The minister indicated that the new policy would build one existing measure in the CBG value chain.
29 Jan 2026 | 185 Views | By Kiran Murali and Shahkar Abidi
Amid a strong push to transition to cleaner fuels from fossil fuels and scale up the availability of alternative fuels, the Ministry of Petroleum and Natural Gas will soon come out with a policy to strengthen the Compressed Biogas (CBG) ecosystem, according to Minister Hardeep Singh Puri.
“I just ...
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Amid a strong push to transition to cleaner fuels from fossil fuels and scale up the availability of alternative fuels, the Ministry of Petroleum and Natural Gas will soon come out with a policy to strengthen the Compressed Biogas (CBG) ecosystem, according to Minister Hardeep Singh Puri.
“I just want to share something on the two-day conference on developing the Indian CBG ecosystem. We had convened high-level conferences. The key outcomes are presented and, based on this, my ministry will be coming up with a policy on CBG in a short time frame,” Puri said on Thursday.
The minister indicated that the new policy would build on existing measures in the CBG value chain. The policy is expected to focus on financial assistance for biomass, aggregation machinery, schemes for the development of pipeline infrastructure, central financing, and market development assistance for FOM and LFOM.
Currently, the Ministry of Renewable Energy provides financial incentives for the value chain, while the Department of Fertilizers supports market development and the petroleum ministry handles pipeline infrastructure and biomass aggregation.
Biogas, which consists mainly of methane and carbon dioxide, is produced from organic matter such as food or animal waste. It has the potential to replace natural gas and provides a solution for waste management, reduces greenhouse gas emissions, and increases renewable energy production.
Biogas has to be purified and upgraded to at least 95% methane by volume to be used as vehicle fuel. While blending of CBG in CNG was voluntary till 2024–25, the government has mandated blending for transport and piped natural gas (PNG) for households in a phased manner from the current financial year, with a target of 5% by FY29.
CBG blending in total CNG and PNG consumption is set at 1% in FY26, with blending to be increased to 3% and 4% in FY27 and FY28, respectively. The primary objective of CBG blending is to drive demand for biogas within the City Gas Distribution (CGD) sector. This initiative is a strategic move to substitute imported liquefied natural gas (LNG), which in turn will save foreign exchange.
Many private companies are setting up biogas plants across the country. India is estimated to have around 132 CBG plants with a combined production capacity of 920 tonnes per day.
Recently, India’s largest carmaker, Maruti Suzuki, showcased its Wagon R and Victara models that run on biogas. The automaker plans to set up nine CBG plants in Gujarat by 2027, in partnership with Amul, Banas Dairy, and the National Dairy Development Board (NDDB). By FY31, the company expects CNG and CBG vehicles to account for about 35% of its powertrain mix.