IEEFA: Biogas Scale-Up Can Save India US$29 Billion in Gas Import Costs

An IEEFA report finds India can cut liquefied natural gas import costs by approximately US$29 billion between FY2025 and FY2030 by incrementally replacing 20% of natural gas consumption with biogas and biomethane, while simultaneously addressing waste management and greenhouse gas emissions challenges. Recent government policy changes — including CBG rate revisions and a planned 5% procurement mandate on gas marketing companies — have reinvigorated private sector interest, including from Reliance Industries and Adani Group.

India's compressed biogas sector has underperformed historical targets. The SATAT scheme aimed for 5,000 CBG plants but achieved only 48 in five years, due to fragmented government support, the absence of guaranteed offtake, and complicated permitting processes. The GOBARdhan umbrella scheme and the 2021 National Bioenergy Scheme have consolidated disparate support programmes. Biogas with 45–75% methane content by volume can be upgraded to over 90% methane, producing pipeline-ready biomethane equivalent to natural gas in calorific value. CBG has the same composition as natural gas and is directly compatible with CNG vehicles and distribution infrastructure.

The financial case for biogas in India is reinforced by the country's import dependency. India imports 85% of its oil and 50% of its natural gas requirements. IEEFA's savings estimate assumes natural gas sector consumption reaching 550 million standard cubic metres per day by 2030 at a compound annual growth rate of 22%, with LNG import prices modelled on Japan Korea Marker price forecasts. Biogas slurry as organic fertiliser offers an additional benefit: the government's market development assistance of Rs1,500 per tonne with a Rs15 billion outlay aims to encourage adoption of fermented organic manures, reducing the government's own fertiliser subsidy burden.

IEEFA analyst Purva Jain identifies several remaining policy gaps. Guaranteed offtake through take-or-pay arrangements is essential to give project developers revenue certainty. Feedstock mapping of agricultural and industrial waste is needed to link supply to plant locations and prevent reliance on food crops — a risk that has caused indirect land use changes and higher emissions in ethanol programmes elsewhere. The government must also shift from capital-expenditure incentives to generation-based incentives to ensure plants remain operationally viable after commissioning. Ensuring biogas is produced strictly from waste and not energy crops is critical to preserving the climate credentials of the sector.

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