Current Affairs · · GS3 · Economy

GOBARdhan scheme targets tenfold compressed biogas output

The Centre has launched GOBARdhan, a ₹23,731-crore, ten-year scheme to raise compressed biogas output nearly tenfold. City gas companies must buy CBG at an administered price of ₹2,110 per MMBtu, and new plants get capital assistance. The government expects import savings, rural jobs and organic manure.

Event date:

REq1
  1. Context1 / 4
    • The Union Cabinet approved GOBARdhan, the National Circular Bioenergy Scheme, on 6 August 2026, with an outlay of ₹23,731 crore. Petroleum Minister Hardeep Singh Puri formally launched it on 1 October 2026.
    • It runs for ten years, from FY 2026-27 to FY 2035-36, as a Central Sector Scheme under the Ministry of Petroleum and Natural Gas.
    • It aims to turn farm residue, cattle dung, press mud, food waste and municipal organic waste into compressed biogas (CBG), which can be blended into CNG and piped gas.
    • As of August 2026, India had 217 commissioned CBG plants with installed capacity above 1,700 tonnes per day, and 339 more under construction.
  2. Key highlights2 / 4
    • Output target. Raise CBG production from about 0.4 million standard cubic metres per day (MMSCMD) to 4-6 MMSCMD, a nearly tenfold rise.
    • Expected gains over the decade. More than ₹40,000 crore saved on fuel imports, more than ₹75,000 crore added to GDP, over 1.5 lakh jobs, about 10 million tonnes of fossil fuel replaced, more than 40 million tonnes of carbon dioxide avoided, and around 250 million tonnes of organic manure. These are government projections, not measured results.

    The scheme has six components.

    • Offtake assurance. City gas distribution (CGD) firms must buy CBG to meet a blending obligation of 3% in FY27, 4% in FY28 and 5% from FY29, in CNG for transport and in piped gas for homes. Producers can sell up to 100% of saleable output, and GAIL pools the procurement.
    • Pricing framework. An administered price of ₹2,110 per MMBtu, held for at least ten years.
    • Capital assistance. New plants get ₹1.25 crore per tonne per day (TPD), capped at ₹30 crore per project. Existing biogas plants being upgraded get ₹0.60 crore per TPD, up to ₹5 crore.
    • Pipeline infrastructure. Links plants to the gas network.
    • Credit guarantee. Guarantee support for MSME-based projects.
    • Ecosystem challenge fund. Supports technology and ecosystem development.

    Headline versus guideline. The Cabinet described support of up to ₹2 crore per TPD. The September 2026 guidelines set ₹1.25 crore per TPD for new plants, with extra reimbursement for feedstock-collection and manure equipment. Assistance is tied to project milestones, not paid upfront.

  3. Key concepts3 / 4

    1. What is compressed biogas (CBG)?

    Raw biogas comes from rotting organic matter and is only partly methane. Purifying and compressing it gives CBG, which is rich in methane and works like CNG as a vehicle or industrial fuel. The step is a little like refining raw cane juice into usable sugar.

    2. Why do assured offtake and an administered price matter?

    A CBG plant is costly to build, but it earns only if someone buys its gas at a known price. Assured offtake guarantees a buyer, and the administered price fixes the rate for ten years. Together they make loans easier to raise, much as a guaranteed buyer does for a crop.

    3. What is digestate, and what is the catch?

    Digestate is the nutrient-rich residue left after gas production, and it can be used as organic manure. Plants can earn from it, but quality standards and demand decide how much. Leaks of methane, itself a potent greenhouse gas, can also cancel out the climate gain.

  4. Way forward4 / 4

    These are suggested measures, not approved policy.

    • Secure feedstock and payments. Sign reliable waste-supply contracts, and pay producers on time.
    • Control methane leaks and set manure standards. Strong quality checks protect both the climate gain and the trust of farmers.
    • Cluster plants around assured waste streams. Link them to city-gas and transport markets.

