New Delhi is poised for a green energy revolution as the proposed excise duty exemption on biogas blended with compressed natural gas (CNG) could attract investments worth nearly Rs 1 lakh crore. The Indian Biogas Association (IBA) highlighted this potential on Sunday, emphasizing its role in accelerating India’s journey towards net-zero emissions by 2070.
The announcement, part of the recent Union Budget 2026 proposals, aims to make compressed biogas (CBG) more economically viable when mixed with CNG. This critical step addresses long-standing tax disparities, where CBG—a renewable, eco-friendly fuel—was taxed at par with conventional CNG despite its superior environmental benefits.
According to IBA, even a modest 5% blending mandate across city gas distribution networks over the next five years would require 2.5 to 3 million metric tonnes per annum (MMTPA) of CBG. This alone could spur investments between Rs 45,000 crore and Rs 55,000 crore.
With supportive policies like stable pricing and clear frameworks, blending could rise to 7-8% by 2032, potentially doubling investments to Rs 1 lakh crore. This influx would not only bolster private sector participation but also enhance energy security and rural economies.
India boasts immense potential, with organic waste like rice stubble, press mud, municipal solid waste, and cattle dung capable of producing around 60 million tonnes of CBG annually. Small to medium plants with 4.8 to 10 tonnes per day capacity stand to gain the most, as their internal rate of return (IRR) improves significantly post-exemption.
For city gas companies, lower average fuel costs mean stable or reduced prices for consumers. Producers benefit from assured off-take and steady revenue streams. Environmentally, CBG blending over its lifecycle slashes greenhouse gas emissions by 70-90%, especially from agricultural waste. At 10% blending, annual CO2-equivalent reductions could hit 12-15 million tonnes—a game-changer for climate goals.
This policy shift marks a pivotal moment, transforming waste into wealth and propelling India towards sustainable energy dominance.