Opinion: From waste to wheel: Restoring fuel equilibrium by mainstreaming Bio-CNG in India
By Roshan Toshniwal and Adhnan Nazir Wani
Ranked as the cleanest city in India for the last 5 years, Indore is credited to house Asia’s largest bio-CNG plant. Labelled as ‘Gobar-Dhan’, the plant exhibits a practical circular solution to modern-day waste management problems. The process of generating bio-CNG from organic waste facilitates both efficient waste disposal as well as production of indigenous automotive fuel with manure as a by-product. Given India’s high import dependency on crude and natural gas, bio-CNG promises to be a sustainable future fuel for mobility.
Urban India generates over 277.1 million tonnes of Municipal Solid Waste (MSW) annually of which 70% is treated, the rest getting disposed of either in landfills or unauthorised sites. Despite the Solid Waste Management Rules 2016 mandating producers to segregate the waste at the source, it often gets mixed during collection. Nearly half of the treated waste is organic which could be converted into biogas and manure through a process called ‘biomethanation’. The biogas obtained is filtered and compressed into bio-CNG — an advanced biofuel and a renewable energy resource. The country has the potential to generate around 1.5 million tonnes of Bio-CNG every year from its treated MSW alone. It closely resembles conventional CNG (Compressed Natural Gas) in composition and could therefore substitute and supplement CNG in energy-guzzling sectors like transportation.
With a significant surge in conventional automotive fuel prices, the demand for CNG vehicles has almost doubled in the first half of FY 2022. India’s LNG imports have also grown by over 45% in the last 10 years, making it vulnerable to geopolitical uncertainties in the energy sector. A ramped-up Bio-CNG production could be instrumental in meeting this growing demand sustainably. It could also leverage India’s efforts in achieving greater energy security.
The National Policy on Biofuels provides a roadmap to cut crude import dependency by 10% from the current 85% by 2022. Since a huge chunk of crude oil products is consumed by the transportation sector, bio-CNG could significantly contribute to lowering these imports. Bio-CNG also has one of the lowest tailpipe emissions of most automotive fuels. Hence, mass-producing bio-CNG through the likes of ‘Gobar-Dhan’ could provide a strong pillar to clean mobility.
The aforementioned bio-CNG plant in Indore processes 550 tonnes of organic MSW producing 17 tonnes of bio-CNG every day. Half of the bio-CNG produced by the plant is procured by the Indore Municipal Corporation (IMC) at a ₹5/kg lesser than the market rate to fuel 400 of its city buses. In addition, the corporation earns up to ₹8 Crores annually from the privately operated biogas plants by supplying solid waste to them. Bhopal and Nagpur have adopted similar models to fuel their public buses by processing MSW. Megacities like Bangalore which generates over 3000 tonnes of organic MSW could tread a similar path. The city has the potential of producing over 90 tonnes of Bio-CNG and 600 tonnes of organic fertiliser every day from its MSW.
Fortunately, the bio-CNG generation potential from Urban India’s growing waste hasn’t gone unnoticed. To facilitate the domestic production of the fuel, setting up bio-CNG plants became eligible for priority sector lending from the year 2020. Bio-CNG produced from these plants can be sold to Oil Marketing Companies (OMCs) under a scheme called SATAT (Sustainable Alternative Towards Affordable Transportation). Under the programme, the minimum assured rate for bio-CNG is fixed at INR 46/Kg till 2029. However, the procurement price can range between 54 to 74.29 INR corresponding to the Retail Selling Price (RSP) of 70 and 100 INR. The scheme is seen as a major step towards creating a reliable supply chain mechanism for bio-CNG consumption with active support from OMCs.
A monetary support package under the waste-to-energy scheme from the Ministry of New and Renewable Energy (MNRE) provided Central Financial Assistance (CFA) of up to ₹10 crores to new plant operators. However, post-March 2021, MNRE decided to stop sanctioning new projects under the CFA. Experts in the biogas industry believe it could hinder the momentum of SATAT which falls under the Ministry of Petroleum and Natural Gas. The production and sale of bio-CNG needs a vertically-integrated financing mechanism to reduce the obstacles within the value chain and encourage the ecosystem.
India’s number of CNG dispensing stations has grown to over 2800 in FY 2021, a 28% increase from FY 2020, corresponding to the growing CNG demand. The sale and branding of Bio-CNG is a growing business opportunity for OMCs and will provide an impetus for the sale of CNG vehicles in the country. Though presently, bio-CNG constitutes a small pie of India’s renewable energy and fuel, it has immense potential to replace conventional fuel for the heavy vehicle segment while smaller vehicles are transitioning to electrification.
Proactive measures by the government combined with the active participation from OMCs and Urban Local Bodies would immensely support the Bio-CNG value chain. Mainstreaming Bio-CNG would require effective segregation, collection and transportation of waste and more impetus for production. A robust ‘Waste-to-wheel’ approach could thus help restore the fuel equilibrium by supplementing the growing CNG demand and reducing import dependence while ensuring the safe disposal of organic waste at the same time.
Read the full Issue Brief here.