Policy Update
Saachi Saxena
Background
envisaged establishing 5,000 Compressed Bio-Gas (CBG) plants with an annual production target of 15 million metric tonnes (MMT) by 2023–24 (Ministry of Petroleum and Natural Gas [MoPNG], 2022). According to Indian Oil Corporation Limited (IOCL, 2026), more than 120 CBG plants are operational across India. The difference between the original target and the subsequently reported operational base provides the context for examining SATAT’s implementation and the progress made in expanding CBG production.
CBG is produced through the anaerobic decomposition of biomass and waste, followed by purification and compression. A range of materials can be used as feedstock, including agricultural residue, cattle dung, poultry litter, municipal solid waste, sewage treatment plant waste and sugarcane press mud. According to IOCL (2026), Compressed Bio-Gas is similar to commercially available natural gas in its composition and energy potential. IOCL also states that CBG has a similar calorific value and other properties to Compressed Natural Gas (CNG), allowing it to serve as an alternative renewable fuel for automotive, industrial and commercial applications.
The economic relevance of SATAT lies in its attempt to turn waste and biomass into a marketable source of energy. Agricultural residue and other organic waste, which may otherwise have limited economic value, can become inputs into an energy-production process. The CBG produced can then be supplied to existing fuel markets. IOCL identifies several potential benefits from this process, including additional income opportunities for farmers, rural employment and entrepreneurship, lower dependence on natural gas and crude-oil imports, and greater protection against fluctuations in crude-oil and gas prices (IOCL, 2026).
The scale originally envisaged for SATAT was significant. The programme set a target of 5,000 CBG plants with an annual production capacity of 15 million metric tonnes (MMT) by 2023–24 (Ministry of Petroleum and Natural Gas [MoPNG], 2022). While this target represented the long-term ambition of the programme, the scheme has also expanded its operational base. According to the PIB 2026 SATAT Scheme note, 217 CBG/Bio-CNG plants registered on the GOBARdhan Unified Registration Portal have been commissioned, producing 0.4 million standard cubic metres per day (MMSCMD). This expansion indicates that CBG is moving beyond the narrow role of a waste-management solution and is gradually emerging as a component of India’s domestic gas economy.
SATAT also operates alongside the National Policy on Biofuels, 2018 and the GOBAR-DHAN initiative. GOBAR-DHAN focuses on converting cattle dung and farm waste into CBG and compost, thereby connecting CBG production with the broader management and productive use of organic waste (IOCL, 2026).
The central economic question for SATAT, therefore, is not simply how much biomass India has available. It is whether these resources can be converted into reliable, investable and commercially viable CBG capacity at scale.
Functioning
SATAT follows an entrepreneur-led production model. Public-sector Oil Marketing Companies (OMCs) invite Expressions of Interest (EoIs) from entrepreneurs interested in setting up CBG plants. These entrepreneurs use available biomass and waste to produce CBG, which is then supplied to the market for automotive and industrial applications (IOCL, 2026). The National Portal of India similarly describes SATAT as an initiative to establish CBG production plants and make CBG available for automotive use by inviting EoIs from potential investors (National Portal of India, 2026).
The procurement arrangement is important because it is intended to provide greater certainty around the market for CBG produced by new plants. OMCs issue Letters of Intent (LoIs) to entrepreneurs for the procurement of CBG. However, the implementation data also highlight the gap between securing an LoI and actually commissioning a plant. As of 31 October 2022, OMCs participating in SATAT had issued 3,694 LoIs, but only 38 CBG/biogas plants with an installed capacity of around 225 tonnes per annum had been commissioned by LoI holders (MoPNG, 2022). This difference suggests that moving from initial investment interest to operational capacity involves several additional financial, technological and infrastructure requirements.
