Indian Biogas Association Proposes Rs 10,000 Crore Fund for Industry Growth

The Indian Biogas Association (IBA) has put forward a substantial proposal for a Rs 10,000 crore fund aimed at providing capital subsidies to bolster the biogas industry. This recommendation, issued on January 11, 2024, is intended for consideration in the upcoming budget. The IBA is advocating for increased financial support to enhance the viability and growth potential of this green sector.

In its statement, the IBA suggested raising the capital subsidy by 50 percent to Rs 6 crore for every 4.8 tonnes per day (TPD) of Compressed Biogas (CBG) production capacity. Furthermore, the association proposed an upper limit of Rs 25 crore for individual projects, which would enable larger-scale initiatives to secure funding. The IBA plans to present these recommendations to the Ministry of New & Renewable Energy and the Ministry of Finance.

Strategies for Sustainable Agriculture

The IBA has also emphasized the need for a minimum of 5 percent mandated blending of Fermented Organic Manure (FOM) in overall fertilizer applications by 2028, with a gradual increase to 10 percent by 2030. This initiative is part of a broader strategy to position the biogas sector as a key component of India’s green growth objectives. The association asserts that enhanced fiscal support, along with streamlined implementation processes, is essential to unlock significant private investment and generate rural income opportunities.

In addition, the IBA highlighted the rising costs associated with the capital expenditure (capex) for CBG plants, which have surged by over 50 percent since the introduction of the Central Financial Assistance (CFA) scheme in 2014. The current cap for this scheme stands at Rs 4 crore per 4.8 TPD setup, with a project cap of Rs 10 crore. Given the increased financial demands, the IBA is advocating for a revision of these limits to better support project viability.

The association pointed out that the central government allocates approximately Rs 2 lakh crore annually for chemical fertilizer subsidies, which do not contribute to improving soil organic content. It proposed that even a small reallocation of these funds—around 10 percent or Rs 20,000 to 25,000 crore—towards FOM-linked or carbon-based incentives could significantly enhance soil health and promote climate-smart agricultural practices.

Carbon Monetisation and Market Opportunities

The IBA is also calling for the introduction of a FOM-Chemical Fertilizer Blending Obligation as part of a broader Organic-Chemical Fertilizer Blending Programme. It aims to align this initiative with the Ministry of Petroleum and Natural Gas’s (MoPNG) Compressed Biogas blending obligations, which promote a cleaner energy transition through gradual blending of CBG with compressed natural gas (CNG) and piped natural gas (PNG).

Moreover, the association advocates for carbon monetisation through a Green Certificate mechanism, allowing biogas producers to sell carbon credits on both international and domestic platforms. This approach is expected to not only contribute to government climate targets but also create additional revenue streams for producers. The market for carbon credits, currently valued between USD 5 to 50 per tonne of CO2, could significantly enhance the financial viability of biogas projects. The IBA estimates that with around 1,000 CBG plants anticipated by 2030, the potential market value for CBG-based green certificates could reach approximately Rs 4,000 crore.

The IBA has also proposed the implementation of “cap and trade” practices for carbon-intensive industries, suggesting that these entities could purchase green certificates if they exceed their allocated greenhouse gas quotas. To facilitate this transition, the association recommends that the government subsidise part of the proposed carbon pricing initiative to initiate the process effectively.

The recommendations from the IBA reflect a strategic vision for the biogas industry in India, emphasizing the need for increased support and innovative funding approaches to foster sustainable development in the sector.