Oil majors bet on compact bio-gas to tackle emission woes in India

by Shahkar Abidi 24 Dec 2019

Over 500 letters of intent (LoIs) have been issued to entrepreneurs by three government-owned oil marketing companies (OMCs) for setting up of Compact Bio-Gas (CBG) plants, claims a top official from the Ministry of Petroleum & Natural Gas. The government envisages stting up about 5,000 such CBG plants across the country through its ‘SATAT’ (Sustainable Alternative Towards Affordable Transportation) initiative, with an estimated production of 15 MMT CBG per annum by 2023.

Speaking to Autocar Professional on the sidelines of a road show organised in Navi Mumbai by the three OMCs on Monday, Vijay Sharma, Director, Ministry of Petroleum & Natural Gas said, “India can produce approximately 62 MMT equivalent of CBG annually which is sufficient to replace the entire gas demand of the nation and contribute in making a ‘brown revolution’ for energy. We are planning to ask to link the CBG project and waste management to smart cities so as to get the assured supply of feed for the project.

The government has offered a procurement price of Rs 46 till 2024 with take-off assurance of 10 years plus GST. The industry experts claim that CBG has the potential to replace CNG as an affordable fuel in automotive, industrial and commercial uses by conversion of biomass or any kind of organic waste. In fact, the evolving CBG program will go a long way in reducing India's dependence on crude oil imports.

What is CBG?
Compressed Biogas (CBG) is purified and compressed biogas, which is produced through a process of anaerobic decomposition from various waste/ biomass sources like agriculture residue, cattle dung, sugarcane press mud & spent wash of distilleries, sewage water, municipal solid waste (MSW), biodegradable fractions of industrial waste etc. CBG can be used as a green fuel in automotive, industrial and commercial sectors. 

Speaking to Autocar Professional, a senior BPCL executive earlier said, “The CBG can be set up at the centers where biogas is available thereby making it available even in the interior of the country in comparison to CNG which is only available in certain city pockets”. The same BPCL executive explained that the investment on each such plant by entrepreneurs comes around Rs 10-50 crore on average while the conversion cost from CNG to CBG would come to around Rs 50,000-60,000 per vehicle. Interestingly, CBG production also releases a byproduct which can be used as manure for the irrigable soil.

Financing a big problem
The road show was attended by letter of intent holders of various OMCs for putting up CBG plants and other stakeholders including sugar mills owners, entrepreneurs, technology Providers and bankers. Most of the entrepreneurs present at the workshop complained at the lack of financing by banks for the CBG project. VS Shridhar, CEO, of Pune based biofuel company Greenjoules said, “ Though everything about the project looks good on paper, the ground realities are different. I just hope things to improve going forward”. The ministry and OMCs are now in discussions with top bank management including State Bank of India (SBI) to address the issue, the ministry  officials said.

India’s emission woes
Given the growing emission concerns, the Government has mooted a roadmap for cutting crude oil dependence by 10% by 2021-22 and reducing the energy emissions intensity by 33%-35% by 2030 as per the Nationally Determined Contribution (NDC) targets agreed in COP21 at Paris.

Referring to a report on low carbon strategies for inclusive growth penned by Kirit Parikh in 2014, the white paper reveals that the transport sector contributed 138 TMT of carbon-dioxide in 2007-2008, which was around 7% of overall carbon-dioxide from India.

Tags: OMCs, CBG, CNG