Biogas and Bio-CNG in India - Central Policies and Incentives - India Renewable Energy Consulting – Solar, Biomass, Wind, Cleantech
Select Page

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).


Policies and incentives play a major role after technology and economics in determining the viability of a sustainable project. Any sustainable product which is driven by attractive subsidies and incentives along with strict regulations for its use as an alternative source is likely to have a good market in the near future. While globally, most of the regulations are implemented in an organized manner, in India, the policies could take a reasonable time for enforcement in all states. It is hence imperative to understand the regulatory measures for a product in the country before implementation of the project. This holds critical for RNG as it is an emerging product in India.

This blog post provides highlights on major central policies and incentives which would attract potential investors for setting up viable RNG plants in India.

Major central policies for RNG in India include

  • MNRE program on urban, industrial and agricultural wastes / residues (2017-20)
  • National Biofuels Policy 2018
  • SATAT scheme

1. MNRE program on urban, industrial and agricultural wastes / residues (2017-20)

(Issued on Jul 2018)

The main objective of the program is

  • To promote setting up of projects for recovery of energy in the form of biogas / RNG/enriched biogas/ power from urban, industrial and agricultural wastes
  • The scheme provides for Central Financial Assistance in the form of capital subsidy and Grants-in-Aid in respect of the following activities:
  • Biogas production from industrial waste, sewage treatment plants, urban & agricultural waste/residue through biomethanation.
  • Power generation or production of RNG/enriched biogas from biogas produced from Industrial waste, sewage treatment plants, urban & agricultural waste/residue.

Eligibility criteria for central financial assistance:

Criteria based on type of waste:

The eligibility criteria for type of waste are as follows:

  • Projects based on any bio-waste from urban waste (cattle dung, vegetable & fruits market, slaughter house, poultry waste etc., agricultural waste (paddy straw, agro processing industries residues/ effluents, green grass etc.), industrial wastes/effluents (agro processing industry, paper & pulp industry, milk processing, sugar industry etc. (excluding bagasse).
  • Mixing of other wastes of renewable nature, including rice husk, bagasse, sewage, cow-dung, other biomass and industrial effluents (excluding distillery effluents) will be permissible up to extent of 10%.
  • Biogas generation projects based on distillery effluents and projects based on wastes from fossil fuels and waste heat (flue gases) shall not be supported.
  • RNG/enriched biogas generation projects from biogas for captive use /pipeline /bottling are eligible for CFA

Criteria based on technologies

The eligibility criteria for technologies will be:

  • Projects based on waste-to-energy conversion technologies, namely, Biomethanation, combustion, gasification, pyrolysis or a combination thereof or any new technology as approved by MNRE.
  • Projects for generation of power from biogas will be based either on 100% biogas engines or steam turbines with a minimum steam pressure of 42 bar.
  • RNG/Enriched biogas to be produced will have to meet the BIS specifications as per IS 16087: 2013*

*Details on BIS specifications for biomethane are provided below.

Indian Standard on biogas (biomethane)

Bureau of Indian Standards (BIS) prepared an Indian Standard on biogas (biomethane) – specification (IS 16087:2013) in the year 2013, on the request of MNRE and the same was published. The biogas (biomethane) for automotive application and piped network shall comply with the requirements given in below table, when tested in accordance with the methods given in table 1 column 3. This biogas (biomethane) may also be used for applications such as stationary engines or power generators.

Requirements for biogas (biomethane)

Characteristic Requirements Method of test, ref to
CH4 percent min 90 IS 15130 (Part 3) :2002
Moisture, mg/m3 max 16 IS 15641 (Part 2) : 2006
H2S, mg/m3 max 30.3 ISO 6326-3 : 1989
CO2 + N2 + O2 percent max (v/v) 10 IS 15130 (Part 3) :2002
CO2 percent max (v/v)(when intended for filling in cylinders) 4 IS 15130 (Part 3) :2002
O2 percent max (v/v) 0.5 IS 15130 (Part 3) :2002

Criteria based on capacity

There will be no minimum / maximum limit on capacity of projects supported under this programme, however, cattle dung-based power generation projects of up to 250 kW capacity will not be considered under this programme.

