Budget 2023: Government To Establish 200 New Plants To Boost Adoption Of Compressed Biogas As Automotive Fuel

Finance Minister Nirmala Sitharaman, presenting Union Budget 2023-24 in Parliament, has announced that 500 new ‘waste to wealth’ plants under GOBARDHAN scheme will be established for promoting circular economy.

Of these plants, 200 will be compressed biogas (CBG) plants, including 75 plants in urban areas, and 300 will be community or cluster-based plants. The 500 plants are to be established at a total investment of Rs 10,000 crore.

The Galvanising Organic Bio-Agro Resources Dhan (GOBAR-DHAN) scheme was first announced by former finance minister Arun Jaitley during his budget speech for financial year (FY) 2018-19.  

According to Jaitley, the scheme would focus on managing and converting cattle dung and solid waste in farms to produce compost, biogas and bio-CNG.

The Department of Drinking Water and Sanitation (DDWS) launched the scheme in April 2018 as a part of the Solid and Liquid Waste Management component under Swachh Bharat Mission (Grameen) to positively impact village cleanliness and generate wealth and energy from cattle and organic waste.

Under the scheme, CBG plants can be set up by entrepreneurs, cooperatives, gaushalas, dairies among others for generation of CBG on a commercial scale.

The CBG can be sold to industries or oil marketing companies (OMCs) or directly through fuel dispensing units etc.

Large CBG plants are to be set up through self-financing. However, financing can be availed from other sources such as commercial loans, waste to energy programme of Ministry of New and Renewable Energy (MNRE), Swachh Bharat Kosh and corporate social responsibility (CSR) funds.

The operational guidelines of SBM (Grameen) provide for financial assistance up to Rs 50 lakh per district for the period of 2020-21 to 2024-25 for setting up of cluster/community level biogas plants.

The Union Budget 2023 also announced introduction of a 5 per cent CBG mandate for all entities marketing natural and biogas in India. This may mean that such companies will have to market CBG to the extent of 5 per cent of their volumes.

The government has been pushing for increased production of CBG and its blending with natural gas, particularly in the transportation segment that uses compressed natural gas, or CNG, as a fuel.