NEW DELHI — Five years after the Indian government launched an ambitious plan to scale up compressed biogas (CBG) as a domestic alternative to fossil fuels, the sector remains far short of its targets, leaving the country’s heavy dependence on imported crude oil largely intact. Despite policy support and financial incentives, structural challenges—ranging from regulatory delays to feedstock shortages—have stymied progress, raising questions about whether biogas can meaningfully contribute to India’s energy security in the near term.
What Happened: A Policy Push Falls Short
India’s vulnerability to global energy shocks is stark: the country imports nearly 85% of its crude oil, a dependency that exposes its economy to price volatility and supply disruptions. In response, the government has promoted biogas—produced from agricultural waste, municipal solid waste, and other organic feedstocks—as a cleaner, locally sourced substitute for fossil fuels. Compressed biogas (CBG) can be blended with natural gas or used directly in transport and industrial applications, offering a potential pathway to reduce import reliance.
The centerpiece of this effort is the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme, launched in 2018. Under SATAT, the government set a target of establishing 5,000 CBG plants by 2025, with an annual production capacity of 15 million metric tons. However, as of early 2026, only 120 plants have been commissioned, producing roughly 300,000 metric tons annually, according to data from the Ministry of Petroleum and Natural Gas (MoPNG). This represents just 2% of the original target, signaling a significant shortfall in execution.
The slow progress is not for lack of policy support. The government has introduced several incentives, including viability gap funding (VGF), tax exemptions, and guaranteed offtake agreements with oil marketing companies (OMCs). Yet, industry stakeholders cite a litany of obstacles: high capital costs, bureaucratic delays in land acquisition, environmental clearances, and inconsistent feedstock supply. Many developers report that securing long-term agreements with municipal bodies or farmers—critical for ensuring a steady supply of organic waste—remains a persistent challenge.
A 2025 report by the Ministry of New and Renewable Energy (MNRE) acknowledged these bottlenecks, noting that the sector requires “streamlined approval processes and stronger coordination between central and state agencies” to meet national targets. The report also highlighted the need for improved waste segregation infrastructure, particularly in urban areas, where mixed waste streams often render organic feedstock unusable for biogas production.
Why It Matters: Energy Security and Economic Risks
India’s reliance on imported crude oil has long been a strategic and economic liability. The Petroleum Planning and Analysis Cell (PPAC) estimates that the country spent $157 billion on crude oil imports in 2025 alone, a figure that fluctuates sharply with global oil prices. The 2022 Ukraine war and subsequent supply chain disruptions served as a stark reminder of this vulnerability, with India’s fuel prices spiking despite government subsidies.
Biogas advocates argue that the sector could play a critical role in mitigating these risks. The PPAC projects that replacing just 10% of diesel consumption with CBG could save India $5 billion annually in foreign exchange. Moreover, biogas aligns with the country’s climate commitments, offering a low-carbon alternative to fossil fuels while reducing methane emissions from agricultural waste—a significant contributor to India’s greenhouse gas footprint.
The transport sector, in particular, presents a high-potential use case. Compressed natural gas (CNG) is already widely used in Indian cities, with over 5,000 CNG stations operational as of 2026. CBG, which has a similar composition to CNG, could be seamlessly integrated into this existing infrastructure. The Society of Indian Automobile Manufacturers (SIAM) estimates that 30% of India’s commercial vehicle fleet could run on CBG by 2030 if production scales up.
However, the sector’s uneven progress threatens these ambitions. While states like Maharashtra, Tamil Nadu, and Gujarat have seen relatively faster adoption—thanks to proactive policies and private sector participation—others lag due to bureaucratic inertia, lack of investor confidence, and weak enforcement of waste management laws. The 2025 MNRE report found that only 12 states had operational CBG plants, with the majority concentrated in just three states.
Background and Context: A Decade of Unfulfilled Potential
India’s biogas push is not new. The country has experimented with biogas since the 1980s, when small-scale plants were promoted in rural areas for cooking fuel. However, these efforts were largely subsidy-driven and lacked commercial viability, leading to high failure rates. The modern CBG sector, by contrast, is framed as a market-driven solution, with the government positioning itself as a facilitator rather than a direct operator.
The SATAT scheme, launched under the National Biofuels Policy 2018, marked a shift in approach. Unlike earlier programs, SATAT emphasized private sector participation, offering long-term offtake agreements with OMCs at fixed prices to reduce investor risk. The government also introduced viability gap funding (VGF), covering up to 40% of project costs for eligible plants.
Despite these measures, the sector has struggled to attract large-scale investment. A 2024 survey by the Federation of Indian Chambers of Commerce and Industry (FICCI) found that 68% of biogas developers cited regulatory delays as the biggest hurdle, followed by feedstock availability (52%) and financing challenges (45%). The survey also revealed that only 30% of commissioned plants were operating at full capacity, with many facing feedstock shortages or technical issues.