Central Financial Assistance (CFA)

Central Financial Assistance (CFA) for different categories of projects is given below:

# Output Capital subsidy Description
1 Biogas Rs. 1.0 crore per 12000m3 Biogas /day. (Max. Rs.10 crore/project ) Biogas generation from Urban waste/ Agricultural Waste/ Industrial wastes/ Effluents or mix of these wastes. (Distillery effluent is excluded)
2 Power Rs 3.0 crore per MW. (Max. Rs.10 crore/project) Power generation based on Biogas generated from Urban waste/ Agricultural Waste/ Industrial wastes/Effluents or mix of these wastes. In case, developer wants to set up power generating unit at already existing Biogas generation unit, in that case, the applicable CFA will be only Rs 2.0 crore per MW
3 RNG / Enriched Biogas Rs 4.0 crore. Per 4800 kgs of RNG/day generated from 12000m3 Biogas /day. (Max. Rs.10 crore/project) RNG generation based on Biogas generated from Urban waste/ Agricultural Waste/ Industrial wastes/Effluents or mix of these wastes. In case developer wants to set up RNG generating unit at already existing Biogas generation unit, applicable CFA will be Rs 3.0 crore.

The amount of capital subsidy would be calculated on the basis of installed capacity subject to maximum ceiling of Rs. 10 Cr/project.

Implementation arrangement

  • The scheme will be implemented through State Nodal Agencies (SNA), Urban Local Bodies / Municipal Corporations, private or public sector enterprises or organizations, as well as Energy Service Companies (ESCOs).
  • Waste to Energy project proposals for financial support will be submitted by the promoters to the Ministry through financial institutions with all statutory clearances before commissioning of the plant.

Approvals and clearances

The developers seeking Government support for their projects will submit proposals to the Ministry through Financial Institutions. A Project Advisory Committee (PAC) for Waste to Energy projects would be constituted with the approval of Secretary, MNRE under the Chairmanship of Joint Secretary (In-charge), MNRE. PAC will evaluate and recommend the project proposals for financial support.

The Ministry would issue sanctions with the concurrence of IFD and approval of the Secretary, MNRE. Based on this sanction/approval the developer can complete their projects as per the guidelines of the scheme. The time period for completion of the project is 24 months. No extension of the implementation period of the project will be considered. After 24 months the sanction stands cancelled and no claim for CFA will be entertained.

Release of central financial assistance

The entire CFA will be released to the developer’s loan account in the lending financial institution/banks for the purpose of offsetting the loan amount only after successful commissioning of the project. Waste to Energy Projects without loan will not be supported. The condition of successful commissioning of the Waste to Energy project would, inter-alia, imply operation of the project for three months, including continuous operation for at least 72 hours at a minimum of 80% of rated capacity. No advance CFA will be released to any projects.

2. National Biofuels Policy 2018

The policy aims to increase usage of biofuels in the energy and transportation sectors of the country during the period 2018-2028. The policy aims to utilize, develop and promote domestic feedstock and its utilization for production of biofuels thereby increasingly substitute fossil fuels while contributing to National Energy Security, Climate Change mitigation, apart from creating new employment opportunities in a sustainable way. Simultaneously, the policy also encourages the application of advance technologies for generation of biofuels.

The policy encourages production of ‘Advanced biofuels’ which are

  • Produced from lignocellulosic feedstocks (i.e. agricultural and forestry residues, e.g. rice & wheat straw/corn cobs & stover/bagasse, woody biomass), non-food crops (i.e. grasses, algae), or industrial waste and residue streams,
  • Having low CO2 emission or high GHG reduction and do not compete with food crops for land use. Fuels such as Second Generation (2G) Ethanol, Drop-in fuels, algae based 3G biofuels, RNG, bio-methanol, Dimethyl Ether (DME) derived from bio-methanol, bio hydrogen, drop in fuels with MSW as the source / feedstock material will qualify as “Advanced Biofuels”.
  • RNG’: Purified form of bio-gas whose composition & energy potential is similar to that of fossil based natural gas and is produced from agricultural residues, animal dung, food waste, MSW and Sewage water

Policy interventions and enabling mechanisms

Feedstock availability & its development

Potential domestic raw materials for production of advanced biofuels are Biomass, MSW, Industrial waste, plastic waste etc.

