India targets 10-fold clean fuel output jump in next 5-10 years to curb imports

New Delhi: The government is targeting at least a 10-fold increase in compressed biogas (CBG) production to 5 million standard cubic metres per day (mmscmd) in the next five to 10 years, Alok Tripathi, Joint Secretary, Ministry of Petroleum and Natural Gas (MoPNG), said on Tuesday, highlighting the potential of CBG to strengthen India's energy security and reduce import dependence.

"We are targeting 5 mm CFD. There is always a possibility that this production can go up to 10 mm CFD also. That is the kind of potential I see in case of CBG ecosystem," Tripathi said while addressing India Bioenergy and Tech Expo and 3rd International Conference and Exhibition on Bioenergy and Technologies.

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Tripathi said CBG production is currently around 0.4 mmscmd, which the government considers very small, and another 300-odd plants are under construction.

He said the Centre wants to significantly expand the sector by addressing uncertainties across the CBG supply chain.

"We found that there are many uncertainties involved in this entire CBG supply chain. The uncertainty related to feedstock, the uncertainty related to pricing of CBG, then uncertainty related to offtake of the CBG, then uncertainty related to disposal of by-product," he said.

He said these uncertainties were among the reasons why the CBG business was not growing at the desired pace, prompting the government to formulate the Govardhan scheme.

The scheme is based on the principle of having "one portal, one scheme and one ministry" to simplify the process and improve ease of doing business, Tripathi said.

A key component of the scheme is offtake assurance. Tripathi said the government plans to map every CBG plant with either a city gas distribution (CGD) agency or a trunk pipeline to ensure that the gas produced is utilised.

The government is also working on a stable pricing mechanism to provide CBG producers with long-term price visibility. Tripathi said the pricing was determined after assessing production costs for different feedstocks and providing for a reasonable internal rate of return (IRR).

"We are offering this pricing for not less than 10 years," he said, adding that prices would be reviewed periodically, including if feedstock costs rise.

Pipeline connectivity is another key component. Tripathi said CBG plants located in identified clusters would be connected to the national gas grid, while standalone plants could be connected to city gas distribution networks.

The government will provide financial support covering 80 per cent of capital expenditure (capex) for eligible cluster connectivity with the national gas grid and 50 per cent for standalone connectivity, he said.

Under the scheme, the Centre will also provide capital financing support of up to Rs 2 crore per tonne per day (TPD) of CBG capacity. Of this, Rs 1.25 crore per TPD will support plant development, while Rs 0.75 crore per TPD will support feedstock-management or by-product-processing machinery.

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Tripathi said the scheme also includes a credit guarantee component for micro, small and medium enterprises (MSMEs) to encourage them to establish CBG plants.

The government has also proposed a CBG ecosystem development fund to support research and development in CBG technology and district-level initiatives aimed at promoting the sector.

The Ministry is developing a Govardhan portal through which registration, capital financing support, pipeline support, MSME credit guarantees and other processes related to the scheme will be managed.

Tripathi said state governments will also have an important role in developing the CBG ecosystem, particularly in areas such as land, permissions, feedstock management and promoting the use of organic manure generated as a by-product.

He said the Centre expects the Govardhan scheme, along with state CBG policies and other supporting measures, to substantially expand the sector and contribute to reducing India's import dependence.