By Karan Sharma
Bioenergy is increasingly being viewed as a cornerstone of India’s transition to a lower-carbon, circular economy. The sector already accounts for about 13 per cent of total energy consumption, as per the International Energy Agency, and is projected to grow to 45 per cent by 2030.
As of October 2025, India had a total installed biopower capacity of 11,612.93 MW across various segments such as bagasse cogeneration, biomass cogeneration and municipal solid waste (MSW)-based waste-to-energy (WtE), as per the Ministry of New and Renewable Energy (MNRE). Maharashtra is leading with 2,998.30 MW of installed bioenergy capacity, followed by Uttar Pradesh and Karnataka at 2,310.39 MW and 1,916.05 MW respectively.
Renewable Watch provides a round-up of the developments in the bioenergy sector over the past year…
Biogas and CBG
Current status
As of October 2025, India had a total installed capacity of 9,821.32 MW and 935.99 MW of biomass (bagasse cogeneration) and biomass cogeneration (non-bagasse) capacity, respectively, as per the MNRE. Under the GOBARdhan scheme, 1,516 biogas plants have been registered as of November 2025, of which 1,103 are functional, 122 completed and 167 under construction.
The uptake of compressed biogas (CBG) projects has shown positive momentum in recent years, even though overall progress falls short of the ambitious initial target of setting up 5,000 CBG plants and achieving 15 million metric tonnes (mmt) of CBG production by FY 2023-24 under the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme. As per the SATAT portal, as of November 2025, 114 CBG plants have been commissioned, with 1,103 active letters of intent issued.
Further, to inject CBG into city gas distribution (CGD) networks, the government introduced the CBG-CGD Synchronisation Scheme in 2021. According to GAIL (India) Limited, as of September 2025, 237 CBG producers and 39 CGD entities were active under the scheme, facilitating the sale of approximately 247,600 standard cubic metres per day, or 5,267 metric tonnes of biogas.
Policy initiatives
Demand and supply instruments for the biogas and CBG segments were strengthened over the past year through various policy initiatives. The compressed biogas obligation (CBO), announced in November 2023 and voluntary until 2024-25, has been made mandatory from 2025-26, with phased targets, to secure offtake. The CBO has been set at 1 per cent of the overall consumption of compressed natural gas (CNG) or piped natural gas (PNG) during 2025-26, and will be increased to 3 per cent in 2026-27, 4 per cent in 2027-28 and 5 per cent in 2028-29. In May 2025, GAIL revised the pricing methodology under the CBG-CGD Synchronisation Scheme, fixing procurement at 85 per cent of the average CNG retail selling price and setting a reference price of Rs 1,478 per metric million British thermal unit, while also introducing cascade transport charges to address logistics.
In July 2025, the Ministry of Petroleum and Natural Gas (MoPNG) revised the central financial assistance (CFA) disbursement process for CBG projects to support the purchase of biomass aggregation machinery (BAM). In August 2025, guidelines for the development of pipeline infrastructure were revised under the CBG-CGD Synchronisation scheme, providing a CFA of up to Rs 287.5 million per project for steel or medium-density polyethylene pipelines with lengths between 50 km and 75 km. In September 2025, the MNRE’s National Bioenergy Programme Phase I received an additional allocation of Rs 1.4 billion, of which Rs 500 million was earmarked for the biogas scheme.
Ethanol blending
Current status
Ethanol blending has slowly matured into a mainstream fuel policy, with the country achieving 20 per cent of ethanol blending (E20) in petrol in July 2025, five years ahead of the initial 2030 target. To achieve this, the government expanded the supply chain by increasing ethanol production capacity from 380 million litres in 2014 to over 6,610 million litres by June 2025. The economic benefits of the ethanol blending programme have been significant. The government estimates cumulative foreign exchange savings of about Rs 1.44 trillion by substituting approximately 24.5 mmt of crude oil. In 2025, with 20 per cent blending, the expected forex savings amount to around Rs 430 billion. Additionally, around Rs 400 billion of funds that would otherwise have been spent on oil imports have been redirected to farmers in 2025.
The government reported that procurement prices averaged Rs 71.32 per litre for the ethanol supply year (ESY) 2024-25, inclusive of GST and transport, as of July 2025. These prices are market-determined, with public sector oil marketing companies responsible for procurement. Meanwhile, vehicle manufacturers have adapted their product lines in line with the government’s roadmap for a nationwide E20 roll-out.
