Green energy federation asks govt to extend CBG blending rule to industrial consumers

New Delhi: The Indian Federation of Green Energy has written to the petroleum and natural gas ministry seeking an extension of the compressed biogas (CBG) blending obligation beyond city gas distributors to large industrial gas consumers, arguing that the distributors alone cannot bear the cost of scaling up.

The industry body's call comes days after the union cabinet approved the ₹23,731 crore Gobardhan National Circular Bioenergy Scheme, aimed at increasing domestic CBG production by nearly tenfold over the next decade through assured offtake, stable pricing, capital support, pipeline connectivity and easier access to finance.

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In a letter to Alok Tripathi, joint secretary in the Ministry of Petroleum and Natural Gas, the IFGE proposed extending the CBG blending obligation beyond city gas distribution (CGD) companies to refineries, petrochemical complexes, power plants and other large industrial consumers that procure natural gas directly through long-term contracts, spot markets or gas exchanges. The current framework puts the incremental cost of CBG largely on CGD companies supplying households and CNG users, while large industrial gas consumers remain outside the obligation, the federation said. "Extending the obligation framework to all gas-consuming sectors would be a natural progression" as the CBG blending targets rise, it said in the letter, a copy of which ET has seen. The issue is significant as India seeks to reduce its dependence on imported gas. Natural gas demand was about 192 million standard cubic metres a day in FY26, with nearly half of that met through LNG imports. The LNG import bill was more than ₹1 lakh crore last year, highlighting the potential of domestic CBG as an alternative source.

However, the CBG market faces both demand and infrastructure constraints. According to the Petroleum and Natural Gas Regulatory Board's report for fiscal 2026, CGD entities sold 111.48 million standard cubic metres of CBG against 12,033 million standard cubic metres of CNG and domestic PNG, achieving 0.92% blending against the 1% mandate. The obligation rises to 3% in FY27, 4% in FY28 and 5% in FY29.

It also reported that out of 207 CBG plants, only 24 are connected to gas pipelines, while 148 have no connectivity planned. Of 328 plants under construction, just two are connected and 257 have no connectivity planned.

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CBG sales are growing, with average monthly sales rising from 211,000 standard cubic metres of gas per day in April 2025 to 620,000 SCMD in March 2026. Yet the market remains concentrated with Torrent Gas, IGL, BPCL, Gujarat Gas and Gail Gas accounting for 54.7% of FY26 CBG sales.

The federation has proposed sector-wide CBG purchase obligations, modelled on the electricity sector's renewable purchase obligation, along with tradable renewable gas certificates for consumers unable to physically source CBG. It suggested excluding fertiliser units because of existing government subsidies, unless CBG becomes cheaper than spot gas.