Compulsory blending of compressed biofuel in compressed natural gas (CNG) and piped natural gas (PNG) will help create a well-structured market for biofuels in India, say industry leaders.
Experts are optimistic about the recent move by the oil ministry to mandate blending of compressed biogas (CBG) in CNG and PNG with the target of 1 percent blending by financial year 2025-26.
“The recent move by the government would bring down capital and operational expenditure. The process of selling biofuels in the market will become very smooth and the ecosystem will become investor friendly. Also since the gas market is governed solely by MoPNG (Ministry of Petroleum and Natural Gas), mandatory blending of biogas would become a reality,” said Gaurav Kedia, Chairman of the Indian Biogas Association.
The government said the CBG blending obligation (CBO) would be voluntary till financial year 2024-25 (FY25), and the mandatory blending obligation would start from FY26. CBO will be kept as 1 percent, 3 percent and 4 percent of total CNG/PNG consumption for FY26, FY27 and FY28 respectively, it added.
CBO will be 5 percent from FY29 onwards. A Central Repository Body (CRB) will monitor and implement the blending mandate.
Petroleum and Natural Gas Minister Hardeep Singh Puri said mandatory compressed biogas blending would encourage investment of around Rs 37,500 crore and facilitate establishment of 750 CBG projects by 2028-29.
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The government highlighted that the key objectives of the CBO are to stimulate demand for compressed biogas in the city gas distribution sector, import substitution for Liquefied Natural Gas (LNG) and saving on forex.
Headwinds
One of the biggest challenges faced by the mandatory blending would be to have enough biogas to meet the targets. The government said it is working on promoting production of ethanol from maize with all stakeholders, especially with the Department of Agriculture and Department Food and Public Distribution (DFPD), to make it a prominent feedstock in coming years.
“Currently, we don’t have enough biogas to cater to the 1% blending quota to be put in pipelines but this will give emphasis to the SATAT (Sustainable Alternative Towards Affordable Transportation) programme and people will start installing CBG plants. A lot of homework has already been done, so this target of 1% blending seems achievable,” said Kedia.
The oil ministry said work has been initiated in consultation with the Department of Agriculture and DFPD to further develop high starch yielding varieties, improve the quality of maize DDGS (Dried Distillers Grain Solids) by removing aflatoxins, and speed up registration of new seed varieties with high starch. To promote maize further, a training programme for distillers with seed companies has also been initiated.
Another challenge in mandatory blending is the technology required to produce biogas from agricultural waste, which is still evolving. Industry leaders say the entry of large players in the sector, however, could accelerate the process.
“With so much focus and potential in the sector, many large players are coming into this field and a lot of money is being spent on R&D (research and development). And when that money comes, the technology adoption will be very fast,” said Ashvin Patil, Founder and Director of Biofuels Junction. “On top of it, we are already working with so many countries under the biofuel alliance, which happened at the G20 Summit, and would further help in technology transfer.”
At the G20 Summit, 19 countries and several international organisations joined the India-proposed Global Biofuel Alliance (GBA) with the aim of promoting the use of biofuels.
ALSO READ: Global Biofuel Alliance guidelines expected in FY24 itself: Indian Biogas Association Chairman
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