Fuelling India’s future with bioenergy

In November 2022, the Ministry of New and Renewable Energy (MNRE) announced that it would continue with the National Bioenergy Programme for energy recovery till 2025–2026 with a budget outlay of INR 858 crore for the first of the two phases.¹ The Programme is meant to enable the use of cattle dung, biomass, and urban and industrial biowaste for energy recovery. The announcement has put the spotlight on the green sector and demonstrates the Government of India’s sustained focus on bioenergy. The International Energy Agency (IEA) estimates that once such government policies are in place, bioenergy may produce 130 million tonnes of oil equivalent (Mtoe) of useful energy by 2040, or about 15% of India’s total energy demand at that time.²

These emissions contribute to the thick smog that envelopes Delhi and adjacent areas every year, causing serious respiratory and other health issues. Recent statistics show that stubble burning in Delhi, in 2022, caused an increase of over 20% in the PM2.5 pollution level in October and November, the stubble-burning months.¹¹ According to the National Institute of Public Finance and Policy (NIPFP),¹² the annual cost of air pollution is estimated at USD 300 million in terms of health problems and economic disruptions such as flight and train delays, and visibility-related accidents.

India is one of the world’s largest producers of crops, but it is also the second-most populated nation, generating municipal solid waste of about 160,038.9 tonnes per day (TPD). This waste is another source of biomass. Of the total waste generated daily, roughly 95% is collected, about 79,956.3 TPD is treated and 29,427.2 TPD is landfilled.¹³ These landfills are super-emitters of methane, a major contributor to global warming. Around 11% of greenhouse gas emissions are released by methane into the atmosphere. As a result, this traps around 80 times more heat in the atmosphere than carbon dioxide (CO2).¹⁴ By 2031, India is projected to produce 125 million tonnes of garbage annually¹⁵ and methane emissions will increase exponentially. Garbage generation in India is colossal, and needs to be addressed on priority.

Challenges that hamper growth in the bioenergy sector

Following are the risks and challenges: 

• State policies focus on biomass in power generation: State policies are currently more focused on the utilisation of biomass in power generation, though biomass resources also have other uses. These include biofuel production and biomass processing for industrial heating purposes.
• Inadequate feedstock supply (fuel reliability and quality): This is one of the key challenges that requires immediate attention. Any bioenergy project is unlikely to succeed if the long-term fuel supply is unpredictable or the fuel quality is uncertain. Project economics would typically depend on a specific quantity of energy produced. Project developers desire an ironclad, long-term contract with a feedstock supplier and would ideally like to avoid situations that allow the supplier to accept competing offers from other feedstock users. Having a long-term contract for feedstock supply would also provide a level of comfort to the lender, resulting in lower risk perception of the bioenergy project. 
• Lack of public data on biomass availability across geographies: The data related to availability of biomass across geographies, especially at the district/block level, is not easily available and requires case-by-case research. This affects the planning of such projects. Hence, most stakeholders conduct their own analysis to assess the availability of biomass. Subsequently, availability of surplus biomass for bioenergy production may or may not be accurate, time efficient and cost-effective. 
• Limited storage options: Storing biomass residue is a long-standing issue in India. For agri-based biomass residue, limited storage capacity is among the primary reasons for stubble burning. This is more of an issue in the northern Indian states, where with limited offtake and storage options, excess biomass is disposed of by burning crop residue in open fields.
• Supply chain bottlenecks: Carriage and transportation of biomass require customised vehicles, especially for agri-waste due to its varying sizes and density. So far, this has seen limited commercialised options and is done mostly through make-shift arrangements. 
• Limited offtake of biofertilisers: There is a pressing need to promote the use of biofertilisers by farmers. There is still lack of awareness in the farming community on how the use of biofertilisers can enhance the nutrient uptake, growth, yield, nutrition efficiency and quality of crops, besides helping local allied industries to flourish. The slow uptake of biofertilisers is one of the major discouraging factors for private sector investment in the biogas sector in the country. 
• Limited platforms for biomass trading: There are limited platforms available for trading and exchange of raw and processed biomass wherein sourcing agencies, aggregators and processed biomass producers can list available resources and sell them to prospective buyers. At present, biomass trading in the country is fragmented and exists only in a handful of states, despite the need for biomass or waste for bioenergy projects in the country. 
• Lack of adequate financing mechanisms: Lenders are largely reluctant to support either short-term or long-term loans. When such loans are available, the rate of interest is higher than it is for loans for other clean energy sources, thus inflating the costs of such projects. 

Bioenergy has the potential to reduce carbon emissions, especially in the ‘difficult to de-carbonise’ sectors such as power, long-haul or heavy transport, manufacturing, iron and steel, cement, aluminium, chemicals and other heavy industries. When biomass is used to produce energy, it can reduce atmospheric CO2 emissions, caused by other fuels or other reasons. Similarly, if bioenergy is utilised for carbon capture and storage, the carbon that is not returned to the atmosphere leads to a net reduction in CO2, resulting in negative CO2 emissions. Though we are yet to witness the deployment of carbon capture and storage at an industrial scale, some applications can be seen in bioethanol production, waste-to-energy plants and power generation. 

Way forward

The Government of India’s net zero pledge may prove instrumental in accomplishing the national climatic goals, given the prevailing emissions trajectory and widening intensity of climate change. To this end, an achievable target for India’s progress towards attaining these goals is the scaling up of bioenergy solutions which can mitigate the environmental impact of energy generation. 

For the effective implementation of bioenergy projects in the country, the key action plans suggested in this paper and derived from our analysis have been plotted in the graph below, based on their ease of implementation and impact potential:

Sustained private sector investment is vital for the bioenergy sector to achieve compound growth and contribute to the successful progression of India’s clean energy trajectory. This would require developing strong supply chains, which can ensure viable long-term biomass sourcing for power plants and private sector use. This can also streamline the price of biomass in the market. 

In this regard, the sources of biomass that can be used as feedstock in modern bioenergy supply chains need to be well understood. It was highlighted at the beginning of this paper that 750 MMT of agri-based biomass is available in the country. However, only a small fraction of the surplus being generated (230 MMT) is utilised for energy conversion. There is also a need to focus on other sources of waste such as non-food crop residues and organic waste, which offer similar or, in some cases, better calorific value and can feature as potential feedstock for bioenergy generation in India. Forest industries are also coming up as potential feedstock suppliers of products such as saw wood and pine wood, which are cheaper and abundantly available. According to the IEA, the useful energy content of the feedstock can become as high as 130 Mtoe by 2040.⁴⁷ Therefore, a sustainable and viable long-term supply chain of biomass feedstock has to be established. 

Another focal point is the provision of bankable innovative conversion technologies for bioenergy production, alongside a stable and supportive policy and regulatory regime, which would provide the much-needed impetus for sectoral development. Banks still lack the requisite knowledge on how to viably appraise bioenergy projects and often deem them as risky. Thus, concessional financing and partial risk facilities could encourage private sector investment in the bioenergy sector. Moreover, strategic financial solutions such as credit enhancement could boost banks’ confidence in lending to the sector. 

Bioenergy has the potential to decarbonise not only the electricity sector but also the industrial, transport and aviation sectors, in addition to others. Therefore, it is all the more crucial for relevant stakeholders in the market to maintain a sharp focus on this sector.

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