Financing remains an important consideration in establishing CBG plants. Under the Ministry of New and Renewable Energy’s (MNRE) 2022 Waste to Energy Programme guidelines, Central Financial Assistance (CFA) was set at ₹4 crore per 4,800 kg/day of CBG capacity for new biogas plants and ₹3 crore for existing plants, subject to a maximum of ₹10 crore per project and specified eligibility and performance conditions (MNRE, 2022). However, the application deadline was 31 December 2025, and further applications have been stopped until further notice (MNRE, n.d.).
Additionally, CBG projects have been classified as a priority sector for lending by the Reserve Bank of India, while the State Bank of India has introduced a dedicated financing policy for CBG projects (IOCL, 2026).
The economics of a CBG plant, however, extends beyond the sale of gas. The production process generates by-products such as Fermented Organic Manure (FOM), Liquid FOM and Phosphate Rich Organic Manure (PROM). Under the GOBAR-DHAN framework, the government provides Market Development Assistance of ₹1,500 per metric tonne for these organic fertilisers produced by biogas and CBG plants (IOCL, 2026). This creates an additional revenue stream while linking CBG production with the productive use of organic waste.
The availability and collection of feedstock is another important part of the production model. To support this, the Ministry of Petroleum and Natural Gas issued guidelines for Biomass Aggregation Machinery on 2 February 2024, providing financial support to CBG producers for procuring such machinery (IOCL, 2026). This support is particularly relevant because the commercial viability of CBG depends not only on plant capacity but also on a reliable supply of biomass.
Infrastructure integration is another component of SATAT’s functioning. The CBG-CGD Synchronisation Scheme enables biogas and CBG to be integrated with City Gas Distribution (CGD) networks. GAIL has been mandated to operationalise the scheme and supply CBG blended with domestic gas to CGD entities. A separate pipeline infrastructure scheme also provides financial support for connecting CBG plants to the CGD network (IOCL, 2026). Such integration can help connect producers with established gas distribution infrastructure rather than requiring every plant to develop an entirely separate delivery system.
Demand creation has also become more explicit under the scheme. Mandatory CBG blending in CNG for transport and PNG for domestic consumption is set at 1% in FY2025–26, increasing to 3% in FY2026–27 and 4% in FY2027–28, before reaching 5% from FY2028–29 onwards (IOCL, 2026). Together, the procurement mechanism, financial support, feedstock assistance, infrastructure linkages and blending requirements are intended to connect CBG production with both the supply and demand sides of the market.
Performance
The most revealing aspect of SATAT’s early performance was the gap between project commitments and actual operational capacity.
The programme had initially set a target of 5,000 CBG plants by 2023–24. However, the Parliamentary Standing Committee on Petroleum and Natural Gas reported that only 40 plants had been set up against this target at the time of its review (PRS Legislative Research, 2022). This pointed to a significant difference between the scale of the programme’s ambition and its progress on the ground.
The same Committee reported that 3,263 Letters of Intent (LoIs) had been issued as of 1 June 2022, while only 35 CBG plants had been commissioned. It also noted that some entrepreneurs or investors had received multiple LoIs, while banks were generally not extending loans for more than one project to entrepreneurs holding multiple LoIs (PRS Legislative Research, 2022). This created a gap between the number of projects identified under the scheme and the number that could actually move towards implementation.
By 30 November 2024, 80 CBG plants had been commissioned under SATAT, while 72 others were at various stages of construction (Ministry of Petroleum and Natural Gas, 2024).
The comparison between the two reporting dates in 2022 highlights the gap between project commitments and operational capacity. Between 1 June and 31 October 2022, the number of Letters of Intent (LoIs) increased from 3,263 to 3,694, an addition of 431 LoIs, while the number of commissioned plants rose from 35 to 38 (PRS Legislative Research, 2022; Ministry of Petroleum and Natural Gas [MoPNG], 2022). This comparison captures progress over a specific four-month period in 2022, rather than SATAT’s overall progress since its launch or its performance up to 2026. It illustrates that an increase in project commitments did not necessarily translate into a corresponding increase in operational capacity over that period.
