Unlocking India’s bioenergy potential

This commentary originally published as part of India’s Petroleum Planning and Analysis Cell's Journal during India Energy Week 2025.

India is developing its bioenergy resource to provide affordable energy while reducing fossil fuel imports, improving air quality and reducing greenhouse gas emissions. Modern bioenergy today accounts for 13% of India’s total final energy consumption and is expected to grow by up to 45% between 2023 and 2030. However, to meet India's longer-term bioenergy ambitions, it will need to deploy new technologies and practices to collect and convert its vast feedstock potential into sustainable biofuels, biogases and solid bioenergy. Moreover, additional policy details are needed to deliver on some of India's policy ambitions. For instance, India has announced its mandatory blending obligations for compressed biogas (CBG), but it has yet to release design elements such as a certificate trading market.

In this commentary we discuss the implications of India's bioenergy ambition for feedstock availability, innovation needs and prioritisation. We also share lessons learned from biogas certification markets that India may consider when designing its Mandatory Blending Obligations for CBG programme. 

India is forecast to be the fastest growing bioenergy market in the world between 2023 and 2030, accounting for more than a third of global bioenergy demand growth. India has established its overall bioenergy ambitions through a series of targets supported by enabling policies such as guaranteed pricing, capital support for new projects and technical standards. It has established a 20% ethanol blending (by 2025/26), 5% biodiesel blending (by 2030), 5% CBG blending requirement (by 2028/29) as well as 7% of co-firing solid biomass in coal power plants by 2026 and 2% biojet blending for international flights by 2028.

To 2030 all forms of bioenergy use expand across India. Modern, solid biomass use expands the most, accounting for nearly 80% of new bioenergy use. Bagasse used in India's expanding sugar industry for heat and electricity supports much of this growth. Liquid biofuel demand, including ethanol, biodiesel and biojet fuel nearly quadruples if planned targets are met by 2030. However, achieving this level of growth requires policy support mechanisms similar to those used to promote ethanol for biodiesel and biojet fuel.

India’s demand for biogases climbs by 25% to 2030 following accelerated growth for compressed biogas (CBG) and despite declining biogas production from small household  digesters. When excluding small household facilities, India’s demand for biogases increases 150% by 2030 from 2023 levels. Crucial to expanding biogases at this pace will be further details on the Central Repository Body that will monitor and implement the blending mandate and guidelines on CBG certificates that would enable city gas distribution companies to purchase certificates when local production is unavailable.   

Bioenergy today in India, excluding traditional uses for fuel wood, consumes 180 million tonnes per year of feedstocks including sugarcane, corn, agricultural residues and municipal solid and liquid wastes. We estimate that feedstock demand would need to expand near 50% by 2030, primarily to supply new biofuel, biogas and solid biomass using commercial technologies. While considerable feedstock potential exists, new innovative and expanded collection approaches are needed to access it. For instance, used cooking oil collection would need to be expanded to support biodiesel and SAF production. In the case of other organic wastes and residues such as manure and organic municipal and industrial waste collection incentives, new business models and development of mixed feedstock digestion are needed to enable greater biogas production.

After 2030, new processing technologies capable of converting lignocellulosic feedstocks to liquid biofuels will be needed to expand production. For instance, agricultural wastes and residues could support a theoretical 1.4 EJ of ethanol production, India’s current production being 0.1 EJ. Initially, these technologies will be more expensive than commercial technologies, but costs could come within range of commercial biofuel technologies through economies of scale and learning by doing. 

Phasing out the traditional use of bioenergy is essential to improve modern energy access and avoid negative impacts such as poor indoor air quality and long collection distances. Traditional use of bioenergy accounted for near 40% of total bioenergy use in India in 2023, and so eliminating its use would expand biomass supply for modern energy uses and can contribute to improving ecosystem health.  

Second, a thorough understanding of feedstock availability is crucial to developing India's bioenergy potential. Current assessments for liquid biofuels, biogases and solid biomass have been conducted separately under differing assumptions where the same agricultural residues are counted towards liquid biofuel, biogas and solid biomass production estimates. A centralised, comprehensive feedstock assessment would help to align estimates.

The proposed feedstock assessment could then inform a third action area on co‑ordinating bioenergy initiatives. India may consider complementing its National Bioenergy Programme with a national bioenergy strategy or a broader bioeconomy strategy to propose post-2030 bioenergy targets. Such a strategy would consider the relative merits of different bioenergy uses when considering energy security, air quality, cost, technology availability, innovation potential, employment and greenhouse gas performance.

