Rise with the Sunrise: CBG

15 February 2026, Mumbai 

Rise with the Sunrise: Compressed Bio-Gas and India’s Emerging Green Economy

In every developing economy, certain industries initially appear futuristic and ahead of their time. Some of them fade away, but a few evolve into what we call “sunrise sectors.” After a period of incubation, these sectors become significant contributors to economic growth. India has witnessed this journey with Information Technology, Telecom and Modern Retail. Today's sunrise sectors are tomorrow's dominant industries or mainstream economy staples.

Today, sectors such as Semiconductors, Solar Power Generation, Battery Energy Storage Systems (BESS), Millet-based Food Products, Green Data Centres, Green Warehouses, Technical Textiles and Compressed Bio-Gas (CBG) are fast emerging as the new sunrise sectors of India. 

While the underlying technologies have existed for decades, mainstream adoption is now accelerating. In the coming years, these sectors could become core pillars of the economy. The need for adopting such sectors is driven by self-reliance, import substitution, cost efficiency and environmental sustainability. Every sunrise sector builds its own ecosystem of suppliers, financiers, regulators and consumers — creating both opportunity and execution challenges.

Why CBG Matters?

Compressed Bio-Gas (CBG) is produced through anaerobic digestion of biomass such as crop residue, cattle dung, sewage and municipal solid waste. The gas is purified and compressed to achieve methane content above 90–95%, making it fully compatible with CNG infrastructure — much of which is supported by imported natural gas.

Agricultural feedstock options include Napier grass, wheat and rice straw (parali), maize residue, sugarcane press-mud and cow dung. To reduce risk of dependency on a single seasonal feedstock, multi-feedstock plants are increasingly preferred. While rice paddy offers high gas yield, its seasonal nature can create supply gaps. Napier grass is gaining popularity because it can be cultivated throughout the year and provides predictable biomass output.

Illustrative Ecosystem of CBG

Additional Revenue Streams

Beyond fuel production, CBG plants generate by-products such as Fermented Organic Manure (FOM) and bio-slurry. These improve soil health, reduce chemical fertilizer dependency and create additional revenue opportunities. Farmers benefit both from biomass supply income and improved soil productivity.

Thus, CBG is not merely an energy initiative — it is a rural industrialisation strategy, an environmental solution and an energy security measure combined.

Investment and Plant Structure

Setting up a CBG plant is moderately technology-intensive but does not require heavy marketing infrastructure. However, it has three critical pillars: close coordination with farming communities, availability of suitable land and sustained feedstock supply.

A typical 5 Tonnes Per Day (TPD) CBG plant may require 5–6 acres of land including storage facilities. Feedstock is generally sourced from FPOs, farmers or biomass aggregators. An alternative is captive cultivation - approximately 150-200 acres of biomass cultivation exposure can ensure year-round feedstock security.

Government subsidies significantly reduce the financial burden on investors in CBG projects. Under central and state schemes such as SATAT, GOBARdhan, and various state renewable energy policies, projects may receive capital subsidies, interest subvention, viability gap funding, and support for grid connectivity and marketing.

These incentives can lower the effective project cost by upto 50%, improving project viability and shortening the payback period. With subsidy support and stable offtake agreements, a typical 5–10 TPD CBG plant can achieve break-even within approximately 5 years, depending on feedstock cost, gas offtake price, and operational efficiency. This significantly enhances investor confidence and reduces long-term risk exposure.

Actual investment levels vary depending on plant capacity, feedstock model, location and choice of plant & machinery.

Global Push

The Global Biofuels Alliance was launched in September 2023 during India’s G20 Presidency at the G20 Summit in New Delhi to accelerate global adoption of sustainable biofuels, enhance energy security, and support climate goals. India is a founding leader of the Alliance and is positioning biofuels as a core pillar of its clean energy transition.

Compressed Biogas (CBG) directly aligns with this agenda by converting agricultural residue and organic waste into clean, transport-grade fuel. Expanding CBG under programs like SATAT and GOBARdhan helps reduce fossil fuel imports, lower methane emissions, and advance India’s Nationally Determined Contributions (NDCs) under the Paris Agreement, supporting its net-zero target of 2070 and strengthening its COP climate commitments.

Government Push - SATAT Initiative

In 2018, the Ministry of Petroleum & Natural Gas launched SATAT (Sustainable Alternative Towards Affordable Transportation). The objective was to promote greener, cost-effective fuel alternatives and reduce reliance on imported fossil fuels. The long-term vision includes developing nearly 5,000 CBG plants across India.

Under SATAT, Public Sector Oil Marketing Companies (OMCs) invite entrepreneurs to set up CBG plants and provide structured procurement arrangements. This ensures that once the plant is operational, the produced gas has a defined offtake pathway for automotive and industrial use.

Gamechanger - CBG and the CGD Blending Scheme

CBG is increasingly integrated with the City Gas Distribution (CGD) network under phased blending obligations. As blending percentages increase, CGD networks provide structural demand support. This framework reduces marketing effort significantly — once commissioned under OMC linkage, the producer supplies into an established energy distribution ecosystem rather than building retail demand independently.

Land Challenges – Agriculture to Industrial Conversion

One of the most practical bottlenecks in CBG implementation is land.  Since plants are typically located near biomass sources, agricultural land often requires Non-Agricultural (NA) conversion. Banks sometimes hesitate to accept certain NA conversions as mortgage security (largely due to the SARFAESI Act). Similarly, extraction of water from agri-land for such a plant could face bureaucratic tangles. Zoning clarity between agro-processing and industrial classification can also delay approvals.