Blending & bio-refinery programme

Task force on Waste to Energy created by NITI Aayog has estimated generation of 62 MMT of Municipal Solid Waste (MSW) annually in India. This waste has a huge potential of producing drop-in fuels and generate power including Refused Derived fuel, biogas/electricity and compost to support agriculture.

World over, technologies available for converting wastes into Biofuels such as drop-in fuels, RNG, bio-hydrogen etc. are in nascent stages and need to be proven on commercial scale. Conversion of such wastes into RNG is a model which will be promoted for meeting the energy demand in rural areas and addresses the environmental issues.

Technologies providing higher yield of RNG per unit of waste processed will be promoted in line with the policy.

Setting up of such plants for production of advanced fuels will also be promoted through various incentives and offtake assurance. Similarly, hydrogen, one of the costliest fuels, has found its use in many industries including Refineries. Bio hydrogen, produced from biomass and wastes, will be interesting proposition to explore.

Financial and fiscal incentives

Government will consider extending financial incentives including viability gap funding, subsidies and grant for biofuels for advanced biofuels. A National Biofuel Fund may be considered for providing financial incentives.

Role of states

The successful implementation of biofuel programme largely depends on the active participation of the states.

The learning experiences of the states who have set up Biofuel Development Boards will be utilized for setting up Biofuel Boards in other states and the state governments would be encouraged to suitably empower these agencies/boards for development and promotion of biofuels in their respective states. Other stakeholders will also be enrolled for the programme.

State governments would also be required to decide on land use for plantation of non-edible oilseed bearing plants or other feedstocks of biofuels and on allotment of government wasteland, degraded land for raising such plantations. Creation of necessary infrastructure would also have to be facilitated to support biofuel projects across the entire value chain.

States will also be encouraged for granting single window clearances in setting up biofuel plants. State governments will also be pursued for supporting initial few biofuel plants with fiscal incentives, tax rebates, supply of subsidized power, and land allocation on priority at subsidized rates.

3. SATAT scheme for RNG

  • Launched by the Government of India on October 1, 2018 with Oil Marketing Companies, the scheme encourages potential entrepreneurs to set up Compressed Bio-Gas (CBG) or RNG production plants and make available RNG in the market for use in automotive fuels. The scheme also guarantees production offtake by OMCs at fixed rate.
  • The initiative is aimed at providing a Sustainable Alternative Towards Affordable Transportation (SATAT) as a developmental effort that would benefit both vehicle-users as well as farmers and entrepreneurs.
  • RNG plants are proposed to be set up mainly through independent entrepreneurs. RNG produced at these plants will be transported through cascades of cylinders to the fuel station networks of OMCs for marketing as a green transport fuel alternative.
  • The entrepreneurs would be able to separately market the other by-products from these plants, including bio-manure, carbon-dioxide, etc. to enhance returns on investment.
  • It is planned to roll out 5,000 RNG plants across India in a phased manner by 2025.
  • This initiative is expected to generate direct employment for 75,000 people and produce 50 million tonnes of bio-manure for crops.

It is encouraging to note that central government offers significant support to entrepreneurs through policies and attractive incentives for setting up of bio-CNG plants in India. Early movers would hence have an advantage in getting these incentives as there are possibilities of RNG becoming a commodity like solar industry if more entrepreneurs enter the field.


Know more on how BioBiz can assist your business in your strategy for the bio-based businesses, Here

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.

Know More...Connect with our director

Copyright © 2024 EAI. All rights reserved.