Budget 2024: Mandatory blending of bio-gas to enable sustainable energy transition

Sitharaman also highlighted that the private sector has been allowed into the “core strategic” sectors and the government wants to have only “minimum presence” in these sectors.

Finance Minister Nirmala Sitharaman's recent budgetary announcement on the phased mandatory blending of Compressed Bio Gas (CBG) in Compressed Natural Gas (for transportation) and Piped Natural Gas (for domestic purposes) marks a significant step in India's journey towards a green gas-based economy.

This aims to make the gas supply chain green and address the growing concerns of environmental degradation and the need for cleaner energy sources. The government aims to balance the demand-supply equation for clean fuel by incorporating bio-fuels into the energy mix, thus achieving sustainable energy transition.

The financial assistance earmarked (how much) for this is expected to energise the bio-fuel segment, making it economically viable for businesses to invest in the infrastructure required for CBG production and distribution. Current reports indicate that biomass power, co-generation, and waste-to-energy projects constitute less than 3 percent of India's installed power generation capacity.

The phased blending of CBG will not only contribute to the reduction of greenhouse gas emissions, but also enhance energy security by diversifying the country's energy sources, create job opportunities, and help save foreign exchange. Projections from the International Energy Agency (IEA) indicate that with the implementation of government policies, bio-energy is poised to generate around 130 million tonnes of oil equivalent (Mtoe) energy by 2040. This is expected to meet approximately 15 percent of India's total energy demand at that juncture.

The budget's provisions for biomass will also help create a conducive environment for the trading of clean and eco-friendly bio-fuels. IGX (Indian Gas Exchange) is already working on creating a CBG certificates market, which will create an additional revenue stream for CBG producers. City gas distribution (CGD) networks who cannot buy CBG since it’s not available can meet their obligations by buying these certificates. IGX would facilitate trading and help discover prices transparently, thereby helping generate demand and triggering investments in the CBG sector.

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