India Prioritizes Compressed Bio Gas (CBG) with Policy Reforms to Drive Growth

India is advancing its energy transition by prioritizing Compressed Bio Gas (CBG) following its successful ethanol blending program. The government has mandated Compressed Bio Gas Blending Obligations (CBO), requiring 1% CBG blending in natural gas for domestic and transport use from FY 2025-26, rising to 5% by FY2029. This initiative offers significant benefits, including managing agricultural waste, enhancing energy security, reducing import dependence, and supporting net-zero goals.

To ensure market viability and scale, the article proposes six key policy recommendations: 1. **Accelerate Targets**: Advance the 5% CBO target to FY2027. 2. **Expand Scope**: Include industrial and commercial gas users under CBOs. 3. **Green Gas Certificates**: Launch a 'book and claim' model to monetize CBG's environmental value. 4. **Policy Alignment**: Clarify rules for Carbon Credit Trading Scheme (CCTS) and Renewable/Green Gas Certificates (RGCs). 5. **Price Stability**: Extend price validity to 1-2 years and delink from Administered Price Mechanism (APM) for better project bankability. 6. **By-product Support**: Increase Market Development Assistance (MDA) for digestate and align production factors with ground realities. 7. **Cost Reduction**: Advocate for preferential electricity tariffs for CBG plants and waive ISTS charges for imported renewable energy. 8. **GST Reform**: Resolve inverted duty structures and double taxation issues in the CBG value chain.

Impact: This policy shift is expected to significantly impact India's energy sector, driving investment in the CBG value chain and creating rural employment. It aligns with national energy security and sustainability objectives, potentially influencing the broader economy. Rating: 8

Difficult terms: * **Compressed Bio Gas (CBG)**: A purified biogas from organic waste, similar to natural gas. * **Ethanol Blending Program (EBP)**: Mixing ethanol with petrol for cleaner fuel. * **Compressed Bio Gas Blending Obligations (CBO)**: Mandate to blend a certain percentage of CBG into natural gas. * **Net-zero journey**: India's goal to balance greenhouse gas emissions by 2070. * **Carbon Credit Trading Scheme (CCTS)**: Scheme to earn/trade credits for emission reductions. * **Renewable/Green Gas Certificates (RGCs)**: Tradable certificates for green gas attributes. * **Book and Claim model**: System to trade environmental benefits separately from the physical product. * **Administered Price Mechanism (APM)**: Government-regulated pricing system for commodities like natural gas. * **Project Internal Rate of Return (IRR)**: A measure of an investment's profitability. * **Digestate**: Nutrient-rich residue from biogas production, used as fertilizer. * **Discoms**: Electricity distribution companies. * **ISTS**: Inter-State Transmission System, for electricity transfer between states. * **GST**: Goods and Services Tax, India's indirect tax. * **Input Tax Credit (ITC)**: Credit for taxes paid on business inputs.