India has set an ambitious target to double its current ethanol production by 2028, after more than tripling its production capacity in the last four years. With a growing population and economy, the country is pressing for a major expansion and decarbonization of its energy matrix, almost 80% of which is made up of fossil fuels and coal. With a clear goal of reducing crude oil imports and expanding energy production relying on renewable sources, the country could reach almost 200,000 barrels per day (bpd) of ethanol production in 2030 and more than 1 billion cubic meters (Bcm) of added biomethane production capacity from large-scale biogas plants could be added into the gas supply mix within the next two years. However, India’s high dependence on first-generation (1G) feedstock and the current level of ethanol production, which is close to 50% of the size of the final target, call into question its ability to achieve the stated goals.

India's favorable climate supports robust agricultural production and generates substantial biomass feedstock, making it well-positioned to enhance energy autonomy by reducing fossil fuel imports, which currently account for almost 80% of all Indian refinery consumption. Despite the high current reliance on imports for both crude oil and natural gas, bioenergy is expected to play a vital role as a renewable energy source in India, thanks to its widespread availability, potential to generate net-negative carbon dioxide emissions, capacity to provide non-intermittent energy output and substantial impact on the job market in rural areas.

Following the rapid growth in ethanol production over the last three sugar cane harvest seasons, the Indian government has been trending towards different feedstock to be used in biofuel production, with the aim of achieving 20% blend in gasoline by 2025. We predict that, given the current prospects for 1G production, the current target will only be met in 2030, the date of the government's original proposal. Our analysis shows that ethanol production is set to reach around 200,000 bpd by 2030 in our base case.

Given India's substantial potential to produce biogas from degradable waste such as crop residues from agriculture, municipal solid waste (MSW), and wastewater, the biogas yield potential can be high. The biogas yield from agricultural residues in India can be up to 12%, and in 2024 agricultural residues account for roughly 26% of the operational production capacity in India. However, the current waste management practices can be significantly improved, as around 80% of the waste in landfill sites is left within the open space, causing methane emissions to leak into the atmosphere and pollution that otherwise can be trapped and utilized for electricity, heat or road transportation. The four feedstocks contributing to most of the current production as well as the potential going forward are agricultural waste, manure, MSW and pressmud, which is a compressed sugar industry waste. Currently, there are over 230 large-scale anaerobic digestion projects (32 over 24 gigawatt-hours [GWh] per annum in size) either converting 2G feedstock into biomethane or are in the planning stage. From reported data from the GOBARdhan scheme, India’s current production capacity from large plants is approximately 2,000 GWh per annum, with a massive 8,000 GWh per annum currently under construction and planned for the next year. Most of the capacity is within the Uttar Pradesh area, where pressmud is heavily used as a feedstock. If all these projects were to materialize, this would add roughly 1 Bcm of biomethane into India’s gas supply mix within the next two years.

India has set ambitious targets to transform its energy landscape in line with its commitment to a sustainable future. By 2030, the country aims to achieve 50% of its cumulative electric power installed capacity from non-fossil fuel-based energy resources. Bioenergy is set to play a crucial role as a renewable energy source in India due to its widespread availability, carbon-neutral nature and capacity to create substantial employment opportunities in rural areas. Even though ethanol production is set to reach around 200,000 bpd by 2030 in our base case, that is a much slower pace compared to the current blending target of 20% ethanol blending by 2025. Biogas, in the form of biomethane or CBG, will also be important for the natural gas demand sectors in the medium term, especially for the growing industrial and transport sector. But even with significant challenges to reach the self-imposed targets, India is set to become one of the global bioenergy powerhouses and occupy a central role in the energy transition on a global scale.