Bio-CNG Market - Competition from Current and Emerging Fuel Substitutes - India Renewable Energy Consulting – Solar, Biomass, Wind, Cleantech
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evnext-logo-v-smallThis post is a part of BioBiz’s Bio-CNG Perspectives.

BioBiza division of EAI, is a leading market intelligence & strategic consulting firm for the Indian bio-based sectors.

This blog post uses the terms bio-CNG and renewable natural gas (RNG) interchangeably.

Bio-CNG or bio-compressed natural gas, also known as sustainable natural gas or biomethane, is a biogas which has been upgraded to a quality similar to fossil natural gas and having a methane concentration of 90% or greater. As the gas is derived from natural and renewable sources, it is also termed renewable natural gas (RNG).


Renewable natural gas is a sustainable gas with fuel characteristics similar to natural gas. It has the potential to be a replacement for conventional fuels such as LPG, diesel, biomass, etc. Despite its advantages, the growth of renewable natural gas market in various applications is expected to be effected by the price of competing fuels. 

Various fuel substitutes, both current and emerging, could be potential competitors for renewable natural gas.

This blog post highlights the advantages of RNG over competing conventional and emerging fossil and renewable fuels and approximate fuel prices.

Competing fuels for RNG

Following is the list of fuel substitutes and their end use segments:

  • LPG – industries, commercial, transport (auto-LPG)
  • Conventional natural gas – industries & commercial (PNG), transport (CNG)
  • Diesel – industries (for boilers), transport
  • Biodiesel – industries (as a replacement for diesel gensets)
  • Gasoline – transport

Note: Domestic sector is not considered for select fuels as the business model is not very attractive for entrepreneurs.

It is to be noted that in any application, some equipment modification would be required with a premium cost added, in the initial stages of shifting to renewable natural gas. 

The following section compares RNG with other fuel substitutes on price points and other characteristics. Prices of fuels are based on market prices in 2020.

1. LPG

Liquefied petroleum gas or liquid petroleum gas, also referred to as propane or butane, is a fossil based, flammable mixture of hydrocarbon gases used as fuel in heating appliances, cooking equipment and vehicles. 

LPG has a density of 0.525 to 0.580 kg/m3 @ 15˚C. It is readily liquefied under moderate pressure. As LPG is heavier than air, when it leaks from the cylinder, the vapour flows and gets accumulated at the ground level. It is difficult to disperse LPG and hence the risk of ignition is high. The vapour pressure of LPG is 14-15 kg/ It is highly flammable with an explosive range of 1.8-9.5%. LPG has an auto ignition temperature of 410-580˚C. Further, as LPG is a liquid, the entire fuel is not utilizable and a small quantity remains in the cylinder. 

While LPG is considered to be cleaner than gasoline, LPG still releases CO2 which is a greenhouse gas.

On the other hand, RNG is a renewable, sustainable form of natural gas. It has fuel characteristics similar to natural gas. It is cleaner than natural gas and its other forms including LPG and can be completely utilized without any remains.  In order to achieve the highest possible energy density, the biomethane is typically compressed to 200-250 bar. 

Bio-CNG is lighter than air and hence disperses easily in the event of spillage. As it disperses, the risk of ignition is minimized. It is sourced from renewable, sustainable sources and hence does not release green house gases. The amount of CO2 that is produced corresponds to the amount of CO2 captured when the biomass was created, making bio-CNG carbon neutral. The calorific value of bio-CNG is also almost similar to LPG (bio-CNG – 12,428 kcal/kg vs. LPG – 11,900 kcal/kg), making RNG a potential replacement for LPG.

When we compare the fuel prices, currently, LPG for commercial and industrial segment is being sold at Rs. 84/kg, while RNG is expected to be sold at around Rs. 67/kg. In the case of transport segment, the price of auto-LPG is Rs. 42/kg, while OMCs offtake RNG for Rs. 46/kg. If the LPG cylinder prices drop dramatically, the financials for RNG get affected.

2. Conventional natural gas (CNG and PNG)

Natural gas is a non-renewable hydrocarbon used as a source of energy for heating, cooking, and electricity generation. It is also used as a fuel for vehicles and as a chemical feedstock in the manufacture of plastics and other commercially important organic chemicals. Natural gas is less flammable compared to LPG owing to the presence of higher alkanes. It is lighter than air and hence disperses easily, thus minimizing the risk of ignition. It also releases lesser greenhouse gases. However, as natural gas is from a fossil source and is predominantly imported, it could still have a negative impact on the environment and economy.

