Biomass gets a boost as budget promises financial help in buying machinery

The Indian government announced mandatory blending of compressed biogas in CNG and PNG in November 2023.

Finance Minister Nirmala Sitharaman said on February 1 that the government would provide financial assistance for the procurement of machinery to help in biomass collection.

While presenting the Interim Budget, Sitharaman said the mandatory blending of compressed biogas in compressed natural gas (CNG) and piped natural gas (PNG) would be mandated.

“Phased mandatory blending of compressed biogas in compressed natural gas for transport and piped natural gas for domestic purposes will be mandated,” she said. The finance minister, however, did not specify the allocation.

In November 2023, the government announced mandatory blending of compressed biogas in CNG and PNG in a phased manner to promote consumption of biogas in the country. The government expects that the move would also help reduce the country’s reliance on imports of crude oil.

The government had said CBG blending obligation (CBO) would be voluntary till financial year 2024-25 (FY25), and the mandatory blending obligation would start from FY26. CBO will be kept as 1 percent, 3 percent and 4 percent of total CNG/PNG consumption for FY26, FY27 and FY28 respectively, it added.

CBO would be 5 percent from FY29 onwards. A Central Repository Body (CRB) will monitor and implement the blending mandate.

“Finance Minister Nirmala Sitharaman today presented financial assistance for machinery for the procurement of biomass schemes during Union Budget 2024, which will support the use of biomass to convert into CBG as part of the government's commitment to a greener future," Gaurav Kedia, chairman of Indian Biogas Association, said. "The government also emphasised mandating the blending of CBG and CNG, including that for household utilisation, to support the transition towards energy security.”

Petroleum and Natural Gas Minister Hardeep Singh Puri had said earlier that mandatory compressed biogas blending would encourage investment of around Rs 37,500 crore and facilitate establishment of 750 CBG projects by 2028-29.

The government had highlighted that the key objectives of the CBO are to stimulate demand for compressed biogas in the city gas distribution sector, import substitution for Liquefied Natural Gas (LNG) and saving on forex.