The Committee also recommended reviewing the existing LoIs and developing clearer guidelines for issuing new ones. It highlighted the involvement of multiple agencies at the central, state and local levels in granting approvals and clearances, which could contribute to delays in project implementation (PRS Legislative Research, 2022).
The early performance of SATAT thus points to a key implementation challenge: converting project commitments into actual productive capacity. The number of entrepreneurs expressing interest was substantially higher than the number of plants that had reached the operational stage, making financing, approvals and project execution important factors in determining how quickly the CBG sector could expand.
Impact
SATAT’s potential impact extends beyond the energy sector into the rural economy by converting agricultural residue, cattle dung, poultry litter, municipal solid waste and other biomass into commercially usable fuel (Indian Oil Corporation Limited [IOCL], 2026). This creates a potential link between waste management, rural economic activity and domestic energy production.
CBG production can generate additional income opportunities for farmers through the sale of feedstock and create employment in biomass collection, transportation, plant operations and processing. IOCL identifies rural employment, entrepreneurship and additional farmer income among the potential benefits of commercial-scale CBG production (IOCL, 2026). However, these are potential benefits identified by IOCL rather than measured outcomes of SATAT’s implementation. The cited sources do not quantify actual increases in farmer incomes or employment generated specifically under the scheme.
SATAT also seeks to reduce dependence on imported fossil fuels by expanding the domestic supply of renewable gas. CBG can substitute for conventional natural gas in suitable applications, potentially reducing import requirements and exposure to international fuel-price fluctuations (IOCL, 2026). However, the extent of this contribution depends on actual CBG production, its substitution for conventional gas and its integration into existing markets. The cited sources do not establish the scale of import substitution or price-risk reduction attributable to SATAT.
Another potential benefit arises from the utilisation of by-products. CBG plants produce organic fertilisers, including Fermented Organic Manure (FOM), Liquid Fermented Organic Manure and Phosphate Rich Organic Manure (PROM). Market Development Assistance of ₹1,500 per metric tonne for eligible organic fertilisers is intended to support their marketing and improve the economic value of the production process (IOCL, 2026). However, the extent to which this support generates additional revenue for producers depends on actual sales, production costs and market demand.
These activities give SATAT a circular-economy dimension by linking organic waste management with fuel production and the recovery of nutrients through organic fertilisers. The scheme has the potential to create value from biomass that might otherwise have limited commercial use. Nevertheless, the scale of waste processed, fertiliser marketed and emissions avoided needs to be assessed through implementation data before these benefits can be quantified. The potential environmental benefits should not be treated as measured emissions reductions without supporting evidence.
Infrastructure integration is another channel through which SATAT seeks to improve commercial viability. The CBG-City Gas Distribution (CGD) Synchronisation Scheme and pipeline infrastructure support are intended to connect producers with established gas distribution networks (IOCL, 2026). These arrangements can facilitate market access, although their actual contribution depends on the number of plants connected, the volume of gas supplied and the consistency of deliveries.
Overall, SATAT provides a policy framework through which biomass utilisation, rural economic activity, domestic energy production and waste management can reinforce one another. However, the benefits identified by IOCL should be interpreted as potential impacts unless supported by evidence of realised outcomes. A fuller assessment of SATAT’s impact requires measurable data on farmer incomes, employment, CBG production, import substitution, waste utilisation and emissions reduction, alongside information on the costs of achieving these outcomes. This distinction is important for evaluating not only the scheme’s intended benefits but also the extent to which its implementation has delivered them.
Emerging Issues
The economic viability of Compressed Bio-Gas (CBG) projects remains a central challenge for SATAT. The Parliamentary Standing Committee reported that CBG plants had a low internal rate of return (IRR) and recommended that CBG pricing guidelines account for the costs associated with different feedstocks (PRS Legislative Research, 2022). Where selling prices do not adequately reflect production costs, project returns may remain too low to attract investment. This can make it harder for developers to secure financing, delay plant commissioning and limit the utilisation of installed capacity. These constraints suggest that expanding the number of project commitments alone may not be sufficient; the scheme also needs to support the sustained commercial operation of plants.
