Mandatory use of bio-gas by fertilizer units likely

Source: Financial Express

New scheme proposed by industry similar to existing one for oil companies.

The Indian Biogas Association (IBA) has suggested that the government formulate a scheme similar to Sustainable Alternative Towards Affordable Transportation (SATAT) being implemented in the oil and gas sector, for fertilizers, to ensure guaranteed purchase of fermented organic manure (FOM) by fertilizer marketing companies. This, it said, would help in strengthening the financial viability of biogas plants.

“Government officials have agreed to our proposal in principle. But they noted that given the Budget constraints, such a scheme can be implemented only in a phased manner,” said Gaurav Kedia, Chairman of the Indian Biogas Association. “We are told that the government is considering this.. it might roll out a scheme in next fiscal year itself.”

The association has suggested an outlay of Rs 1.78 trillion for the scheme over several years. “Similar to the existing programme like SATAT that guarantees gas offtake by oil marketing companies (OMCs), this scheme will also propose to secure FOM offtake, thereby stabilizing revenue streams and strengthening the financial viability of biogas projects,” Kedia said. The SATAT scheme is designed to extract economic value from bio-mass waste in the form of Compressed Bio Gas (CBG) and bio-manure.

The scheme will provide investors with increased clarity and confidence in the overall biogas plant business model which so far has failed to gain the expected traction.

The idea to bring PM PRANAM, Bhartiya Prakratik Kheti, and the support through small and marginal farmers under one umbrella, Kedia said.

Biogas plants convert organic waste including animal waste, crop residue, municipal waste etc into clean biogas through anaerobic digestion to produce clean energy. In the process, FOM is produced as a waste which can be utilised in agriculture.

“A single window clearance system will give a lot of push to the sector,” Kedia said. The IBA expects 30-40 CBG plants to be commissioned by the end of the current financial year and another 100 by December 2024. “In the next 20-30 years we should be able to reach 60 million metric tonne of CBG potential per annum,” Kedia said. This is, provided the increased impetus to the sector by the government.

The government has intended to set up 5,000 CBG plants for production of 15 million metric tonne of CBG per annum by 2023-24 under the SATAT scheme. However, the country has only been able to set up some 48 CBG plants so far. As per the official data, the active number of Letter of Intent presently is 2,176 against the total number of 4,100 LoIs issued when the scheme was announced.

Additionally, to be able to realize the target of 5,000 CBG plants at least by 2030, will require an investment of Rs 1.75 trillion, 3-4% of which will be attributed to the foreign direct investment, according to industry estimates.

The government has been working towards the promotion of compressed biogas as an alternative source of energy to reduce its dependence on fossil fuels for quite some time now. It has also created the Global Biofuel Alliance in its latest G20 summit and has now mandated 5% blending of CBG with compressed natural gas and piped natural gas by FY29.

“Next year they will announce the entire framework for the Global Biofuel Alliance and are already consulting different organizations for this,” said Kedia. “There might be a little more emphasis on the liquid side to start with.”