Government Subsidies for CBG Plants in India: Powering the Green Energy Revolution

Introduction

India is at a critical stage in its energy development journey. With a population exceeding 1.4 billion and rapid urbanization, the demand for energy is increasing exponentially. Conventional energy sources such as coal, oil, and natural gas are facing depletion, price volatility, and environmental challenges. At the same time, India is striving to meet its commitments under international climate agreements and its national goal of achieving net-zero carbon emissions by 2070. Renewable energy solutions, particularly those that can utilize local resources efficiently, are therefore essential for sustainable development.

Compressed Biogas (CBG) represents one of the most promising renewable energy alternatives. While biogas has been in use for decades, CBG, being purified and compressed, can be used as a direct substitute for natural gas and CNG in transportation and industrial applications. This not only helps reduce dependence on fossil fuels but also provides a viable solution for managing organic waste, reducing greenhouse gas emissions, and generating rural employment. By tapping into agricultural residues, cattle dung, and other organic waste, CBG plants convert waste into a valuable energy resource, supporting both environmental sustainability and economic development.

The Indian government has recognized the strategic importance of CBG and has introduced various policy measures and subsidies to promote its adoption. These incentives are aimed at reducing capital expenditure for entrepreneurs, ensuring market stability through offtake agreements with Oil Marketing Companies (OMCs), and providing technical and operational guidance. By providing a structured framework, the government encourages private and public sector participation, supports rural economies, and contributes to national energy security.

Moreover, the push for CBG aligns with multiple national initiatives such as the Swachh Bharat Mission, which focuses on cleanliness and sanitation, and Atmanirbhar Bharat, which emphasizes self-reliance through domestic production of energy resources. These programs collectively create a conducive environment for the establishment and growth of CBG plants, ensuring that the benefits extend from energy production to socio-economic development.

In this article, we’ll cover:

·         Government Policy Framework for CBG Promotion

• Major Subsidy Schemes for CBG Plants
• Government subsidies and support programs for CBG plants
• How subsidies benefit farmers, industries, and entrepreneurs
• The role of cbg plant manufacturers in India
• How cbg plant installation services in Maharashtra are setting examples for others
• The future outlook for CBG in India

Government Policy Framework for CBG Promotion

The Indian government’s approach to promoting CBG plants is grounded in a comprehensive policy framework that integrates financial incentives, technical guidance, and regulatory oversight.

1.1 Role of MNRE
The Ministry of New and Renewable Energy (MNRE) provides central financial assistance for the establishment of CBG plants. It monitors project implementation, offers technical guidance, and ensures compliance with national energy and environmental standards. MNRE’s support reduces the initial capital investment required and increases the financial viability of projects.

1.2 Role of MoPNG
The Ministry of Petroleum and Natural Gas (MoPNG) is responsible for implementing the SATAT scheme. It facilitates offtake agreements between CBG producers and Oil Marketing Companies (OMCs) such as IOCL, BPCL, and HPCL. These agreements provide a guaranteed market for CBG, reducing commercial risk for plant operators.

1.3 Role of MoEFCC
The Ministry of Environment, Forest and Climate Change (MoEFCC) ensures that CBG plants comply with environmental regulations. It oversees waste management protocols, monitors emissions, and grants necessary clearances, ensuring that projects align with India’s sustainability goals.

1.4 Coordination Between Central and State Agencies
Central ministries work closely with state renewable energy agencies to streamline approvals, provide localized support, and facilitate subsidy disbursement. This coordination ensures that projects are executed efficiently, benefiting from both central incentives and state-specific support programs.

1.5 Alignment with National Initiatives
CBG promotion aligns with broader government initiatives such as the Swachh Bharat Mission, which focuses on cleanliness and waste management, and Atmanirbhar Bharat, which promotes domestic energy production and self-reliance. This strategic alignment ensures that CBG projects contribute to multiple national objectives simultaneously.

