The importance of the bioenergy segment has been much talked about in the context of creating a sustainable and circular economy. However, the lack of a policy and financial impetus has held back the segment from reaching its full potential. Now, however, policymakers are showing interest in this segment with the socio-economic issues of burgeoning crude oil imports and pollution levels coming into play.
A Renewable Watch team recently met Dr Atma Ram Shukla, president of the Indian Biogas Association and former adviser, bio-energy, Ministry of New and Renewable Energy (MNRE), to know more about the history of the bioenergy segment, its current status and the business models that will propel investor interest in this space.
Around 2010, the solar boom started setting in. Since globally, solar technology was already developed and the size of the players was big enough, solar companies were able to attract more investments. With more investments coming in, the case for solar power gradually became stronger, leading to the development of the National Solar Mission, which featured a feed-in tariff regime. “As part of the ministry, I could see the focus of the government shifting slowly towards solar energy and bioenergy did not get its due support and attention,” says Dr Shukla.
He recounts that until 2008, just before the solar boom, the use of biogas in India was primarily for cooking and for small-scale power generation. “At that time, I felt that if biogas has to be taken seriously, it has to compete with petroleum fuels-compressed natural gas (CNG), petrol and diesel. This could be done if 40 per cent of the carbon dioxide content in biogas was removed and converted into bio-CNG.” Taking this concept further, a demonstration programme on “Integrated Technology Package for Biogas Purification and Bottling” was announced by the MNRE and by 2011, around 20 projects were approved for the purification and bottling of biogas. These plants were to be built with 50 per cent subsidy support from the government. In the Twelfth Five-Year Plan, it was converted to a regular programme, but the subsidy amounts were reduced, making this sector less attractive. “Further, to compete with conventional sources of energy, it was necessary that the biogas segment set its own standards. To this end, the Bureau of Indian Standards brought out a standard on biogas composition in 2013, which was modified later in 2016. Since then, several programmes and schemes have been launched by the government. Unlike solar and wind energy, the bioenergy segment needs to invest in the biomass waste input required for generating biogas for the entire life of the plant. Therefore, despite having a good intent, the programmes and schemes on the bioenergy segment have not been able to deliver the desired results on the ground due to inadequate provisions and other difficulties,” says Dr Shukla.
In October 2018, the Ministry of Petroleum and Natural Gas (MoPNG) launched the Sustainable Alternative Towards Affordable Transportation (SATAT) programme, which aimed at providing sustainable alternatives to petrol and diesel. The scheme was launched with Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL) and Gas Authority of India Limited (GAIL). Under this scheme, expressions of interest were invited from project developers to set up compressed biogas (CBG) plants in a bid to provide cleaner and affordable fuel for vehicles through better use of agricultural residue, cattle dung and municipal solid waste. As a part of this scheme, the government announced that 5,000 biogas plants would be set up in the country over the next five years at an investment of Rs 1.75 trillion.
Dr Shukla notes that under this scheme, IOCL, BPCL, HPCL and GAIL are going to buy any quantity of CBG produced by any developer. However, he feels that the Rs 46 per kg rate quoted by the public sector undertakings is too low and should be increased to at least Rs 54-Rs 55 per kg. Apart from a low tariff, other operational and financial issues have crept in. “Oil marketing companies are not investing in these projects. They are just requesting private developers to set up projects as per their quality standards. Moreover, the responsibility for the supply of biogas to the fuel stations lies with the developers. In this scenario, private developers are not keen to invest in these projects and bankers too are not confident enough to lend,” says Dr Shukla.
