Overcoming Challenges to Scale Compressed Biogas in India

Compressed Biogas (CBG) holds immense promise for India. It aligns with the country’s goals on clean energy, circular economy, and import substitution. Yet despite its promise, only a fraction of its potential has been tapped. As of 2023, under the SATAT scheme, fewer than 50 CBG plants had become operational out of more than 4,000 Letters of Intent. This article explores key barriers and offers practical, implementable solutions for scaling up CBG across India.

1. Feedstock Quality and Supply Chain Bottlenecks

The single greatest constraint to CBG scale-up is poor feedstock quality. Most plants today receive inadequately segregated or highly variable organic waste streams, often unfit for smooth processing. This results in low capacity utilisation and increased operational costs.

What’s Going Wrong?

• No price regulation between waste suppliers and CBG producers.

• Lack of infrastructure to process mixed waste.

• Alternative uses for biomass (fuel, fodder, compost) reduce availability for CBG.

The Way Forward

• Community-level biomass mapping to understand organic waste flows and avoid feedstocks with high opportunity costs.

• Introduce state-led pricing mechanisms for feedstock supply to standardise input costs.

• Develop hub-and-spoke logistics models with decentralised collection and pre-processing centres.

• In the long term, support the shift to mixed-feedstock processing technologies, reducing dependency on single-source supply chains.

2. Reduced Gas Output Due to Feedstock Inefficiencies

Many CBG plants experience declining gas yields over time. This is particularly common when lignocellulosic materials like rice straw are used without adequate pre-treatment.

Underlying Cause

Feedstocks with high lignin content slow microbial activity unless properly pre-treated. Any slight change in pH, temperature, or moisture disturbs anaerobic digestion, hurting output efficiency.

The Way Forward

• Introduce mandatory pre-treatment protocols for lignocellulosic feedstocks.

• Promote continuous process monitoring with automated alerts for microbial health indicators.

• Incentivise adoption of integrated digester control systems to optimise biogas yield.

3. Capital Intensity and Equipment Imports

Building a CBG plant requires large upfront investment. Around 90% of the project cost is capital expenditure, with most equipment sourced internationally, leading to delays and high forex exposure.

The Way Forward

• Offer customs duty and GST exemptions on CBG equipment in the short term.

• In the long term, develop domestic manufacturing capacity through:

  • Capital subsidies for local OEMs.

  • R&D funding for design localisation.

  • Public-private partnerships with global tech providers.

4. Disposal of CO₂ and Digestate Remains Poorly Managed

Biogas production leaves behind significant volumes of CO₂ and bio-slurry. Without efficient reuse or disposal, these by-products become liabilities.

The Way Forward

• Divert CO₂ to industrial applications like food processing or dry ice manufacturing.

• Promote Fermented Organic Matter (FOM) and Fermented Liquid Organic Manure (FLOM) as a fertiliser, supported by:

  • Fertiliser PSUs procuring FOM/FLOM at fixed rates.

  • Agricultural universities training farmers on its usage.

  • Branding and certification under FCO norms to improve market trust.

5. Financing Constraints and Risk Perceptions

Despite inclusion in priority sector lending, access to credit remains limited. High interest rates, short loan tenures, and low awareness make capital inaccessible.

The Way Forward

• Develop a dedicated CBG financing desk within public and private banks.

• Maintain a national database of lenders and schemes available for CBG entrepreneurs.

• De-risk loans through partial credit guarantee funds or viability gap support.

6. Weak Support Ecosystem and Missed Co-Use Opportunities

India’s thermal power sector is yet to integrate CBG. Even though CBG could replace a portion of coal in boilers, awareness is low and retrofitting costs remain high.

The Way Forward

• Raise awareness of carbon credit and clean energy financing available to power plant operators.

• Create PPP models for retrofitting power infrastructure to use CBG.

• Offer performance-linked incentives for early adopters.

7. Skilling Gaps in Rural and Urban Regions

CBG systems require skilled personnel for plant operation, maintenance, feedstock logistics, and digestate management. Yet, India has no structured workforce development model specific to biogas.

The Way Forward

• Integrate biogas modules into ITI and polytechnic curricula.

• Leverage existing Biogas Development and Training Centres (BDTCs) for technician training.

• Launch state-specific skilling missions to create local job ecosystems.

8. Environmental Risks and Leakage

Improperly managed biogas systems risk methane leaks, which can nullify the climate benefits of the entire operation. Methane’s global warming potential (GWP) is 28 times that of CO₂.

The Way Forward

• Enforce a methane leakage cap of <2% of total production, in line with World Bank and EU standards.

• Adopt continuous monitoring systems with regular third-party verification.

• Mandate annual reporting of GHG emissions from all plants.

9. Land Use Pressures from Energy Crop Cultivation

To boost gas yield, some developers opt to cultivate energy crops like Napier grass. While high-yielding, this can divert land away from food and raise GHGs through indirect land use change.

The Way Forward

• Avoid new land acquisition for feedstock production.

• Prioritise livestock, market, and food waste streams for CBG.

• Use waste mapping to assess urban vs. rural resource availability before approving new plants.

10. Market Risks from Supply-Demand Mismatch

There is a fundamental geographic mismatch between demand (urban transport) and supply (rural waste). Transporting CBG over long distances erodes margins.

The Way Forward

• Encourage urban MSW-based plants to cater to city-based CNG demand.

• In rural India, promote CBG as a cooking fuel, thereby localising both supply and demand.

• Integrate CBG into LPG subsidy or rural electrification schemes to build anchor demand.

11. Threats from Biomass Export

In 2023, India liberalised exports of agri-residue pellets, opening up new markets. However, this raises domestic availability concerns, particularly for high-calorific residues.

The Way Forward

• Impose export quotas or tariffs on critical biomass types to preserve domestic supply.

• Create a national biomass inventory, regularly updated, to forecast domestic vs. exportable surpluses.

Chart: Severity of Key Challenges to CBG Scale-Up

August 2025

Conclusion: Turning Promise into Practice

India’s CBG potential is real, but unlocking it requires integrated action across:

• Feedstock governance and waste logistics,

• Financial innovation and risk management,

• Skill-building and ecosystem development,

• Environmental safeguards and smart demand planning.

From farmgate to gas grid, India must reimagine biogas not as a niche technology, but as a linchpin of its clean energy future.

📊 Sources: IEA Bioenergy Task 37 (2023), MNRE, SATAT Dashboard, Swachh Bharat Mission (2022), PIB (2023), GEDA, CEEW, Jain (2024), Nandigama (2023), World Bank (2023), Singh and Kalamdhad (2022), European Biogas Association, Directorate General of Foreign Trade (2023).