The Indian Biogas Association (IBA) has proposed the creation of a Rs 10,000 crore fund to provide capital subsidy to the biogas industry in the Union Budget 2026, calling for higher fiscal support to accelerate investment, improve project viability and scale up green energy adoption, PTI reported.In its Budget recommendations, the industry body urged the government to raise the capital subsidy for compressed biogas (CBG) plants by 50 per cent to Rs 6 crore per 4.8 tonnes per day (TPD) of capacity, and increase the upper cap to Rs 25 crore per project, from the current Rs 10 crore limit. At present, the scheme offers Rs 4 crore per 4.8 TPD of capacity.IBA said it will share these recommendations with the Ministry of New & Renewable Energy and the Ministry of Finance, adding that it has raised the demands at multiple forums ahead of the Budget.The association said the capex cost of CBG plants has risen by over 50 per cent since the launch of the Central Financial Assistance (CFA) scheme in 2014, necessitating a revision in subsidy norms. It proposed that the enhanced subsidy structure be supported by a minimum corpus of Rs 10,000 crore, enabling projects of up to 20 TPD capacity.For Budget 2026, IBA said the biogas and CBG sector should be positioned as a fast-maturing pillar of green growth, which now requires deeper fiscal support, faster implementation and easier access to finance to unlock private investment and rural income opportunities.The association also called for scaling up project incentives by raising CFA levels, and proposed a mandated blending of fermented organic manure (FOM) in fertiliser use — at least 5 per cent by 2028, rising to 10 per cent by 2030.Pointing to the government’s annual Rs 2 lakh crore chemical fertiliser subsidy, IBA said this contributes little to soil organic content. Redirecting even 10 per cent (Rs 20,000–25,000 crore) of this subsidy towards FOM-linked or carbon-based incentives could improve soil health, reduce import dependence and promote climate-smart agriculture, it said.The association noted that the current Rs 1,450 crore allocation over three years for Market Development Assistance (MDA) for organic manure from CBG plants is “abysmally low” and only a starting point, especially when compared with chemical fertiliser subsidies.In line with the compressed biogas blending obligation (CBO) under the Ministry of Petroleum and Natural Gas, IBA suggested that the Ministry of Chemicals and Fertilizers consider introducing a FOM–Chemical Fertilizer Blending Obligation (FCFBO) under an Organic–Chemical Fertilizer Blending Programme.The industry body also pushed for carbon monetisation through a Green Certificate mechanism, urging the government to allow biogas and CBG producers to sell carbon credits in domestic and international markets. It said this would help meet climate targets while opening new revenue streams for producers.Carbon credits in voluntary markets are valued at USD 5–50 per tonne of CO₂, and even at the lowest price, the carbon premium for CBG’s greenhouse gas mitigation could be Rs 10–12 per kg of methane produced, IBA said. With around 1,000 CBG plants expected by 2030, the market value of CBG-based green certificates could be about Rs 4,000 crore, it estimated.IBA also suggested introducing ‘cap and trade’ practices for carbon-intensive entities, and subsidising part of the proposed carbon pricing mechanism to help kick-start the system.
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