Can Biogas Aid India’s Energy Security

Why in the News?

Renewed West Asia tensions have again exposed India’s dependence on crude oil, of which it imports nearly 85% of its needs. This has revived the case for Compressed Biogas (CBG) as an alternative fuel. 

What Is the Policy Architecture Built Around Compressed Biogas?

1. Compressed Biogas (CBG): Biogas is formed from a mixture of methane, carbon dioxide and small quantities of other gases from anaerobic digestion of organic matter. It is processed and compressed until chemically identical to CNG. It is renewable, carbon-neutral, and usable for electricity, heating or cooking.
2. Import exposure: India imports nearly 85% of its crude oil needs, much of it from West Asia. Around 90% of its LPG imports transit the Strait of Hormuz.
3. SATAT initiative: The Sustainable Alternative Towards Affordable Transportation scheme, launched in 2018, set a target of 5,000 CBG plants by 2023.
4. GOBARdhan scheme: The Galvanising Organic Bio-Agro Resources Dhan scheme offers grants of up to ₹50 lakh per district for community biogas plants under a “waste to wealth” approach.
5. Budgetary allocation: ₹564 crore has been earmarked for biomass collection machinery and ₹994 crore for pipelines linking biogas plants to the gas grid.
6. Blending mandate: The National Biofuels Coordination Committee approved a mandatory CBG blending obligation in 2023. Gas distributors must blend CBG into supply from FY26, starting at 1% and rising to 5% by FY29.

Why Has Implementation Stalled Despite a Decade of Support?

1. Target shortfall: Only 132 of the 5,000 targeted plants are complete as of June 3, 2026.
2. Infrastructure gap: Inadequate collection and pipeline infrastructure has slowed the commissioning of plants.
3. Credit access: Biogas project developers face difficulty accessing formal credit.
4. Upfront cost: The high initial cost of CBG technology deters private investment.
5. Missing fiscal incentives: Accelerated depreciation and tax holidays are not yet in place; their absence keeps many projects economically unviable for private players.

Does the Push for Energy Security Create a New Food Security Risk?

1. Administered pricing skew: The government fixes per-litre ethanol prices by feedstock. Maize-based ethanol commands the highest price, rice-based ethanol the lowest, and molasses-based ethanol is priced between the two.
2. Price growth favouring maize: The administered price of maize-based ethanol grew at a compound annual growth rate of 11.7% between FY22 and FY25.
3. Cropping shift: Maize area under cultivation and output rose between FY22 and FY25, while pulses output declined and oilseeds and other cereals registered only modest growth.
4. Yield divergence: Economic Survey 2026 data show national maize yield rising from about 2.56 tonnes per hectare in FY16 to about 3.78 tonnes per hectare in FY25, while yields of soybean, sunflower, rapeseed, peanut and millet either stagnated or declined.
5. Import consequence: India already imports large quantities of pulses and edible oils. A pricing structure that disincentivises their cultivation could deepen this dependence and expose domestic food prices to volatility during supply shocks.

What Do Germany and Denmark Show About Managing This Trade-off?

1. Germany, Renewable Energy Sources Act (2000): Introduced income guarantees and operator bonuses for biogas producers, accelerating sector growth.
2. Germany, corn mania: High feedstock profitability drove farmers to replace other food crops with maize over more than a decade.
3. Germany, corrective cap: The government was eventually forced to impose a cap on maize use in biogas plants to contain the distortion, a correction applied only after the damage had occurred.
4. Denmark, feedstock design: Denmark targets 100% biomethane in its gas system by 2030 and discourages the use of crops as feedstock from the outset.
5. Denmark, primary feedstock: Livestock manure and agricultural waste, not food crops, form the country’s primary feedstock base.
6. Scale context: Europe, China and the United States together account for 90% of global biogas production; Germany ranks among Europe’s largest producers, alongside France, Denmark and the U.K.

Can India Replicate Ethanol’s Blending Success With CBG?

1. Ethanol precedent: Ethanol blending in petrol rose from 1.5% in 2014 to 20% by December 2025, five years ahead of the original 2030 target.
2. Budgetary signal: In the February 2024 Budget speech, the Finance Minister announced that phased CBG blending in CNG for transport and Piped Natural Gas for domestic use “will be mandated.”
3. Scale-up plan: The government is expanding the establishment of CBG plants to meet the phased blending targets of 1% by FY26 and 5% by FY29.
4. Open question: Whether this scale-up can be achieved without repeating the pricing distortion that shaped the ethanol programme’s effect on cropping patterns remains unresolved.

Conclusion

India’s compressed biogas and ethanol blending programme is designed to cut crude oil import dependence, but its administered feedstock pricing currently favours maize over pulses and oilseeds. Left uncorrected, this design risks converting an energy import problem into a food import problem, as Germany’s early “corn mania” illustrates. The unresolved question is whether India builds feedstock neutrality into pricing design now, on the Danish model, or waits to correct the distortion after it has already reshaped cropping patterns, as Germany did. Closing the CBG implementation gap, from 132 plants toward the 5,000 target, will also require resolving credit, infrastructure and upfront-cost barriers independent of the pricing question.

PYQ Relevance

[UPSC 2022] Do you think India will meet 50 percent of its energy needs from renewable energy by 2030? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above objective? Explain

Linkage: The PYQ asks whether subsidy redesign can shift India’s energy sourcing toward renewables by a fixed target year. It tests the same subsidy-design logic the article questions, whether an incentive structure achieves its stated energy goal without distorting a different sector