The waste management gap is a particularly acute problem. India generates over 62 million tons of municipal solid waste annually, of which only 28% is processed, according to the Central Pollution Control Board (CPCB). The rest ends up in landfills, where it decomposes anaerobically, releasing methane—a potent greenhouse gas. While this waste could theoretically be repurposed for biogas, poor segregation at source and lack of collection infrastructure limit its usability.
Competing Claims and Uncertainty: Can Biogas Deliver?
The biogas sector’s potential is widely acknowledged, but experts remain divided on its scalability. Proponents argue that with stronger policy enforcement and technological advancements, biogas could emerge as a key pillar of India’s energy transition. The International Energy Agency (IEA), in a 2025 report, estimated that India could produce up to 30 million tons of CBG annually by 2030 if feedstock collection and processing efficiencies improve.
However, skeptics point to structural limitations that may be difficult to overcome. Unlike solar or wind energy—which benefit from standardized infrastructure and global supply chains—biogas production is inherently decentralized, relying on local waste streams and community-level participation. This makes scaling up more complex, particularly in a country with diverse agricultural practices and urban waste management systems.
A 2025 study by the Council on Energy, Environment and Water (CEEW) highlighted another challenge: feedstock pricing volatility. The study found that agricultural residue prices—a key input for biogas—fluctuated by up to 40% annually, depending on crop yields and demand from other industries (such as paper and packaging). This unpredictability makes it difficult for developers to secure long-term supply contracts, a critical requirement for bank financing.
There is also debate over the sector’s economic viability. While the government offers subsidies and tax incentives, some analysts argue that CBG remains uncompetitive with fossil fuels without higher carbon pricing or stricter emissions regulations. A 2026 report by the Institute for Energy Economics and Financial Analysis (IEEFA) noted that CBG production costs—currently around ₹50-60 per kg—would need to fall to ₹35-40 per kg to compete with imported LNG (liquefied natural gas).
What to Watch Next: Policy Shifts and Market Signals
The coming year could be pivotal for India’s biogas sector, with several key developments on the horizon:
1. SATAT 2.0 and Revised Targets
The government is expected to announce a revised SATAT scheme (SATAT 2.0) in mid-2026, with updated targets and incentives. Industry sources suggest that the new plan may lower the 2030 production target to 10 million tons—a more realistic figure given current progress. The scheme may also expand eligibility for VGF to include smaller plants (5-10 tons per day capacity), which have struggled to secure financing.
2. Waste Management Reforms
The Solid Waste Management Rules 2026, currently under review, could mandate source segregation in all urban areas, a move that would boost feedstock availability for biogas plants. The Swachh Bharat Mission 2.0 has also earmarked ₹10,000 crore ($1.2 billion) for waste-to-energy projects, including biogas.
3. Private Sector Participation
Several large conglomerates, including Reliance Industries, Adani Group, and Tata Chemicals, have announced plans to enter the CBG sector, signaling growing corporate interest. Reliance, in particular, has partnered with municipal corporations in Maharashtra and Gujarat to develop large-scale biogas plants, leveraging its existing CNG distribution network.
4. Technological Innovations
Research institutions like the Indian Institute of Technology (IIT) Delhi and the Indian Oil Corporation’s R&D center are developing new pre-treatment technologies to improve feedstock efficiency. These innovations could reduce production costs by 15-20%, making CBG more competitive.
5. Global Energy Trends
India’s biogas push could gain momentum if global oil prices remain volatile or if carbon border taxes—such as the EU’s Carbon Border Adjustment Mechanism (CBAM)—increase the cost of fossil fuel imports. The government may also introduce a national carbon trading scheme, which could boost demand for low-carbon fuels like CBG.
Conclusion: A Promising but Uncertain Path Forward
India’s biogas sector stands at a crossroads. On one hand, the economic and environmental case for CBG is compelling: it offers a domestic, low-carbon alternative to imported fossil fuels, reduces methane emissions from waste, and could create rural jobs in feedstock collection and processing. On the other hand, structural challenges—regulatory delays, feedstock shortages, and high costs—continue to hinder progress, raising doubts about whether the sector can deliver on its promises in the near term.
For now, India’s energy security remains heavily dependent on global oil markets, with biogas playing a marginal role. However, if the government can address the sector’s bottlenecks—through streamlined approvals, stronger waste management policies, and targeted incentives—biogas could yet emerge as a meaningful contributor to India’s energy mix. The next 12-18 months will be critical in determining whether the country can **turn its biogas ambitions
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Story synopsis gathered from: The Hindu – National — source.
