The Government of Madhya Pradesh has approved a comprehensive biofuel scheme aimed at promoting biofuel projects, particularly Compressed Biogas (CBG), which has been identified as a drop-in fuel. The scheme seeks to address structural challenges in the CBG sector such as feedstock availability, infrastructure gaps, and market viability, thereby accelerating the transition toward clean energy and circular economy practices.
The biofuel scheme represents a significant step toward scaling up the CBG sector, especially in an agrarian state like Madhya Pradesh where biomass availability is high. By promoting CBG as a drop-in fuel, the policy ensures that it can be used in existing systems without major modifications, thereby reducing adoption barriers and supporting energy transition goals.A major strength of the scheme lies in its multi-dimensional incentive structure. The government provides investment promotion assistance ranging from 10% to 40% of capital investment (up to ₹200 crore), along with infrastructure support of 50% (up to ₹5 crore) for essential facilities such as power, water, and pipelines. Additional incentives such as 30% subsidy on biomass aggregation equipment and 100% electricity duty exemption for 10 years significantly improve the financial viability of CBG projects.
The scheme also addresses one of the biggest bottlenecks in the sector—feedstock security. The introduction of the “one project, one block” principle ensures a defined catchment area for biomass supply, reducing competition and supply uncertainty. Further, the involvement of the Animal Husbandry Department in executing long-term contracts under the SATAT scheme ensures availability of cow dung and land for animal shelters, strengthening the raw material supply chain.
Another innovative feature is the integration of Agricultural Produce Market Committees (APMCs) and Krishi Upaj Mandis into the supply chain. By enabling waste collection and contractual supply of biomass, the scheme promotes efficient utilisation of agricultural residues and reduces wastage. The proposed IT-based portal and mobile application will further connect farmers, waste aggregators, and CBG manufacturers, facilitating a digital and transparent ecosystem.
The scheme also attempts to solve the issue of Fermented Organic Manure (FOM) management, which is a key by-product of CBG plants. By mandating the sale of biomanure through licensed fertiliser shops and promoting its use under defined standards, the government aims to create a market for organic fertilisers, thereby improving overall project viability and supporting sustainable agriculture.From an environmental perspective, the scheme contributes to:
However, certain challenges remain. While the scheme allows installation of CBG pumps, it does not provide direct assistance for fuel offtake infrastructure, which could affect market penetration. Additionally, the role of urban local bodies in waste supply needs further clarity to ensure a comprehensive supply chain.
Overall, the scheme adopts a holistic approach by addressing key issues of finance, infrastructure, feedstock, and by-product management, making it a strong policy intervention for advancing the biofuel ecosystem in India.
| Component | Provision |
|---|---|
| Capital Assistance | 10–40% of investment (max ₹200 crore) |
| Infrastructure Support | 50% (max ₹5 crore) |
| Biomass Equipment Subsidy | 30% (max ₹20 lakh per set) |
| Electricity Duty | 100% exemption for 10 years |
| Land Support | Land at 50% of circle rate |
| Road Infrastructure | 50% assistance upto factory gate |
| Feedstock Strategy | One project, one block principle |
| Supply Chain | APMC, gaushalas, animal husbandry linkage |
| Digital Platform | IT-based portal & mobile app |
| By-product (FOM) | Mandatory sale through fertiliser shops |
Updated - 28 April 2025 ; 06:59 PM | News Source Down To Earth