India can reduce fossil fuel dependence, cut import by $29 bn via biogas

Replacing natural gas consumption with biogas and biomethane incrementally to 20 per cent by 2030 can help India cut liquefied natural gas import bills by USD 29 billion between financial years 2025 and 2030, according to a new report.

The report from the Institute for Energy Economics and Financial Analysis (IEEFA), underscores the environmental advantages of expanding biogas projects, including waste management, reduction of greenhouse gas (GHG) emissions, and enhanced renewable energy production.

According to the report's author Purva Jain, an energy analyst at IEEFA, "Biogas has the potential to replace natural gas and other high-emission fossil fuels. By eliminating carbon dioxide (CO2) and impurities like hydrogen sulfide, its methane content can be upgraded to 90 per cent, making it calorifically equivalent to natural gas.

This upgraded biogas, known as biomethane, is pipeline-ready and can be integrated into gas grids as a non-fossil gas, she said.

"By adopting appropriate production methods and addressing methane leaks during production, upgrading, and supply stages, biogas can offer India a cleaner alternative to its reliance on imported natural gas," Jain said.

Despite its clear advantages, the biogas sector has struggled to gain traction in India.

The report identifies several reasons for this, including the absence of a comprehensive market ecosystem, pricing challenges, complex approval processes, and fragmented government support.

Jain said the government has begun to address these issues. In 2021, various types of support were consolidated under the National Bioenergy Scheme.

"Moreover, the introduction of the GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme as an umbrella initiative of the government will help in this consolidation. It covers the entire gamut of schemes/policies promoting organic waste conversion to biogas or compressed biogas (CBG)," she says.

The report also highlights recent policy developments, such as revising the compressed biogas rate in response to global gas price increases and plans to mandate natural gas marketing companies to procure five per cent compressed biogas.

These measures have reignited private sector interest in compressed biogas, with companies like Reliance Industries Limited and the Adani Group showing strong enthusiasm.

However, the report emphasises that the government must do more to fully unlock biogas's potential in India. This includes encouraging increased investments and private sector involvement, improving market viability for CBG and biogas slurry, increasing financial access for biogas plant development, and promoting feedstock mapping for input availability.

Additionally, it is crucial to ensure that energy crops are not used for biogas, as this can lead to indirect land use changes, as seen with ethanol and biodiesel in Brazil, which can have a detrimental impact on climate and the environment through increased carbon emissions.

"A key step will be to guarantee the offtake of CBG by various natural gas-using industries to expedite the achievement of decarbonization goals. The introduction of take-or-pay arrangements will be a significant move in this direction," Jain said.