India plans to hike compressed biogas blending in city gas amid energy crunch

The blending mandate for city gas distribution (CGD) entities was 1% as of fiscal year 2026 (FY26), to be gradually increased to 3%, 4% and 5% in FY27, FY28 and FY29, respectively. The government is now considering enhancing this to well beyond 5% and with a much more stringent timeline.

This underscores a policy shift towards scaling domestic CBG output, as India prioritizes essential gas use and looks to ease pressure on liquefied natural gas (LNG) imports.

Natural gas is processed to produce piped natural gas (PNG) and compressed natural gas (CNG) as fuels for cooking and mobility, respectively.

Government is pushing for a higher adoption of piped or city gas by domestic as well as industrial users due to the acute shortage of liquefied petroleum gas (LPG), the more commonly used cooking fuel.

The government's focus on compressed biogas is gaining momentum amid the energy supply crunch due to the West Asia war, with India depending on the region for 40% of its natural gas imports. The government has ordered emergency gas supply diversion measures by prioritizing essential sectors, including households, hospitals, and fertilizer production.

"As a revamp of the biogas programme is being worked upon, there is a consideration to increase blending targets beyond 5%. It may be taken up to 20% in a graded manner in order to increase CBG adoption and lower the import dependence for liquefied natural gas (LNG)," said one of the two people mentioned above.

“It would require a significant increase in domestic production of CBG, as it is yet to gain momentum... Steps may be taken to support production,” the person said.

Compressed biogas is a clean and renewable produced from organic waste such as agricultural residue, municipal waste, cattle dung, sewage sludge, and food waste. It is purified to produce a methane-rich gas, almost similar in composition and energy content to compressed natural gas (CNG).

City gas distribution, including piped natural gas and compressed natural gas, comprises around 20% of India's overall natural gas consumption. According to the Petroleum and Natural Gas Regulatory Board (PNGRB), it may reach 34% by 2040.

Queries on the development emailed to the petroleum and natural gas ministry on 14 April remained unanswered until press time.

Responding to a query on plans to enhance CBG output and adoption, Sujata Sharma, joint secretary in the petroleum and natural gas ministry, said that blending was voluntary till FY25 but since FY26, the mandates kicked in. "During April 2025–February 2026, 82,000 tonnes of CBG was procured by oil marketing companies, and this figure during the corresponding period of 2024-2025 was 42,700 tonnes."

"Apart from this, around 200 CBG plants have been commissioned and 317 CBG plants are under construction," Sharma added.

The second person cited above said that the proposal to increase CBD blending mandate is part of the country's larger plan to scale up biogas boosting programmes.

Addressing a conference recently, Neeraj Mittal, secretary at the petroleum and natural gas ministry, had said the government looks to scale up its ongoing biogas programme and streamline the initiatives that aim to promote the green fuel.

“The prime minister has directed us to really scale up the compressed biogas programme. It is a programme that has been parented by five departments so far for various subsidies... So, we are working fervently to come up with a single programme,” he had said.

Currently, the petroleum and natural gas ministry is working on the policy framework for CBG, including the Sustainable Alternative Towards Affordable Transportation (Satat) scheme, the environement ministry runs the waste management policy, new and renewable energy works on biogas technology promotion through the national biogas programme, while the housing and urban affairs ministry is responsible to get support for urban municipal waste.

Dinesh Kumar Sarraf, former chairman of PNGRB and state-run ONGC, noted the need to incentivize CBG entities for scaling up output. “Achieving an ambitious target may be tough, as CBG production and adoption in the country is yet to gain momentum," Sarraf said. "Government would have to support these entities. Further, an uninterrupted supply of feedstock needs to be ensured, which has been a key obstacle for growth of this space.”

He also said CBG blending has its benefits, as unlike the case of ethanol blending in auto fuel, there wouldn't be any debate over food security since the gas does not require food components as feedstock.

The first person cited above said a higher blending of CBG in city gas wouldn't require significant changes in operations and will not have an adverse impact on any existing systems. An oft-cited issue in automobiles is the hit to vehicle performance and components when auto fuel is blended with ethanol.