New Delhi, Feb 22 (NationPress) The anticipated excise duty waiver on biogas mixed with compressed natural gas (CNG) may catalyze investments reaching up to Rs 1 lakh crore in India, according to a statement from the Indian Biogas Association (IBA) on Sunday.

The industry organization highlighted that this initiative, revealed in the recent Union Budget 2026, marks a significant advancement in promoting clean energy and aligning with India’s 2070 Net Zero objectives.

The IBA asserted that the excise exemption on compressed biogas (CBG) blended with CNG would enhance project financial viability and draw substantial private investment.

They indicated that if city gas distribution networks achieve a modest 5% blending of biogas in the coming five years, it will necessitate approximately 2.5 to 3 million metric tonnes per annum (MMTPA) of CBG.

This scenario alone could stimulate investments ranging from Rs 45,000 crore to Rs 55,000 crore.

The IBA also mentioned that with a clear and stable policy framework, along with predictable pricing, blending levels could elevate to 7-8% by 2032.

In such a case, the overall investment potential could nearly double to almost Rs 1 lakh crore.

This waiver is seen as a correction of a long-standing disparity, as CBG, which is a renewable and environmentally friendly fuel, was previously taxed similarly to CNG.

Eliminating the excise charge on the biogas portion of the blended fuel will render it more economical.

For city gas distribution firms, this implies reduced average fuel costs. Consumers stand to gain from stable or potentially lower gas prices, while producers would benefit from assured sales and more reliable revenue streams.

The IBA highlighted that this policy adjustment could expedite private investments, bolster energy security, and foster rural development.

India's potential for CBG production is estimated at around 60 million tonnes per annum, utilizing organic waste materials like paddy straw, press mud, municipal solid waste, and cattle dung.

The expected excise waiver is projected to enhance the internal rate of return for typical plants producing 4.8 to 10 tonnes per day, contingent upon feedstock and logistics.

This enhancement could facilitate funding for numerous projects that were previously deemed financially unviable.

CBG has the capacity to lower greenhouse gas emissions by 70 to 90% throughout its lifecycle, particularly when derived from agricultural waste.

The IBA stated that a 10% blending level could reduce carbon emissions by 12 to 15 million tonnes of CO2-equivalent annually, positioning the policy as a crucial advancement for India’s climate commitments.