Major Subsidy Schemes for CBG Plants

2.1 SATAT Scheme (Sustainable Alternative Towards Affordable Transportation)

Launched in October 2018, the SATAT scheme is a flagship program aimed at promoting CBG as a renewable fuel for transportation.

• Objective: Reduce dependence on fossil fuels and promote renewable energy adoption in the transport sector.
• Implementation: Entrepreneurs register CBG plants with OMCs and enter into long-term offtake agreements, ensuring market stability.
• Financial Support: Capital assistance is provided for plant setup, feedstock collection, and biogas purification.
• Achievements: By 2025, the government targets 5,000 operational CBG plants producing 15 million metric tonnes per annum, contributing to clean energy and rural employment.

2.2 MNRE Central Financial Assistance (CFA)

The Ministry of New and Renewable Energy (MNRE) provides Central Financial Assistance (CFA) to promote the establishment of CBG plants in India. This scheme is designed to reduce the capital expenditure burden for entrepreneurs and organizations, thereby encouraging the adoption of renewable energy from organic waste. It plays a crucial role in making CBG projects financially viable and attractive for private and public sector investors.

Objective

• To encourage the production and use of CBG as a clean energy alternative.
• To reduce greenhouse gas emissions and manage organic waste efficiently.
• To support rural entrepreneurship and employment through bioenergy projects.

Eligibility

• Entrepreneurs and private companies.
• Farmer Producer Organizations (FPOs) and cooperatives.
• Municipal corporations and urban local bodies (ULBs).
• Institutions engaged in waste-to-energy and renewable energy projects.

Subsidy Details

The financial support provided by MNRE depends on the capacity of the CBG plant. The assistance is offered as a capital grant to reduce the upfront investment.

Plant Size	Subsidy Amount	Notes
Large (>2000 m³/day)	₹4 crore per MW	For large-scale industrial or urban plants
Medium (1000–2000 m³/day)	₹2.5 crore per MW	Medium-scale plants, suitable for towns or     clusters
Small (<1000 m³/day)	₹1 crore per MW	Small-scale plants, suitable for villages or cooperatives
Waste-to-Energy Projects	Up to ₹10 crore per MW	For projects using municipal or industrial organic waste

Note: The subsidy is disbursed after commissioning and verification of the project to ensure compliance with MNRE guidelines.

Application Process

1. Project Proposal / DPR Preparation: Submit a detailed project report including plant capacity, feedstock availability, technology, financials, and expected output.
2. Submission to MNRE: Submit the DPR through the MNRE portal or through the designated State Nodal Agency.
3. Evaluation: MNRE conducts a technical and financial evaluation to ensure feasibility.
4. Approval: Once approved, the applicant receives a sanction letter detailing the subsidy amount and conditions.
5. Commissioning: After setting up the plant, MNRE or the nodal agency conducts a site inspection.
6. Subsidy Disbursement: Post-verification, the capital grant is released, usually in phases depending on project milestones.

Key Benefits

• Reduces initial investment costs, making projects viable for small and medium entrepreneurs.
• Encourages the use of local biomass, agricultural residues, and organic waste.
• Supports environmental sustainability by reducing methane emissions.
• Facilitates rural development and job creation through plant operations and feedstock collection.

Example

For a medium-scale CBG plant producing 1,500 m³/day:

• Estimated project cost: ₹6 crore
• MNRE subsidy (CFA): ₹2.5 crore
• Net capital investment by the entrepreneur: ₹3.5 crore
• Expected ROI: 5–6 years, with stable revenue from offtake agreements and sale of organic slurry.

2.3 GOBAR-DHAN Scheme (Galvanizing Organic Bio-Agro Resources Dhan)

GOBAR-DHAN converts cattle dung and organic waste into CBG and compost, promoting rural energy generation.

