By Karan Sharma
CBG is being increasingly recognised The compressed biogas (CBG) segment has gained maturity with measurable offtake, firm demand signals and concentrated policy support. While development remains uneven across states, and installed capacity and offtake are still low compared to stated national targets, the combination of mandatory blending, supply-side incentives and revised procurement rules has significantly improved the economics and bankability of projects. As per the International Energy Agency, India’s CBG production is expected to grow by about 21 per cent between 2024 and 2030, with an estimated annual output of 0.8 billion cubic metres by 2030. If this target is achieved, it would represent a structural shift in India’s gas mix, emphasising the importance of the indigenous renewable gas as a meaningful contributor to energy security in the country.
An overview of the current CBG market status, key industry developments, policy environment and financing architecture of the CBG sector.
Market status and pipeline
Under the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme, India aims to establish 5,000 commercial plants producing 15 million tonnes (mmt) of CBG per annum by 2023-24. Progress has been far slower due to several technical and operational issues. As per the SATAT portal, as of November 2025, 114 CBG plants have been commissioned, with 1,103 active letters of intent (LoIs) issued.
Commercial CBG sales, though still modest, are showing incremental momentum. According to the Indian Biogas Association’s white paper “Mainstreaming Biogas for Viksit Bharat: Decentralized Energy Solution for establishing a circular economy” in May 2025, CBG sales increased from around 19,000-20,000 tonnes in 2023–24 to approximately 31,400 tonnes in 2024–25. However, these volumes remain negligible compared to India’s overall gaseous fuel consumption and are concentrated among a limited number of medium-sized projects with stable feedstock access and assured offtake.
Parallel to SATAT, the GOBARdhan (Galvanising Organic Bio-Agro Resources Dhan) programme provides a broader view of the biogas ecosystem that underpins future CBG supply. Under the GOBARdhan scheme, as of December 2025, 1,549 biogas plants have been registered, with 1,118 functional plants, 125 completed plants and 169 plants under construction. While not all these assets are configured for compression or grid or transport fuel offtake, the figures highlight a substantial base of digesters that could be upgraded to CBG with appropriate capital support and assured demand.
Moreover, a key enabler of CBG’s market integration has been the CBG–City Gas Distribution (CGD) Synchronisation Scheme, introduced in 2021 to allow the injection of CBG into CGD networks. Operational data from the scheme indicates active market linkages. According to GAIL, as of November 2025, 249 CBG producers and 39 CGD entities were active under the scheme, facilitating the sale of approximately 304,000 scmd (6,684 mt) of biogas.
Policy, pricing and finance
Policymakers have introduced a mix of demand-side obligations, supply incentives and infrastructure subsidies to convert LoIs into commissioned capacity and reduce offtake risk. A significant demand-side measure is the CBG blending obligation (CBO). Announced as voluntary initially until 2024-25, CBO became mandatory from 2025–26 with phased targets set at 1 per cent for 2025–26, 3 per cent for 2026–27, 4 per cent for 2027–28 and 5 per cent for 2028–29 onwards.
The CBG-CGD synchronisation scheme remains a practical route to inject CBG into piped networks. 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. This further clarifies transport economics for plant developers selling into distant CGD hubs, and improves project internal rates of return for medium-sized plants that can access CGD offtake.
Furthermore, several supply-side mechanisms have been introduced to reduce capital expenditure hurdles and address the principal practical constraint of CBG projects: reliable, affordable feedstock aggregation. These include the Ministry of Petroleum and Natural Gas’s revision of central financial assistance (CFA) rules for the procurement of biomass aggregation machinery and associated disbursement processes in July 2025, with subsidy caps and disbursement linked to actual biomass collected.
Such policy development has been observed not only at the central level, but at the state level as well. Several states have introduced their own incentives or cluster schemes. For example, Madhya Pradesh launched its Scheme for Implementation of Biofuel Projects in Madhya Pradesh in April 2025 for projects with investments above Rs 100 million, covering feedstock cultivation, prediction technologies, distribution and utilisation, and offering incentives and infrastructure support for bio-refinery clusters.
Outlook
CBG has emerged as a key bioenergy pathway in India with a clearly defined policy mandate, an identifiable demand anchor and the potential to directly displace imported fossil gas. CBG is at the intersection of energy security, waste management and rural income generation. The segment is also witnessing increasing private participation. The Indian Biogas Association estimates that around $4 billion-$5 billion of private investment will be pumped into the Indian CBG market by 2030.
However, several challenges remain. Scale will not only be determined by additional targets or technology breakthroughs, but also by how logistical, aggregation and financing mechanisms are aligned with credible, long-term demand. Feedstock availability and aggregation, in particular, is a key challenge. Most commissioned CBG plants report intermittent operations driven by seasonal availability of agricultural residue, weak aggregation systems and high transport costs. Without warehouse-led aggregation and forward contracting of feedstock, utilisation rates are likely to remain well below the levels required for financial stability.
Demand-side certainty has improved, but price stability remains fragile. CBO and revised CBG-CGD procurement norms have significantly improved demand visibility. However, most offtake contracts remain short-term or conditional.
Developers and lenders consistently point to the need for an initial guaranteed minimum offtake. Furthermore, integration into gas networks must scale further. While the CBG-CGD synchronisation scheme has emerged as a significant practical offtake route and improved market access, current injection volumes remain marginal relative to national gas consumption.
Moreover, targeted fiscal and tax measures could materially influence investment momentum. As per the Indian Biogas Association, the reduction of GST on biogas and CBG plant equipment to 5 per cent could lower upfront project costs by 6-8 per cent and increase near-term investment appetite by 4-5 per cent.
Net, net, CBG in India is no longer merely a policy aspiration. Measurable volumes, improving procurement frameworks and targeted subsidies have created a credible commercial corridor. Going forward, disciplined implementation will be critical to achieving national scale ambitions: faster conversion of LoIs to commissioned plants, tighter feedstock markets and more credible long-term offtake instruments that convert regulatory mandates into bankable cashflows.