Policy initiatives
Supportive policies, such as administered prices for ethanol procurement, GST reduction to 5 per cent, subsidies for new distillery set-ups, long-term supply contracts and infrastructure investments, have led to the rise in domestic ethanol production capacity, improved investor confidence and faster adoption of blending targets across the country. The government is planning further expansion initiatives to enhance ethanol production, streamline interstate movement and develop vehicle infrastructure compatible with higher blends. Pilot programmes for ethanol blending in diesel and support for flex-fuel vehicles are already under way.
Furthermore, the union cabinet has approved price hikes for ethanol produced from molasses. In September 2025, the government removed restrictions on the production of ethanol from sugarcane juice, syrup, and B-heavy and C-heavy molasses for ESY 2025-26, improving feedstock flexibility.
Biomass co-firing
Current status
Co-firing has progressed from demonstrations to mandated operational practice over the years. The Ministry of Power’s co-firing obligations and utility procurement plans have created credible demand for pellets and torrefied biomass. NTPC Limited, for example, has reported a cumulative co-firing of several hundred thousand tonnes along with successful trials, including a 20 per cent torrefied-biomass demonstration at Tanda, with routine non-torrefied blending in the 7-10 per cent range at other units. Adani Power has also reported operational trials at its Raipur (Raikheda) complex, blending 5 per cent and 10 per cent during 2024-25, with similar practical advances made by large private generators.
Policy initiatives
The MNRE revised the Biomass Programme guidelines in June 2025, removing several documentation and clearance requirements for briquette and pellet plants, and introducing performance-based CFA with simpler, shorter inspection windows to speed up disbursements. Additionally, the co-firing obligation of 5 per cent for thermal plants with ball-and-race mills, increasing to 7 per cent for all plants starting 2025-26, remains formally mandated. An additional Rs 525 million was allocated for the biomass scheme in the MNRE’s National Bioenergy Programme Phase I.
MSW-based WtE
Current status
As of October 2025, India has installed 309.34 MW of WtE and 546.28 MW of off-grid WtE capacities. The leading states with the maximum installed WtE capacity are Uttar Pradesh (159.63 MW), Andhra Pradesh (102.35 MW) and Maharashtra (74.6 MW).
Policy initiatives
In June 2025, the MNRE revised the WtE guidelines of the National Bioenergy Programme, mandating the release of CFA in two stages on the basis of plant performance. Further, it allocated Rs 375 million for the WtE scheme from the additional allocation of Rs 1.4 billion for the National Bioenergy Programme Phase I. The MNRE further revised the WtE scheme in October 2025, simplifying the application process and reducing documentation requirements.
Challenges and the way forward
The past 12 months have made it clear that policy clarity and credible demand are essential, but logistics, aggregation and finance also determine whether bioenergy can be scaled up.
One, supply chain economics matters as much as technology. The sector’s logistics challenges, including seasonal feedstock, limited warehousing and high transport costs, remain key bottlenecks. Public interventions, such as BAM and warehouse-led aggregation, must be scaled rapidly. Two, demand-side signals are essential. In this space, mandatory blending obligations such as E20 and CBO, as well as long-term offtake by utilities, have provided investor confidence. Three, targeted fiscal measures make a difference. The GST cut to 5 per cent for biogas plants and devices is expected to lower upfront costs and, as per the Indian Biogas Association, could raise short-term investments by 4-5 per cent and help mobilise around $4 billion-$5 billion in private investment for CBG by 2030.
Four, innovation and feedstock diversity will broaden options. Advances, such as MASH Makes’ commercial biochar and biofuel production from cashew residue and Honeywell’s biocrude upgrading modular plants that convert agricultural and forestry waste into ready-to-use renewable fuels, highlight how non-traditional feedstocks can reduce timelines and open new end uses in hard-to-abate sectors. Power Finance Corporation-Japan Bank for International Cooperation financing for bamboo-based second-generation ethanol in Assam underscores growing international interest in non-food feedstocks.
Five, consumer acceptance needs active management. The E20 roll-out was a policy success but raised concerns about reduced fuel efficiency for some vehicles and potential long-term material effects in older, non-E20-compliant cars. The MoPNG has maintained that vehicles can tolerate E20, while acknowledging possible efficiency variations in older E10 vehicles. Clear labelling, warranty commitments from manufacturers and public awareness campaigns remain critical in this scenario.
Finally, realistic targets and coordinated efforts are essential. PwC projects that India’s biogas market could grow at a compound annual growth rate of 5.27 per cent from 11 GW in 2024 to 14.22 GW by 2029. This can be a useful benchmark: achievable, but only if supply chains, finance and offtake mechanisms are aligned with policy.
Net, net, if policymakers and industry continue to work together, bioenergy can deliver energy security, rural employment and measurable carbon benefits, making it a strong pillar of India’s energy transition.