• Beneficiaries: Rural entrepreneurs, Gram Panchayats, cooperatives.
• Financial Support: Capital grants, technical guidance, and training programs.
• Implementation: Projects are registered on the national portal, verified, and commissioned. The scheme supports both energy generation and sanitation.
• Benefits: Reduces methane emissions, generates rural employment, and produces organic fertilizers for agriculture.

2.4 Waste-to-Energy Programme

Supports the conversion of urban and agricultural waste into energy.

• Financial Assistance: Capital subsidy from ₹50 lakh/MW for power projects to ₹4 crore/4800 kg/day for biogas upgrading projects.
• Technical Support: Advisory on technology selection, plant design, and operational efficiency.
• Implementation: Through MNRE and state nodal agencies in collaboration with urban local bodies (ULBs).

State-Level Subsidies and Incentives for CBG Plants

In addition to the central government schemes, many Indian states offer financial and policy incentives to promote the establishment of CBG plants within their jurisdictions. These state-level measures complement central subsidies like SATAT and MNRE CFA, providing entrepreneurs with additional support, thereby reducing capital investment and improving project feasibility.

3.1 Objectives of State-Level Incentives

• Encourage local entrepreneurship in renewable energy.
• Facilitate regional adoption of CBG technology.
• Promote organic waste management and rural employment.
• Ensure financial viability for small and medium-scale CBG projects.

3.2 Common Types of State Incentives

1. Capital Subsidy – A direct grant to reduce plant setup costs.
2. Interest-Free or Concessional Loans – Loans with low or zero interest to ease the financial burden.
3. Tariff or Feed-in Benefits – Guaranteed minimum price for energy or CBG sold, ensuring predictable revenue.
4. Land and Tax Concessions – Land leased at concessional rates, property tax exemptions, or reduced registration charges.
5. Infrastructure Support – Assistance with water, electricity, or feedstock logistics.

3.3 State-Wise Examples

State	Type of Incentive	Details & Benefits
Maharashtra	Capital subsidy	Up to ₹20 lakh for CBG plants; electricity duty waiver for plant operations
Punjab	Interest-free loan	Supports farmers and small-scale plants; encourages village-level entrepreneurship
Haryana	Tariff benefits	₹7.25/unit for electricity generated from biogas; ensures predictable revenue
Gujarat	Feed-in tariff & infrastructure support	Guarantees minimum CBG price and helps with grid connection and waste collection
Uttar Pradesh	Land & tax concessions	Lease of land at concessional rates; exemption from property and stamp duties for renewable energy projects

3.4 Implementation and Process

• State Renewable Energy Development Agencies (SREDAs) act as nodal agencies for subsidy disbursement.
• Applicants must submit project proposals/DPRs along with central scheme approvals (if applicable).
• Verification and technical evaluation are carried out by state authorities before release of incentives.
• Many states require adherence to environmental and safety norms, ensuring sustainable development.

3.5 Impact of State-Level Incentives

1. Financial Viability – Reduces upfront capital requirements and operational costs.
2. Encouraging Local Entrepreneurs – Small and medium enterprises (SMEs) and cooperatives can participate in energy production.
3. Waste Management – Facilitates collection and processing of municipal and agricultural waste, reducing environmental pollution.
4. Rural Development – Generates employment in feedstock collection, plant operation, and ancillary activities.
5. Boosting Renewable Energy Targets – Helps states meet renewable energy and climate action goals aligned with the central government.

Application & Approval Process for CBG Plants

Establishing a CBG plant and availing government subsidies requires following a structured application and approval process. Understanding each step and avoiding common pitfalls ensures smooth project execution.