India may also consider moving towards greenhouse gas performance-based standards as a fourth action area. While volume or energy mandates are critical to establishing markets, it is also important to drive better fuel GHG-performance over time to ensure that the deployment of biofuels leads to measurable and verifiable emissions savings. Broader sustainability requirements should also be used to address non-GHG impacts of fuels such as food and water security, biodiversity and other socioeconomic factors. 

The government of India has recognised biogas and CBG (with at least 90% methane content) as strategic elements of a transition to an energy system relying on higher shares of natural gas. Globally, biogas and biomethane markets are experiencing significant growth, with Europe and the United States as the largest producers. As these markets expand, both Europe and the United States have established tools and systems to monitor and track biomethane trade.

Renewable gas certificates support the establishment of transparent and robust tracking systems by preventing double counting and providing regulators and consumers with detailed information on the environmental characteristics of biogas and biomethane. Such certificates serve two primary purposes: proving compliance with legal obligations in regulatory markets, and allowing companies and organisations to claim associated emission reductions in their environmental reports in voluntary markets. The type and specific characteristics of certificates depend on their intended use and the applicable regulatory framework.

In the European Union (EU), member states have developed national registries to track production and compliance with mandatory biofuel shares in transport. An EU Union Database for Biofuels (UDB) will become operational in 2025, facilitating cross-border trading. To meet the sustainability requirements under the Renewable Energy Directive (RED), biofuels must be certified. Certificates, in the form of Proof of Sustainability (PoS), are passed and traded alongside the physical molecules using a mass-balance accounting system.

In contrast, the United States relies on market-based systems for complying with biofuel obligations in transport, where credits are traded separately from the physical gas. For example, Renewable Identification Numbers (RINs) under the federal Renewable Fuel Standard (RFS) represent the biofuel’s energy content for a certain type of feedstock (biomethane qualifies for cellulosic or advanced biofuels credit categories), while California’s Low Carbon Fuel Standard (LCFS) awards carbon credits for greenhouse gas (GHG) reductions compared to fossil fuels, that can be traded in the credit market. The price of credits is subject to market variability.

Some European countries, like Germany, have additionally adopted a carbon credit market system for transport GHG reduction quotas like California’s. Here, biofuels must comply with RED sustainability standards via Proof of Sustainability certificates, and additionally generate revenues from carbon credits sold in the market, based on their GHG performance and feedstock type.

Beyond transport, some governments are beginning to set mandates also on other gas markets, such as heating, using similar tools. Voluntary markets, while not regulated by law, require proof of the renewable origin of biomethane and safeguards against double-counting, usually in the form of simpler certificates, like the Guarantees of Origin (GOs). Some European industrial sectors under the EU Emissions Trading System (ETS) also require certificates to prove compliance with GHG emission reduction targets.

Certain features of above-mentioned systems could be used to support India's expanding CBG market. Below are some key suggestions.

1. Create a robust National Registry to monitor CBG production volumes, grid injections or end-use reception in cascade transport systems, along with a centralised registry to document green certificates and account all transactions. Such a registry should include information such as feedstock type, geographical origin, and GHG emission performance, serving as a backbone for transparent and reliable certificate trading.
2. Enable book-and-claim systems to support market development as gas grid infrastructure in India continues to expand. Book-and-claim systems enable the trade of green certificates separately from the physical transfer of the gas, and can be used either in the voluntary markets or to comply with obligations.
3. Incorporate sustainability and carbon intensity (CI) requirements into mandates. For biogas and biomethane facilities, maintaining good technical standards during the design and construction phases, along with proper maintenance of gas seals during use, is crucial to avoid methane leakage into the atmosphere. Additionally, mandates that encourage the use of specific types of feedstocks can provide additional environmental benefits.
4. Introduce compliance waivers. In emerging markets where supply may initially fall short of mandated demand, compliance waivers – similar to the advanced biofuels-category RIN credits under the US Renewable Fuel Standard (RFS) – can be introduced to allow obligated parties to flexibly meet their requirements by purchasing them.
   

India has established its bioenergy use ambitions through clear targets and has demonstrated bioenergy successes such as promoting ethanol use. However, meeting India’s ambitious targets requires a focus on innovation, a coordinated bioenergy strategy and new supportive policies. CBG trackable certificates for instance offer one approach to help meet India's CBG blending mandate. India has nearly 1 billion tonnes of biomass waste and residues presenting considerable opportunity to contribute to expanding and diversifying affordable energy supplies, improving energy security and better air quality, and reducing greenhouse gas emissions.