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The Indian Biogas Association has urged the central government to create a dedicated INR 10,000 crore fund to accelerate growth in the biogas and compressed biogas (CBG) sector. Ahead of the Union Budget, the association has sought higher capital subsidies, citing a sharp rise in project costs over the past decade. It has also recommended increasing the subsidy cap per plant and strengthening demand for by-products such as fermented organic manure through phased blending mandates in fertilisers. Additional proposals include carbon credit monetisation and green certificate mechanisms to improve project viability. The measures aim to attract private investment, support rural income generation, reduce fertiliser dependence, and position biogas as a key driver of India's clean energy and sustainable agriculture transition.
The Indian Biogas Association (IBA) has urged the central government to create a dedicated INR 10,000 crore fund to support the biogas and compressed biogas (CBG) sector through enhanced capital subsidies in the forthcoming Union Budget. Advertisement
In its recommendations, the industry body has proposed increasing the existing capital subsidy by 50 per cent to INR 6 crore for every 4.8 tonnes per day (TPD) of CBG production capacity. It has also suggested raising the maximum subsidy cap per project to INR 25 crore, from the current limit of INR 10 crore. At present, the Central Financial Assistance (CFA) scheme offers a subsidy of INR 4 crore per 4.8 TPD of capacity.
The association said the proposed increase is necessary as the capital expenditure required to set up CBG plants has risen by more than 50 per cent since the subsidy scheme was introduced in 2014. Higher equipment costs, technology upgrades, and compliance requirements have significantly increased project costs, impacting financial viability.
IBA said it will submit its recommendations to the Ministry of New and Renewable Energy and the Ministry of Finance. The proposals have also been raised at multiple industry forums ahead of the Budget.
In addition to financial support, the association has called for policy measures to strengthen demand for biogas-linked by-products. It proposed mandating a minimum 5 per cent blending of fermented organic manure (FOM) in total fertiliser usage by 2028, to be increased in phases to 10 per cent by 2030. According to IBA, this would support soil health, reduce dependence on chemical fertilisers, and improve the overall economics of biogas projects.
The association highlighted that the central government currently spends around INR 2 lakh crore annually on chemical fertiliser subsidies, which do not contribute to improving soil organic content. Redirecting even 10 per cent of this amount toward FOM-linked or carbon-based incentives could support sustainable agriculture, reduce imports, and promote climate-resilient farming practices, it said.
IBA also noted that the current allocation of INR 1,450 crore over three years for Market Development Assistance for organic manure from CBG plants is inadequate, given the scale of investment required to build a viable biogas ecosystem.
To improve long-term project viability, the association has recommended enabling carbon monetisation through a Green Certificate mechanism. It suggested allowing biogas and CBG producers to sell carbon credits in domestic and international markets. Carbon prices in voluntary markets currently range between USD 5 and USD 50 per tonne of carbon dioxide.
According to IBA estimates, even at the lower end of this range, carbon monetisation could add an estimated INR 10-12 per kilogram of methane produced. With around 1,000 CBG plants expected by 2030, the potential market value of CBG-linked green certificates could reach approximately INR 4,000 crore.
The association also proposed exploring a cap and trade mechanism for carbon-intensive industries, along with partial government support to help initiate carbon pricing in the biogas sector. IBA said these measures could unlock private investment, boost rural incomes, and position biogas as a key pillar of India's green growth strategy.
Source: PTI
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