Streamlined land-use policies and faster NA conversion processes would significantly accelerate deployment.

So, How to Start a CBG Plant in India?

With the help of a competitive professional consultant one can take the following route

• Step 1: Assess feedstock availability within a 15–25 km radius.
• Step 2: Secure 5–6 acres of suitable land with clear title and NA conversion.
• Step 3: Apply under SATAT and obtain Letter of Intent from OMC.
• Step 4: Prepare DPR and approach banks for 65–75% project finance.
• Step 5: Finalise technology provider and EPC contractor.
• Step 6: Obtain approvals – Pollution Control Board, Factory License, Electricity Connection and Local Body NOCs.
• Step 7: Construct, commission and begin supply under OMC agreement.

Typical timeline: 12–18 months depending on land and financial closure.

The Maharashtra CBG Story

Maharashtra, being one of India’s most industrious states, is rapidly scaling up CBG activity alongside states like Uttar Pradesh. The state has a robust policy framework under the Maharashtra Bio-Energy Policy 2024 and PSI-2019. Incentives include capital subsidies, employment-linked benefits, stamp duty waivers, SGST refunds and electricity duty exemptions.

In October 2025, India’s first Cooperative Multi-Feed CBG Plant at Maharshi Shankarrao Kolhe Sahakari Sakhar Karkhana in Kopargaon Ahilyanagar was inaugurated by Union Home and Cooperation Minister Shri Amit Shah. It integrates CBG production with a spentwash dryer and potash granulation system, producing 12 tonnes of CBG daily and 75 tonnes of potash granules from jaggery/molasses. The project involved an investment of approximately ₹55 crore.

With over 200 sugar factories, Maharashtra has significant potential for expanding its CBG footprint. 

Opportunity for Vidarbha

Compressed Biogas (CBG) is highly suitable for Vidarbha due to its abundant agricultural residue from cotton, soybean, tur, and paddy crops. CBG plants can convert this biomass into clean fuel, providing farmers with additional income while reducing stubble burning and pollution.

The sector can generate rural employment, promote local industrialisation, strengthen regional energy security, and produce bio-slurry as organic fertiliser, supporting sustainable agriculture. Overall, CBG offers a strong circular and climate-aligned growth opportunity for Vidarbha.

What Maharashtra Needs to Do ? 

Have a Clear Action Agenda

- Announce a Dedicated Maharashtra CBG Policy with defined targets and timelines.

- Set a target of enabling an additional 1000 TPD capacity (non-government setup) by FY27. 

• Earmark 5–10 acre parcels in MIDC zones at each taluka level.
• Permit CBG units in agro-processing zones.
• Fast-track NA conversion for agricultural land used for CBG.
• Encourage MSRTC buses and municipal fleets to adopt CBG blends.
• Provide additional state-level capital subsidy top-up (5–10%).
• Create district-level biomass banks or FPO-linked supply systems.
• Implement time-bound (60–90 days) single-window clearances.
• Integrate CBG production with sugar cooperatives to utilize press-mud.

The CBG Opportunity

Overall, CBG in Maharashtra is best suited for agri-linked, logistics-aware, and regionally connected entrepreneurs who can operate within a rural industrial ecosystem.

• In Maharashtra, the most suitable individual promoters for setting up CBG plants are medium / large farmers and farmer group leaders who have access to significant agricultural residue such as cotton stalk, soybean waste, and paddy straw. 
• Farmer Producer Organisation (FPO) heads and progressive agri-entrepreneurs are particularly well positioned, as they can aggregate biomass and create stable supply chains. 
• Agro-industrial entrepreneurs, including owners of sugar mills, rice mills, dal mills, cotton ginning units, and cold storage facilities, are also strong candidates since they understand rural logistics, energy consumption patterns, and by-product utilisation.
• Existing biogas or waste-management entrepreneurs can upgrade to CBG technology with relatively lower learning curves. 
• Additionally, individuals with strong local administrative networks and the ability to manage clearances, biomass contracts, and OMC tie-ups are more likely to successfully execute such projects. 

Final Strategic View

Maharashtra has all the ingredients to become India’s CBG leader:

• Capability for adopting Innovation and clinical execution
• Large agricultural base
• Strong sugar ecosystem
• Expanding CGD network
• Industrial fuel demand
• Financial ecosystem depth

What is required now is policy clarity, land facilitation and execution speed. If executed effectively, Maharashtra can position CBG today the way it positioned solar energy a decade ago - as a scalable, investment-friendly clean energy sector.

Last Bit

CBG is no longer just a renewable energy option — it is a strategic rural industrialisation opportunity. For regions like Vidarbha, it represents a convergence of farmer income diversification, waste management, clean fuel production, and climate responsibility. As India strengthens its global leadership in biofuels, the real transformation will happen on the ground — where agricultural residue becomes energy, waste becomes wealth, and rural districts become engines of green growth. The sunrise sector is not only about fuel; it is about reshaping the rural economy.

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About the Author

Dhananjay M. Deshmukh (dhan1011@gmail.com) is a Mumbai-based industry professional actively engaged in industrial development, energy transition and regional economic growth, with a focus on Vidarbha.

He provides consultation support for setting up CBG plants (+BioChar /BESS /Green Warehouse / Millet Food Products/ Technical Textiles and others) and other sunrise-sector projects, assisting entrepreneurs in project structuring, policy navigation, land strategy, subsidy mapping and financial closure.