India Can Save $29 Billion by Replacing Natural Gas with Biogas, Reports IEEFA

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In a groundbreaking report, the Institute for Energy Economics and Financial Analysis (IEEFA) has revealed that India has the potential to significantly reduce its liquefied natural gas (LNG) import bills by USD 29 billion between the financial years 2025 and 2030. The key to this substantial savings lies in the progressive substitution of natural gas with biogas and biomethane.

The report emphasizes the environmental advantages associated with the expansion of biogas projects. These advantages encompass efficient waste management, a reduction in greenhouse gas (GHG) emissions, and an increase in renewable energy production.

Purva Jain, an energy analyst at IEEFA and the report’s author, highlights the potential of biogas to serve as a clean substitute for natural gas and other high-emission fossil fuels. Biogas has the ability to eliminate carbon dioxide (CO2) and impurities like hydrogen sulfide, resulting in methane content that can be upgraded to 90 percent. This upgrade elevates biogas to a calorific equivalent of natural gas.This upgraded biogas, referred to as biomethane, is not only pipeline-ready but can also be seamlessly integrated into gas grids as a non-fossil gas. By adopting appropriate production methods and addressing methane leaks throughout production, upgrading, and supply processes, biogas can offer India a cleaner alternative to its reliance on imported natural gas.Despite its significant potential, the biogas sector in India has faced challenges gaining traction. The report identifies several reasons for this, including the lack of a comprehensive market ecosystem, pricing complexities, intricate approval processes, and fragmented government support.

Jain notes that the government has initiated steps to address these issues. In 2021, various forms of support were consolidated under the National Bioenergy Scheme. The introduction of the GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme, as a government umbrella initiative, is expected to further consolidate these efforts. It encompasses a wide range of schemes and policies aimed at promoting the conversion of organic waste into biogas or compressed biogas (CBG).The report also underscores recent policy developments, such as the adjustment of the compressed biogas rate in response to global gas price fluctuations and plans to mandate natural gas marketing companies to procure five percent compressed biogas.

These measures have revitalized private sector interest in compressed biogas, with notable companies like Reliance Industries Limited and the Adani Group expressing strong enthusiasm.Nonetheless, the report emphasizes that the government needs to take more comprehensive measures to unlock the full potential of biogas in India. This includes encouraging increased investments and private sector involvement, enhancing market viability for CBG and biogas slurry, expanding financial access for biogas plant development, and promoting feedstock mapping for input availability.Crucially, it is essential to ensure that energy crops are not diverted to biogas production, which can lead to indirect land use changes and negative environmental impacts due to increased carbon emissions. The introduction of take-or-pay arrangements is cited as a significant move to ensure the offtake of CBG by various natural gas-consuming industries, accelerating the achievement of decarbonization goals.The report underscores the transformative potential of biogas and biomethane as clean and environmentally friendly alternatives to conventional fossil fuels, making a compelling case for their adoption in India’s energy landscape.

As discussions continue and stakeholders engage in dialogue, the future of India’s energy sector may witness a significant shift towards sustainable and cost-effective solutions, reducing the nation’s dependence on costly LNG imports.

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