RNG has the potential to significantly replace natural gas (both CNG and PNG) and be distributed in the existing city gas distribution network owing to similar characteristics. The calorific value of natural gas is 12500 kcal/kg, while that of RNG is 12,428 kcal/kg.

However, in terms of prices, the price of CNG is Rs. 45/kg, while RNG is being sold at Rs. 46/kg. For PNG segments, the price of natural gas is about Rs. 52/kg, while the price of RNG could be about Rs. 53/kg).

3. Diesel

Diesel is a well known liquid fuel produced from fossil sources and find applications in vehicles, gensets, and industrial boilers.

While RNG clearly has the potential to replace diesel in terms of sustainability and fuel characteristics, other parameters need to be considered for comparison of diesel and RNG.

In the case of industrial boilers, these parameters include total fuel cost (price of fuel as well as running costs), operation and maintenance, boiler capacity.

Total fuel cost: The cost of fuel is not just the price per unit of fuel, but also the cost of running the auxiliary equipment required to burn that fuel. Natural gas requires only combustion air fan(s). Fuel oil requires pumps, combustion air fans, atomizers, soot blowers, and perhaps tank and line heaters depending on the oil grade and season.

Operation and maintenance: The by-products that foul the inside of the boiler (soot) are much higher with fuel oil than with natural gas. Because there are more moving parts, pumps, and other components with burning oil, the associated equipment maintenance is also higher.

Boiler capacity: Fuel oil as a liquid has a higher energy density than natural gas; it also burns with more luminosity – which can be a major factor in water tube boiler capacity. Therefore, depending on the boiler and burner design, one fuel may have a capacity advantage over the other in a specific boiler.

Other advantages of using natural gas include

  • No on-site storage of fuel required; no inventory issues
  • Pay for fuel after/as it’s used, not before
  • Potentially less labor costs with reduced boiler operator requirements in some application

In terms of fuel prices, diesel is being sold at Rs. 70/kg, while RNG is in the range of Rs. 55-60/kg. 

In the transport sector, RNG can score well over diesel owing to its net emission reduction potential by almost 70% when compared to diesel.

Thus, RNG has the potential to replace diesel in various end use segments. 

4. Biodiesel

Biodiesel refers to a vegetable oil- or animal fat-based diesel fuel consisting of long-chain alkyl esters. Biodiesel is typically made by chemically reacting lipids with an alcohol producing fatty acid esters. It is a renewable fuel and finds applications in transportation and industries as a blending fuel with diesel. 

In the case of industries, while the use of biodiesel as a blending fuel with diesel in industrial boilers results in reduced emissions and by-products, equipment maintenance still exists; this creates an advantage for RNG as a potential replacement. However, the cost of biodiesel is equally competitive (Rs. 54-57/kg) with RNG (Rs. 55-60/kg).

5. Gasoline

Gasoline or petrol is a fossil, flammable liquid fuel widely used in internal combustion engines. It consists mostly of organic compounds obtained by the fractional distillation of petroleum, enhanced with a variety of additives. Compared to diesel, gasoline is the biggest contributor to carbon emissions. Thus RNG has the potential to replace gasoline in the transport sector owing to its net emission reduction potential by almost 70%. In terms of prices, gasoline costs Rs. 80/kg, while RNG for transport costs Rs. 46/kg.

The following table summarizes the prices of current and emerging fuel substitutes.

Competing fuel Sector Prices (Rs. / kg)
LPG Commercial and industrial 84
LPG Transport 42
Conventional natural gas Residential, commercial and industrial 52
Conventional natural gas Transport 45
Diesel Industries, transport 70
Biodiesel Industries 54-57
Gasoline Transport 80

                              Table 1: Prices of competing fuels as of 2020

It could thus be inferred that irrespective of the cost involved in investment and maintenance or sustainability advantages, prices of competitive fuels determine the growth of RNG market in India.


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Interesting web resources
  • C2V – CO2 to Value – a comprehensive web resource providing insights on opportunities in converting CO2 into a range of useful products – fuels, chemicals, food & materials
  • All about CO2 – CO2 Q&A – a unique resource providing answers to 100+ questions on the most talked about gas today.

About Narasimhan Santhanam (Narsi)

Narsi, a Director at EAI, Co-founded one of India's first climate tech consulting firm in 2008.

Since then, he has assisted over 250 Indian and International firms, across many climate tech domain Solar, Bio-energy, Green hydrogen, E-Mobility, Green Chemicals.

Narsi works closely with senior and top management corporates and helps then devise strategy and go-to-market plans to benefit from the fast growing Indian Climate tech market.

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