Excise Waiver and Clear Policy Could Unlock ₹1 Lakh Crore Investment in Biogas Blending, Says IBA

Key Takeaways

The Indian government has introduced an excise duty waiver on Compressed Biogas (CBG) blended with Compressed Natural Gas (CNG), potentially unlocking Rs 1 lakh crore in investments.
A targeted 5% biogas blending in city gas distribution networks could lead to additional investments of Rs 45,000-55,000 crore.
The policy enhances the biogas sector’s viability, lowering costs for consumers and boosting revenue for producers while significantly reducing greenhouse gas emissions.

Investment Potential Through Duty Waiver

The Indian Biogas Association (IBA) recently highlighted the potential economic impact of a newly proposed excise duty waiver on biogas when blended with Compressed Natural Gas (CNG). The Union Budget 2026 has outlined this waiver as a critical milestone for achieving India’s energy transition and Net Zero ambitions by 2070.

The IBA claims that if city gas distribution (CGD) networks reach a 5% biogas blending level over the coming five years, approximately 2.5-3 million metric tonnes per annum (MMTPA) of Compressed Biogas (CBG) will be required. This shift could generate investments between Rs 45,000 and Rs 55,000 crore. Furthermore, if a clear policy framework is established, biogas blending could realistically increase to 7-8% by 2032, potentially doubling the investment outlook to around Rs 1 lakh crore.

This excise waiver not only aims to reduce gas prices but also transforms several dynamics within the biogas sector. It is expected to accelerate private investments, enhance energy security, and yield significant climate benefits alongside rural development improvements.

Traditionally, CBG, a renewable fuel, had been taxed similarly to CNG—despite its environmental advantages. The waiver is anticipated to make biogas blending more economically viable, resulting in lower costs for CGD companies and consumer pricing stability. Moreover, the initiative promises guaranteed sales and dependable revenue streams for producers.

India’s estimated CBG potential stands at around 60 million tonnes annually, derived from organic waste materials such as paddy straw, press mud, municipal solid waste (MSW), and cattle dung. The new excise waiver is projected to significantly improve internal rates of return (IRR) for typical CBG plants operating at capacities between 4.8 and 10 tonnes per day (TPD). This financial enhancement could facilitate financing for previously marginal projects.

Beyond its economic advantages, CBG offers substantial environmental benefits. It can reduce greenhouse gas emissions by 70-90% over its lifecycle, particularly when produced from agricultural waste. A 10% blending of biogas could lead to a decrease in CO2-equivalent emissions by 12-15 million tons annually.

The measures laid out in the Union Budget signify a commitment to advancing India’s biogas capabilities, fostering economic growth while contributing positively to environmental sustainability.

The content above is a summary. For more details, see the source article.