India Can Cut US$29 Billion in LNG Import Bills Through Biogas Scale-Up

India could reduce its liquefied natural gas import bill by approximately US$29 billion between FY2025 and FY2030 by incrementally replacing 20% of natural gas consumption with biogas and biomethane, according to IEEFA analysis. The government's recent policy initiatives — including revised compressed biogas pricing and a planned 5% CBG procurement mandate on gas marketing companies — have renewed private sector interest after years of slow adoption.

India's biogas sector suffered from fragmented government support, complicated permitting processes, and the absence of guaranteed offtake for compressed biogas (CBG). Under the SATAT scheme only 48 CBG plants were operationalised in five years against a target of 5,000. The government consolidated disparate schemes under the National Bioenergy Scheme in 2021 and subsequently launched the GOBARdhan umbrella initiative to coordinate organic waste conversion policies. The revised CBG rate, aligned to higher global gas prices, and a planned mandate requiring gas marketing companies to procure 5% of their supply as CBG have reignited investment interest from major conglomerates including Reliance Industries, which has announced plans for 100 CBG plants, and Adani Group, which has committed to five plants in the next five years.

Biogas presents a multi-dimensional opportunity for India. With methane content of 45–75% by volume, raw biogas can be used directly for cooking, electricity, and heat. When upgraded to over 90% methane — equivalent to natural gas in calorific value — it becomes pipeline-ready biomethane that can be injected into gas grids. CBG directly substitutes CNG in compatible vehicles. Beyond energy, biogas slurry serves as organic fertiliser, completing a nutrient recycling loop; the government's market development assistance package of Rs1,500 per tonne with an outlay of Rs15 billion aims to encourage farmers to adopt fermented organic manures.

Key structural barriers remain. Feedstock mapping of agricultural and industrial waste is needed to link supply sources to biogas plants and prevent reliance on food crops. The government must shift incentive design from capital-expenditure grants to generation-based incentives to ensure operational viability of plants after commissioning. Take-or-pay arrangements for CBG offtake are critical to give project developers revenue certainty. IEEFA notes that biogas feedstock must be restricted to waste and agricultural residue — not food crops — to avoid indirect land use changes that would negate climate benefits, as seen with ethanol programmes in Brazil.

Key figure — Replacing 20% of natural gas consumption with biogas by 2030 could save India approximately US$29 billion in LNG import bills between FY2025 and FY2030.