New Delhi’s push towards a sustainable energy future has received a notable impetus with the government’s decision to increase the procurement price of compressed biogas (CBG).
This move, welcomed by the Indian Biogas Association (IBA), is seen as a significant step in acknowledging the economic viability of the burgeoning bioenergy sector and unlocking its substantial latent potential within India. While the IBA acknowledges the positive direction of this price revision, it also voices a sentiment that the hike falls short of initial expectations, expressing hope for further upward adjustments in the near future to fully realise the sector’s capabilities. The Ministry of Petroleum has officially revised the procurement price of CBG upwards from ₹1,380 per Metric Million British Thermal Unit (MMBTU) to ₹1,478 per MMBTU, with this revised rate coming into effect on June 1 and remaining applicable until October 31, 2025. The IBA, representing stakeholders across the biogas value chain, lauded this development in an official statement, affirming that “This move demonstrates greater appreciation for the economics of the industry and will meaningfully support unlocking the latent value of bioenergy in India.” This price adjustment is anticipated to provide a more favourable environment for existing and prospective CBG developers, encouraging further investment and expansion within the sector.
Gaurav Kedia, Chairman of the IBA, while acknowledging the positive step, articulated the industry’s broader perspective, stating, “This change in price is a step in the right direction for CBG developers as it corresponds with their reality. However, a higher revision was anticipated, considering the economics of the production, which can also shoulder CBG’s long-held aspirations of contributing to the sustenance of India’s energy independence by fastening progress on existing and new developers in the industry.” Kedia further elaborated that while the announced price achieves parity with Compressed Natural Gas (CNG) at a pre-tax level, there remains an “urgent need of further upward revision to honour and provide premium to the greener molecule,” thereby incentivising the adoption of this environmentally friendly fuel source. In addition to advocating for a more substantial price increase, Kedia also proposed the “formulating a green certification framework with cap and trade should be mandated for companies having higher carbon footprint is the way forward.” This suggestion underscores the IBA’s vision for a comprehensive ecosystem that not only supports the economic viability of biogas production but also actively promotes the reduction of carbon emissions across industries. The implementation of a green certification and cap-and-trade mechanism could provide a market-based incentive for companies to transition towards cleaner energy alternatives, further bolstering the demand for CBG and other renewable fuels.
The IBA, in its official statement, further emphasised the potential catalytic role of a more significant upward price revision. Such a move, according to the industry body, could be instrumental in enhancing the return on investment for entrepreneurs and Micro, Small, and Medium Enterprises (MSMEs) operating in the sector. This, in turn, could facilitate the scaling up of decentralised CBG production across rural India, creating economic opportunities at the grassroots level while addressing waste management challenges. Moreover, a more attractive pricing structure is expected to draw increased institutional finance and Foreign Direct Investment (FDI) into the sector, accelerating progress towards national targets related to clean mobility, effective waste management, and achieving energy self-reliance.
The Indian Biogas Association firmly believes that the current step taken by the government reaffirms its stated objective of supporting the widespread adoption of cleaner fuels, fostering economic development in rural areas through bioenergy initiatives, and advancing the nation’s transition towards a circular and carbon-neutral economy. While advocating for further policy support, the IBA views this recent price hike as a positive indicator of the government’s commitment to harnessing the potential of biogas as a key component of India’s sustainable energy mix.
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