Sources

Syllabus

PaperSubjectSub-topic
GS3EconomyInfrastructure: energy; government schemes for the compressed biogas sector
GS3EnvironmentConservation and environment; agricultural residue and waste management
PrelimsEnvironmentGovernment schemes; energy; environment and waste management

Topics

Agriculture and EnvironmentPollutionAgriculture EconomyExternal Sector of IndiaIndustry

Related previous-year questions

Asked in earlier UPSC Prelims papers on this topic. Answer, then check.

  1. UPSC Prelims 2020 · Environment and Ecology · Environmental Laws, Conventions and Policies

    According to India's National Policy on Biofuels, which of the following can be used as raw materials for the production of biofuels? 1. Cassava 2. Damaged wheat grains 3. Groundnut seeds 4. Horse grams 5. Rotten potatoes 6. Sugar beet Select the correct answer using the code given below:

    1. 1, 2, 5 and 6 only
    2. 1, 3, 4 and 6 only
    3. 2, 3, 4 and 5 only
    4. 1, 2, 3, 4, 5 and 6
    Show answer

    Answer: A. Under the National Policy on Biofuels, 'bioethanol' is defined as ethanol produced from biomass such as sugar containing materials, like sugar cane, sugar beet, sweet sorghum etc.; starch containing materials such as corn, cassava, rotten potatoes, algae etc.; and, cellulosic materials such as bagasse, wood waste, agricultural and forestry residues or other renewable resources like industrial waste. For Ethanol Production the following raw materials may be potentially used: B-Molasses, Sugarcane juice, biomass in form of grasses, agriculture residues (Rice straw, cotton stalk, corn cobs, saw dust, bagasse etc.), sugar containing materials like sugar beet, sweet sorghum, etc. and starch containing materials such as corn, cassava, rotten potatoes etc. Damaged food grains like wheat, broken rice etc. which are unfit for human consumption, food grains during surplus production are also allowed. From the given options: - Cassava (1) → starch-containing material → YES - Damaged wheat grains (2) → damaged food grains → YES - Groundnut seeds (3) → NOT listed as raw material for biofuels - Horse grams (4) → NOT listed - Rotten potatoes (5) → starch-containing material → YES - Sugar beet (6) → sugar-containing material → YES Correct options: 1, 2, 5 and 6 → Option (a).

    Difficulty: medium · statement

    Open this question on its own page, with the full explanation →

  2. UPSC Prelims 2024 · Environment and Ecology · Miscellaneous Environment and Ecology

    Consider the following materials: 1. Agricultural residues 2. Corn grain 3. Wastewater treatment sludge 4. Wood mill waste Which of the above can be used as feedstock for producing Sustainable Aviation Fuel?

    1. 1 and 2 only
    2. 3 and 4 only
    3. 1, 2, 3 and 4
    4. 1, 3 and 4 only
    Show answer

    Answer: C. Sustainable Aviation Fuel (SAF) is a liquid fuel currently used in commercial aviation which reduces CO2 emissions by up to 80%. It can be produced from a number of sources (feedstock) including waste oil and fats, green and municipal waste and non-food crops. An estimated 1 billion dry tons of biomass can be collected sustainably each year in the United States, enough to produce 50–60 billion gallons of low-carbon biofuels. These resources include: - Corn grain - Oil seeds - Algae - Other fats, oils, and greases - Agricultural residues - Forestry residues - Wood mill waste - Municipal solid waste streams - Wet wastes (manures, wastewater treatment sludge) - Dedicated energy crops All four listed materials – agricultural residues, corn grain, wastewater treatment sludge, and wood mill waste – can be used as feedstock for SAF → Option (c).