Financing support is therefore closely linked to the question of project viability. The Committee noted that the Central Financial Assistance (CFA) framework for renewable-energy projects, including CBG projects, had been discontinued in April 2021. It recommended restoring financial assistance and considering generation-based incentives alongside capital expenditure support (PRS Legislative Research, 2022). Capital-based assistance reduces the initial investment burden, whereas generation-based incentives link support to the CBG actually produced and can encourage sustained operations.
This recommendation concerned the earlier assistance framework discussed by the Committee. It should be distinguished from the MNRE’s 2022 Waste to Energy Programme guidelines, which subsequently specified CFA rates for eligible biogas and CBG projects, subject to prescribed conditions (MNRE, 2022). As noted in the Functioning section, the application deadline for that programme was 31 December 2025, and further applications have been stopped until further notice (MNRE, n.d.). The two references therefore describe different points in the policy timeline rather than contradictory accounts of the same arrangement. The broader issue remains how financial support can improve project viability while encouraging plants to operate consistently.
Feedstock availability can further influence operating costs and capacity utilisation. Municipal solid waste and sugarcane press mud are available over a relatively longer period, whereas agricultural residue is often concentrated within particular harvesting seasons. Plants that depend heavily on seasonal residue may need to invest in storage and biomass aggregation, increasing both capital and operating costs (PRS Legislative Research, 2022). The Committee recommended greater emphasis on municipal solid waste and sugarcane press mud as feedstocks because of their relatively consistent availability. However, their suitability also depends on local supply, collection systems, processing requirements and transportation costs. Reliable feedstock arrangements are therefore important for maintaining production and ensuring that installed capacity is used effectively.
Regulatory delays can compound these financial and operational constraints. CBG projects require approvals from authorities at the central, state and local levels, and the Committee observed that coordination across multiple agencies had contributed to implementation delays. It recommended a single-window mechanism for approvals and clearances (PRS Legislative Research, 2022). Simplifying these processes could reduce administrative burdens and shorten the time between project planning and commissioning. This matters because delays can postpone revenue generation while financing and other project-related costs continue to accrue.
The Committee also identified carbon credits as a possible additional source of revenue. It recommended developing a mechanism to estimate the emissions that would have occurred if the waste had not been processed through CBG plants and exploring the monetisation of the resulting carbon credits (PRS Legislative Research, 2022). However, carbon credits should be treated as a potential supplementary revenue stream, not an established solution to project viability. Their contribution would depend on credible emissions measurement, appropriate accounting and verification, applicable market mechanisms and the prices that eligible credits could command.
Overall, these constraints are interconnected. Low returns can weaken the ability of projects to attract finance; financing difficulties and regulatory delays can postpone commissioning; and inconsistent feedstock supplies can restrict production even after a plant becomes operational. Improving SATAT’s performance therefore requires attention not only to project establishment but also to pricing, financing, reliable feedstock supply and sustained plant utilisation. Additional revenues, including those potentially available through carbon credits, may help, but their contribution needs to be demonstrated through implementation evidence.
Way Forward
The next phase of SATAT needs to focus on converting project commitments into operational capacity. The gap between 3,694 Letters of Intent (LoIs) and 38 commissioned plants as of October 2022 illustrates the challenges of moving from project identification to implementation (MoPNG, 2022). The Ministry of Petroleum and Natural Gas (MoPNG), in coordination with Oil Marketing Companies (OMCs), should introduce time-bound monitoring of projects from LoI issuance to commissioning and sustained operation. Delayed projects should be assessed to identify whether the main constraints relate to financing, feedstock availability, approvals or market access.
