAIL, Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) are some of the companies with existing plans for CBG plants.
This policy will ensure minimum off-take risk for upcoming CBG plants, said Varun Karad, chief business officer, GPS Renewables.
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“There are around 100 plants which will be commissioned in this calender year and such positive developments will only promote the growth of this sector,” he added.
According to the International Energy Agency(IEA), the world’s biogas and biomethane resources could meet 20% of global gas demand while reducing greenhouse gas emissions.The world is only using a fraction of the potential to produce gas from organic waste, which could cover around 20% of today’s global demand for gas,the IEA said in one of its reports.