The compressed biogas (CBG) sector has received a major policy boost with the Union Cabinet’s approval of GOBARdhan, the National Circular Bioenergy Scheme. Approved on August 6, 2026, the scheme has an outlay of Rs 237.31 billion and will be implemented over 10 years, from 2026-27 to 2035-36. It brings together measures for CBG offtake, pricing, capital support, pipeline infrastructure, financing, and ecosystem development under a single framework. The move comes as India seeks to build a larger domestic market for CBG amid the crisis in West Asia that has buttressed the need for energy independence. Abundant domestic supply of cattle dung, crop residue, press mud, municipal organic waste, and other biomass can be converted into CBG as well as organic manure, thus ensuring not just clean gas production but also additional revenue streams for farmers. CBG has been promoted through a number of government initiatives in recent years. These include the Sustainable Alternative Towards Affordable Transportation initiative, the Market Development Assistance scheme for organic manure, the Biomass Aggregation Machinery scheme, the Development of Pipeline Infrastructure scheme, and central financial assistance for CBG plants under the National Bioenergy Programme. So far, over 200 CBG plants have been commissioned through these efforts. However, the sector continues to face challenges pertaining to feedstock aggregation, project costs, financing, and reliable offtake. The new GOBARdhan scheme aims to address these gaps and provide greater certainty across the CBG value chain.
Components of the scheme
The scheme has six components. The first component is the CBG offtake assurance framework. Under this component, the city gas distribution (CGD) companies will procure CBG to meet the notified CBG obligation for the CNG transport and PNG domestic segments. The obligation has been set at 3 per cent for 2026-27, 4 per cent for 2027-28, and 5 per cent from 2028-29 onwards. This provides a long-term demand signal for CBG producers, helping developers plan new projects, improve capacity utilisation, and secure project financing.
The second component is the CBG pricing framework. The scheme provides for a stable administered CBG price of Rs 2,110 per MMBTU, with a minimum 10-year horizon. This will provide producers with greater revenue visibility and improve the business case for projects that require significant upfront investment and long-term feedstock and offtake arrangements. The increase in administered price is significant, from Rs 1,478 per MMBTU under the old policy.
The third component is capital assistance. Eligible greenfield CBG projects will receive assistance of up to Rs 20 million per tonne per day of installed CBG capacity. The support will cover the main plant as well as assets required for feedstock aggregation, organic manure processing, and value addition. Brownfield projects undertaking capacity expansion will also be eligible. This is expected to improve project economics and encourage participation from private developers, MSMEs, cooperatives, and rural entrepreneurs.
The fourth component is pipeline infrastructure development. GOBARdhan will support pipeline infrastructure connecting CBG plants with trunk pipelines and CGD networks. Both cluster-based and standalone pipeline projects will be covered. Improved connectivity can reduce evacuation costs, expand market access, and integrate CBG plants located near agricultural and organic waste sources with the wider gas network.
The fifth component is credit guarantee support. A dedicated credit guarantee mechanism will support lending to eligible MSME-based CBG projects. By reducing lending risks, the mechanism is expected to improve access to institutional finance and reduce collateral requirements. This could help smaller developers and rural enterprises raise debt for capital-intensive CBG projects.
The sixth component, the CBG Ecosystem Challenge Fund, will support feedstock mapping, aggregation infrastructure, district-level development plans, technology adoption, process improvements, and capacity building. It will also support value addition of organic manure. Better mapping and aggregation can help developers assess biomass availability and build more reliable feedstock supply chains, which are critical for the viability of CBG plants.
The way forward
The scheme’s impact will extend beyond CBG production, creating opportunities across biomass collection and transportation, plant operations and organic manure. For farmers and rural communities, organised feedstock procurement can provide an additional income stream while helping address crop residue and waste management challenges. The production of fermented organic manure and liquid fermented organic manure will also add value to the CBG business model and strengthen its link with agriculture. The larger opportunity, however, will depend on implementation. Reliable feedstock supply, efficient aggregation and transportation, adequate pipeline connectivity, and access to finance will remain critical as the sector expands. If these gaps are addressed, the scheme could establish CBG as a more meaningful part of India’s gas mix.