Step-by-Step Guidance

1. Feasibility Study & DPR Preparation
   1. Conduct a detailed assessment of feedstock availability, plant capacity, technology options, and projected energy output.
   1. Prepare a Detailed Project Report (DPR) including technical, financial, and environmental aspects.
   1. Include calculations for expected revenue, ROI, and payback period.
2. Application Submission
   1. Submit the DPR along with required documents to the central scheme portals (SATAT, MNRE CFA) or the state nodal agency.
   1. Ensure all documents are complete and accurate, including company registration, land lease details, environmental clearances, and financial statements.
3. Evaluation by Authorities
   1. Technical and financial evaluation is conducted by MNRE, MoPNG, or State Nodal Agencies.
   1. Authorities check for viability, compliance, technology selection, and environmental safeguards.
4. Approval and Sanction
   1. Once the project meets all criteria, a sanction letter is issued specifying the subsidy amount, terms, and timelines.
   1. Applicants may need to sign agreements with OMCs for CBG offtake (in case of SATAT).
5. Plant Commissioning
   1. After installation, a site inspection is conducted to ensure compliance with DPR specifications.
   1. Operational readiness, feedstock handling, and plant efficiency are verified.

• Subsidy Disbursement
  • Post-verification, the subsidy is released, usually in phases, tied to milestones like commissioning and production capacity achievement.

Common Pitfalls

• Incomplete or inaccurate DPR submission.
• Failure to secure land and environmental clearances in advance.
• Lack of proper coordination with state agencies for approvals.
• Not having proper feedstock supply agreements, which can delay plant commissioning.

Tips for Smooth Approval

• Engage with state nodal agencies early to understand local requirements.
• Maintain transparent financial and technical documentation.
• Plan feedstock supply chain in advance to avoid operational delays.
• Monitor timelines closely for subsidy disbursement milestones.

CASE STUDY

HPCL CBG Plant – Badaun, Uttar Pradesh

The HPCL Compressed Biogas (CBG) Plant in Badaun, Uttar Pradesh, commissioned in January 2024, represents one of India’s largest bioenergy initiatives aimed at reducing agricultural residue burning and promoting sustainable fuel alternatives. Developed with an investment of approximately ₹133 crore on a 50-acre site, the plant utilizes 100 metric tons per day of rice straw to produce 14 tons of CBG daily along with 65 tons of nutrient-rich solid manure. Using Praj Industries’ RenGas™ technology, the facility efficiently converts agricultural waste into clean energy, which is then supplied to commercial and industrial consumers. The plant is equipped with advanced raw material handling, processing, CBG filling, and manure management systems to ensure smooth operations and high productivity. Beyond energy production, the project has significant environmental and social benefits: it mitigates the hazardous practice of stubble burning in the region, reduces greenhouse gas emissions, provides farmers with a sustainable waste management solution, and supplies eco-friendly manure as a replacement for chemical fertilizers. Strategically, the plant aligns with India’s National Biofuel Policy 2018 and the government’s vision to promote renewable energy and reduce dependence on fossil fuels, while also generating local employment opportunities and stimulating the regional economy.

Summery

The Government of India is actively promoting Compressed Biogas (CBG) plants under initiatives like the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme, the Ministry of New and Renewable Energy’s (MNRE) Waste-to-Energy Programme, and the National Bioenergy Programme. These initiatives aim to boost clean energy production, reduce dependence on fossil fuels, and promote waste-to-wealth opportunities in rural and industrial sectors. Under the MNRE’s Central Financial Assistance (CFA), new CBG plants can receive up to ₹4 crore per 4,800 kg/day capacity, while existing biogas plants being upgraded are eligible for up to ₹3 crore per 4,800 kg/day, with a maximum limit of ₹10 crore per project. Additionally, the Ministry of Petroleum and Natural Gas provides financial assistance for biomass aggregation and processing machinery, with a total outlay of ₹564.75 crore from FY 2023–27. Many state governments, such as Madhya Pradesh, Uttar Pradesh, Gujarat, and Punjab, also offer supplementary incentives including capital subsidies, tax exemptions, and land support. Projects located in special category states or gaushala/community-based setups may receive additional benefits. Overall, a medium-scale CBG plant can typically avail between ₹4 crore to ₹10 crore in total subsidies, making CBG production a financially viable and environmentally sustainable venture that contributes to India’s green energy revolution.