Before the SATAT programme, in April 2018, the Ministry of Drinking Water and Sanitation too tried its hand at promoting the bioenergy segment. It launched the Galvanising Organic Bio-Agro Resources (GOBAR)-Dhan scheme. The GOBAR-Dhan scheme was funded under the solid and liquid waste management component of the Swachh Bharat Mission-Rural initiative to benefit households in identified villages through gram panchayats. The aim was to create clean villages and manage solid and liquid waste. By working on the latter, the scheme aimed at generating energy from cattle and organic waste, thereby ensuring an alternative source of income for farmers. The MNRE too chipped in and notified a central financial assistance of Rs 40 million per 4,800 kg of CBG per day, generated from 12,000 cubic metres of biogas, with a maximum of Rs 100 million per project. This scheme was meant to be a game changer for the rural economy, considering that India has a cattle population of close to 300 million, producing over 3 mtpa of dung each day. But an inherent issue in the way the policy has been structured has not made it yield the expected results. According to Dr Shukla, “The scheme has not been properly formulated as the age-old concept of distributing the work among the central government, gram panchayats and village pradhans is being used. The policymakers did not take into account modern management tools, the viability gap funding (VGF) approach or an attractive price for biogas as was done for solar power pre and post the launch of the National Solar Mission.” He adds that Rs 10 billion was allocated as the budget for this scheme, but a proper plan for spending that amount has not been made.
Recommendations and the way forward
In the renewable energy sector, biomass energy has the capability to solve the intermittency issue and become the base load of energy supply, as it is available irrespective of sunny and windy days. For this to happen, an intelligent and judicious use of biomass for different types of energy generation is necessary. “For instance, woody biomass is to be used for combustion and second or third generation bio-alcohol production technologies, whereas for wet, loose and leafy biomass and liquid biomass waste, the best route is to go for biogas generation. In opting for composting, energy content is lost and pollution is created, so there is a need to go for biogas generation technology. Many consultants and technology providers default in this simple concept,” says Dr Shukla.
Further, the economic value of the biogas segment should include the value of energy, organic fertiliser and the ability to counter the challenges of waste generation and pollution. This calls for devising a suitable business model linking production with the availability of biomass waste. Local production and consumption should be preferred so that less petrol and diesel are used for transportation. This will reduce the carbon footprint and ensure a decentralised supply chain. “As an illustration, what is the point in transporting rice husk from Punjab and Haryana and setting up a big biogas plant in Delhi?” remarks Dr Shukla. There is a need to ensure that with adequate technical and financial assistance, village entrepreneurs are encouraged to set up village level biogas plants. This will ensure greater participation at the rural level. And as the biogas plants will be primarily used for cooking purposes, the responsibility for supervising the operations and maintenance (O&M) of the plants can be given to women. “The gas generated should be distributed to the villagers through gas pipelines. The extra gas available after cooking should be purified and bottled and used as a clean transportation fuel. But for this, big private or public sector involvement is required to work as a backbone for decentralised biogas and bio-CNG plants,” says Dr Shukla.
He believes that the future of this segment lies in decentralised growth. “Agro-food processing industries, mandis and sugar mills in villages are generating a lot of waste. So, we can have decentralised plants wherever waste is available. This waste can be collected from a 5 km radius and linked with plants and the gas pipeline,” says Dr Shukla. Even in urban areas, bio-CNG can be produced from the biomass content of municipal solid waste and liquid waste from sewage plants and integrated with city gas distribution networks.
With a pure methane content of over 95 per cent and a calorific value similar to that of CNG, CBG can also be used as an alternative, clean fuel for transportation. Given the abundance of biomass in the country, CBG has the potential to replace CNG in automotive, industrial and commercial uses in the coming years. “The government can form high-powered ministerial panels comprising the MNRE, the newly formed Ministry of Water Power, Ministry of Housing and Urban Affairs, Ministry of Agriculture and MoPNG to assist in this transition, and NITI Aayog or the Prime Minister’s Office needs to be the coordinating point,” says Dr Shukla.
After the segment matures, competitive bidding should be allowed through a common tender for a large number of small-scale bio-CNG projects. This will ensure that tariffs are discovered based on market considerations. However, what worked for the solar segment may not work for the bioenergy segment. Dr Shukla raises concern that the “provision for one-time support, like VGF, will not work for biogas projects as, unlike solar projects, the O&M for these is complex and expensive. Even if waste is not added to the plant one day, the plant will remain idle.” So, a balanced and well thought-out approach is required, as bioenergy is a very complex segment, where there will be challenges at every stage, beginning from changing the mindset of people to realising the value of the waste they generate.
By Sarthak Takyar