    Difficulty: medium · direct

    Open this question on its own page, with the full explanation →

Practice questions

  1. With reference to the GOBARdhan scheme (2026), consider the following statements: 1. It is a Central Sector Scheme to develop the compressed biogas sector. 2. City gas distribution entities must procure CBG under a notified obligation rising to 5%. 3. It fixes the CBG price afresh every year. Which of the statements given above are correct?

    1. 1 and 3 only
    2. 2 and 3 only
    3. 1 and 2 only
    4. 1, 2 and 3
    Show answer

    Answer: C. Statements 1 and 2 are correct: GOBARdhan is a Central Sector Scheme under the Ministry of Petroleum and Natural Gas, and the blending obligation on city gas distribution firms rises from 3% in FY27 to 5% from FY29. Statement 3 is wrong, because the administered price of ₹2,110 per MMBtu is set for at least ten years rather than revised annually.

    Difficulty: medium · statement

  2. Consider the following statements about compressed biogas: 1. CBG is made by burning raw biogas and compressing the ash. 2. Digestate left after gas production can be used as organic manure. 3. CBG can be blended into CNG for use in transport. Which of the statements given above are correct?

    1. 1 and 2 only
    2. 2 and 3 only
    3. 1 and 3 only
    4. 1, 2 and 3
    Show answer

    Answer: B. Statements 2 and 3 are correct. Statement 1 is wrong: CBG is made by purifying raw biogas to raise its methane content and then compressing it, not by burning it. Digestate, the residue left after gas production, is a nutrient-rich material usable as organic manure, and CBG can be blended into CNG for transport and into piped gas for homes.

    Difficulty: easy · statement

  3. Consider the following statements about the design of the GOBARdhan scheme: 1. An administered price gives producers long-term revenue visibility. 2. Assured offtake helps projects raise loans. 3. Capital assistance is an unconditional upfront grant. Which of the statements given above are correct?

    1. 1 and 2 only
    2. 1 and 3 only
    3. 2 and 3 only
    4. 1, 2 and 3
    Show answer

    Answer: A. Statements 1 and 2 are correct: a price fixed for at least ten years gives a predictable revenue line, and a guaranteed buyer makes a project easier to finance. Statement 3 is wrong, because capital assistance is released against project milestones such as approvals, first commercial sale and plant performance, not paid as an unconditional grant at the start.

    Difficulty: medium · statement

Mains practice

Answer-writing practice on this article. Attempt it first, then open the hints.

  1. GS3 · 250 words

    Compressed biogas can serve energy security, waste management and rural livelihoods together. Discuss with reference to GOBARdhan.

    Show hints
    1. Set out India’s dependence on imported natural gas, and how domestic CBG displaces part of it, citing the projected saving of more than ₹40,000 crore on fuel imports.
    2. Explain the feedstock side: crop residue, cattle dung, press mud and municipal organic waste become inputs to a plant instead of disposal problems or stubble burnt in the field.
    3. Show how assured offtake and a ten-year administered price turn a waste stream into a business a lender will finance.
    4. Cover rural livelihoods: collection and plant employment, and digestate returned to farmers as organic manure.
    5. Close on the conditions that decide whether the gains are real: methane leakage, reliable feedstock, timely payment and enforced manure quality standards.
  2. GS3 · 250 words

    Examine how assured offtake, administered pricing and capital assistance work together to make CBG projects bankable. What risks remain?

    Show hints
    1. Name the three bottlenecks CBG projects faced earlier: an uncertain selling price, no guaranteed buyer, and a heavy upfront capital cost.
    2. Explain how the blending obligation on city gas distribution firms, rising to 5% from FY29, manufactures assured demand.
    3. Explain how a price held for at least ten years gives lenders a revenue line they can underwrite over the loan tenure.
    4. Explain how capital assistance of ₹1.25 crore per TPD, capped at ₹30 crore, cuts the equity a promoter must bring to the project.
    5. Set out what remains unresolved: milestone-linked release of funds, the gap between the ₹2 crore headline figure and the guideline rate, feedstock contracts and payment discipline by buyers.