Dhirubhai Ambani, the founder of Reliance Industries (RIL), India’s biggest conglomerate, started out with textiles and built an oil-refining and petrochemicals behemoth. His son, Mukesh Ambani, the RIL Chairman, has transitioned the conglomerate from hydrocarbons to telecom and retail and is now pushing to build a clean energy business.
The last decade saw Reliance investing more than $125 billion in its hydrocarbons and telecom business, both of which have a gestation period of more than five years, as per a Goldman Sachs report. The capital expenditure cycle for the 5G technology telecom is also set to be completed this year. “We believe the businesses RIL is investing more in the next three years (retail and upstream new energy) are relatively less capex heavy, higher in returns and have a shorter gestation period,” Goldman Sachs analysts said.
Ambani’s new bet worth nearly $8 billion is part of its upstream clean energy push. ET has reported that RIL will invest Rs 65,000 crore in Andhra Pradesh to set up 500 compressed biogas plants (CBG) over the next five years. This will be the biggest investment by the company outside Gujarat under its clean energy initiative which is being steered by Anant Ambani, the youngest of Mukesh Ambani’s three children. The plants, each involving an investment of Rs 130 crore, will be set up on wasteland in the state, said people aware of the matter. They are expected to generate direct and indirect employment for 250,000 people, as per the state government’s estimate.Also Read: RIL to pump Rs 65,000 cr into Andhra Pradesh for 500 biogas plants
CBG is produced by anaerobic decomposition of agricultural waste, sugarcane press mud, and municipal waste. CBG is also being considered to produce green hydrogen and could be used as a replacement for piped natural gas for domestic use. It has properties similar to Compressed Natural Gas (CNG) and can be used for automotive, industrial and commercial uses.
Why is Ambani chasing this humble energy source?
As green energy becomes the new frontier for energy producers, the humble biogas can emerge as a significant part of India’s clean energy mix. That’s why it is getting attention from industry big-wigs.In September last year, Mukesh Ambani had announced plans to set up 100 CBG plants over the next five years. RIL had started talking with sugar mill operators for supply of sugarcane press mud, a feedstock for the production of CBG, ET had reported in December last year. RIL had reached out to companies operating sugar mills in different locations across the country. It was already operating one CBG plant at Barabanki in Uttar Pradesh.
Reliance’s CBG plants will also feed its downstream business. Jio-BP, a fuel retail joint venture between RIL and British oil major BP, plans to retail CBG and bio-CNG (B-CNG), both of which can be used in place of compressed natural gas in CNG-powered vehicles.
Oil marketing companies aren’t far behind. Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation have issued hundreds of letters of intents for setting up CBG plants. Indian Oil Corporation, India’s largest refiner and marketer, has commissioned 22 CBG plants so far under the government’s Sustainable Alternative Towards Affordable Transportation (SATAT) initiative launched in 2018 to boost the availability of biogas. Gail has decided to insert CBG into the city gas grid. An added advantage for these energy companies is that CBG can also be used to produce green hydrogen.
Adani too eyes CBG potential
The huge potential of this under-explored clean energy source is attracting other big energy players too. Adani is one of them. Adani Total Energies Biomass Limited (ATBL), a wholly-owned subsidiary of Adani Total Gas Limited (ATGL), commissioned operations at Phase 1 of its Barsana Biogas Plant, located at Mathura in Uttar Pradesh.
The company claimed that the plant will be India’s largest agri waste-based bio CNG plant after reaching full design capacity at Phase 3. The cost for all three project phases for the plant would be in excess of Rs 200 crore, according to the company. Suresh P Manglani, executive director and CEO, ATGL said, “In addition to producing compressed biogas (CBG), the plant yields high-quality organic fertilizer, contributing to circular economy principles and agricultural sustainability.”
Adani Total Gas operates in the city gas distribution segment. CBG is also being considered as a replacement for piped natural gas for domestic use. “CBG plants are a natural strategic investment towards supplementing ATGL city gas distribution and providing clean energy. This aligns with India’s commitment to the environment and also the country’s COP26 commitments,” a company spokesperson had said last year.
Why is biogas important for India?
Biogas can improve India’s energy security, as the country is currently heavily reliant on imported natural gas to meet its energy needs. The proposed 5 per cent blending of biogas with natural gas supplies in the country can cut LNG imports worth $1.17 billion annually, says a study by the Indian Biogas Association (IBA).
The study comes against the backdrop of the government’s recent mandate to blend one per cent biogas with piped natural gas (PNG) supplies in the country from April 1, 2025 under the compressed biogas blending obligation (CBO) scheme. The biogas blending is proposed to be further increased to 5 per cent by fiscal year 2028–29.
This blending initiative gels well with the government’s macro-level move to make India a gas-based economy, with a target to increase the current share of gas in the energy mix from 6 per cent currently to 15 per cent by 2030, as per the study.
While the targeted 5 per cent blending of biogas with natural gas can reduce LNG imports worth $1.17 billion, this can also bring down per capita CO2 emissions by 2 per cent, benchmarked to the 2019 figure, which was 1.9 metric tonnes of CO2 per person in India. Additionally, the body says preventing organic waste going to landfills can bring innumerable benefits.
The mandatory CNG blending will encourage investment of around Rs 37,500 crore and facilitate the establishment of at least 750 compressed biogas (CBG) projects by 2028–29, as per government estimates. Despite its evident advantages, biogas hasn’t gained substantial traction in India. The study suggests that the primary obstacles are an underdeveloped market ecosystem for pricing and offtake, convoluted clearance and permission procedures for project inception, and fragmented government support mechanisms.
A solution for stubble burning?
Despite worsening air quality in several parts of North India and pollution levels posing a threat to the health of people, stubble burning continues in Punjab and also in a few other northern states.
The challenge of management of stubble, called parali, is a major roadblock to ending stubble burning in the fields by farmers. CBG plants can offer a solution as parali can be used as a feedstock in these plants. Amid high pollution levels in the national capital in November last year, Union Minister of Petroleum and Natural Gas Hardeep Singh Puri met Claudius da Costa Gomez, CEO of the German Biogas Association to find a solution to stubble burning as Germany is a world leader in producing biogas from stubble.
An estimated 352 MT of stubble is generated each year in India. 22 per cent of this comes from wheat crop and 34 per cent from rice. About 84 MT (23.86 per cent) of this stubble is burnt on-field annually, immediately after harvest. Biogas can be produced from various organic waste sources such as agricultural waste, including the stubble which is burnt by farmers and is a major cause of pollution in the national capital in winters.
“India produces nearly 230 million tonnes of non-cattle feed biomass, most of it contributing to air pollution. Within a short span of one year, we have become India’s largest bio-energy producer based on our indigenously developed technology,” Ambani had said at the company AGM last year.
