Centre revises subsidy guidelines for CBG sector

For better adoption of biomass-to-energy solutions, the Ministry of Petroleum and Natural Gas has revised guidelines for providing financial assistance to Compressed Biogas (CBG) projects. The new framework focuses on incentivizing the use of agricultural residues and promoting the deployment of biomass aggregation machinery.

As per the updated rules, CBG plants that use over 50% biomass as feedstock and have a minimum production capacity of 2 tonnes per day (TPD) are now eligible for a subsidy of up to Rs 90 lakh. This assistance is specifically intended to support the procurement of equipment used for biomass collection and aggregation.

To qualify for the financial support, both existing and upcoming CBG projects must meet at least one of the following criteria:

• Use a minimum of 50% biomass feedstock, or
• Consume at least 3,000 metric tonnes (MT) of biomass per year.

The notification says that projects using less than 50% biomass but still process over 3,000 MT of agri-residue per year are also eligible for the subsidy—receiving Rs 90 lakh for every 3,000 MT of biomass used.

The financial assistance will cover up to 50% of the cost of biomass aggregation machinery, capped at Rs 90 lakh per project, whichever is lower.

To ensure timely execution, the revised policy mandates that projects must have an installed or planned capacity of at least 2 TPD. For under-construction projects, at least 25% of the physical work should be completed at the time of application, and 50% before the subsidy is released.

The revised guidelines also note that those CBG projects that have already received financial support under any other Central or State Government schemes will not be eligible for this assistance.

Applicants must also furnish detailed information about the machinery proposed for procurement and demonstrate alignment with their biomass collection plans. Once approved, developers may receive 10% of the total subsidy as an advance, provided they submit a bank guarantee of the same amount valid for one year. This guarantee will be forfeited if project guidelines are not adhered to.

Additionally, the CBG project developers have a window of two years from the date of approval to claim the subsidy in phases, ensuring flexibility during implementation.

The revised policy aligns with recent amendments to the National Biomass Programme (2022–2027) announced by the Ministry of New and Renewable Energy.