Increasing compressed biogas share in a total gas mix can reduce annual import bills by USD 25 bn by 2030

Increasing compressed biogas share in a total gas mix can reduce annual import bills by USD 25 bn by 2030

Increasing compressed biogas share in a total gas mix can reduce annual import bills by USD 25 bn by 2030

According to the Indian Biogas Association (IBA), increasing the share of compressed biogas in the total gas mix will help reduce the country’s annual import bill by USD 20-25 billion by 2030.

In a recent letter to Petroleum and Natural Gas Minister Hardeep Singh Puri, IBA suggested that in order to achieve a gas-based economy by 2030, the oil ministry must keep a close eye on overall sustainability.

The industry group proposed gradually increasing the share of compressed biogas (CBG) in the overall gas mix to at least 10% by 2025, and 20% by 2030.

Furthermore, it suggested that the CBG-CGD (city gas distribution) synchronisation plan, which was launched in April 2021 and is set to be reviewed three years later (in 2024), be extended for at least ten years to provide long-term certainty to the CBG ecosystem players.

Increased CBG consumption ensures guaranteed offtake and a transparent ecosystem for CBG producers.

It will also help accelerate the establishment of CBG plants under the SATAT (Sustainable Alternative Towards Affordable Transportation) scheme, as biogas plant owners will see the value proposition for their investments, according to the report.

For example, it stated that the ethanol blending programme in petrol has increased from 1.5 per cent in 2014 to 10% now.

By 2030, the government’s annual import bill reductions will be USD 20-25 billion (at the current LNG spot price level), and GHG reductions will be 150 million tonnes, representing a 10% reduction from 2005 GHG emissions levels.

According to the IBA, the relaxed domestic ‘gas pricing move’ must go hand in hand with the renewable energy ministry’s environmental sustainability goals of a 45% reduction in emission intensity by 2030 and net-zero emissions by 2070.

Particularly for the CBG industry, wherein the offtake price of CBG is benchmarked to its closest substitute, CNG (Compressed Natural Gas), the move turns out to be a deterrent, it stated.

According to IBA, the CBG industry is taking a step back after a few steps forward, such as the exemption of central excise duty on the onward sale of CBG blended with CNG, the resumption of the MNRE subsidy programme, the introduction of the BIS standards on design, construction, and operation of biogas plants, and others.

The CGD companies claim to have been heavily bled in terms of margins in recent months due to higher domestic petrol prices. In the midst of global uncertainty, the domestic petrol price increased to USD 8 per MMBTU from USD 1.6 per MMBTU last year.

With the recent government petrol pricing notification to trim and cap domestic petrol prices, it is even more difficult to obtain CBG, it stated.

It predicted that the price difference between CBG and domestic petrol would widen further.

Furthermore, the pricing associated with compression charges and transport charges over and above the UBP (uniform base price) of CBG under the CGD-CBG synchronisation scheme formulated by gas utility major GAIL (India) Ltd is even more concerning for CGD players who are willing to procure CBG into its gas mix, it stated.

The PNGRB (Petroleum and Natural Gas Regulatory Board) has written to the BIS (Bureau of Indian Standard) to increase methane from 90% to 95%, necessitating an additional increase in the price of CBG, it stated.

It suggested that a roadmap be developed to introduce progressive blending targets in the future, which would be consistent with CGD companies adopting sustainable growth paths and the government’s vision of a gas-based economy.

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