Financial support should be linked more closely to actual production. Building on the Parliamentary Standing Committee’s recommendation, MoPNG and the Ministry of New and Renewable Energy (MNRE) should consider generation-based incentives alongside capital assistance, with transparent eligibility criteria and verified production benchmarks (PRS Legislative Research, 2022). MNRE should also clearly communicate the availability and eligibility conditions of financial assistance programmes so that developers can plan investments accordingly.
Banks and project developers should work towards more realistic assessments of project viability, accounting for feedstock costs, plant utilisation and offtake arrangements. Meanwhile, MoPNG and OMCs should improve pricing transparency by considering differences in feedstock, transportation and processing costs. State governments and local authorities should strengthen biomass collection, storage and transportation systems, building on the Biomass Aggregation Machinery guidelines introduced in February 2024 (IOCL, 2026).
Demand creation and infrastructure access also require stronger implementation. MoPNG and City Gas Distribution (CGD) entities should align procurement planning with the prescribed CBG blending trajectory and regularly monitor actual procurement against blending requirements. CGD entities should also work with plant developers to reduce delays in pipeline connectivity and clarify technical requirements, building on existing synchronisation and infrastructure support mechanisms (IOCL, 2026).
Together, these measures would make SATAT more accountable and commercially focused. Its progress should be assessed not merely through LoIs issued, but through commissioned capacity, verified CBG production, plant utilisation and sustained commercial operations.
Conclusion
SATAT seeks to build a domestic compressed bioenergy economy by linking India’s biomass resources with fuel and gas markets through private investment, Oil Marketing Companies procurement, financial support, biomass aggregation and gas-grid integration.
Its early implementation, however, shows a substantial gap between project commitments and operational capacity. The main constraints identified include financing, low returns, feedstock availability, pricing and regulatory approvals (PRS Legislative Research, 2022).
Since then, the policy framework has expanded through financial assistance, priority-sector lending, biomass aggregation support, organic-fertiliser incentives, CGD integration and mandatory blending requirements, which will reach 5% from FY2028–29 (IOCL, 2026).
The next phase of SATAT will depend on how effectively these measures translate into commercially viable and continuously operating plants. Its success will ultimately depend on whether producers can secure feedstock, access finance, recover costs and connect reliably to markets.
References
Indian Oil Corporation Limited. (2026). SATAT (Sustainable Alternative Towards Affordable Transportation).
Ministry of Petroleum and Natural Gas. (2022, December 8). Targets under SATAT Scheme. Press Information Bureau, Government of India.
Press Release Page | Press Information Bureau
National Portal of India. (2026). SATAT Scheme (Sustainable Alternative Towards Affordable Transportation). Government of India.
Press Information Bureau. (2026). GOBARdhan: Taking India’s circular bioeconomy to scale.
Press Note Details: Press Information Bureau
PRS Legislative Research. (2022, December 21). Review of implementation of CBG (SATAT). Committee Reports
About the Contributor
Saachi Saxena is an undergraduate student pursuing B.A. (Hons.) Economics at Gargi College, University of Delhi. Her research interests include climate economics, public policy, sustainable development, healthcare economics, and development policy. She has actively contributed to policy research and social impact initiatives and is passionate about evidence-based policymaking for inclusive and resilient development.
Reviewers: Sandra Menon & Pragya Raghav
Acknowledgements
The author is grateful to IMPRI – Impact and Policy Research Institute for providing the opportunity to prepare this policy update. The author sincerely acknowledges the guidance, valuable feedback, and constructive suggestions received during the review process, which significantly strengthened the quality and analytical depth of this article.
Disclaimer
The views and opinions expressed in this policy update are those of the author and do not necessarily reflect the official position of IMPRI or any affiliated institution. While every effort has been made to ensure the accuracy of the information and data presented, readers are encouraged to verify facts independently before relying on them for any decision-making purpose.
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