Blending CBG into Natural Gas: India's CBG Blending Obligation (CBO)

Producing compressed biogas is only half the story. For a fuel to scale, it needs guaranteed demand, and that is exactly what India's CBG Blending Obligation provides. Modelled on the logic that drove ethanol blending in petrol, the obligation requires that biogas be mixed into the natural gas supplied to vehicles and homes.

The move turns CBG from a voluntary, supply-led effort into a mandated, demand-backed market. Here is how the CBO works.

What the CBO requires

Under the CBG Blending Obligation, or CBO, the city gas distribution companies that supply CNG for transport and piped natural gas for homes are now legally required to blend a set percentage of CBG into that gas. Blending was voluntary until 2024-25 and became mandatory from the 2025-26 financial year.

The obligation is deliberately phased so that supply can keep pace. It begins at 1% of total CNG and PNG consumption in 2025-26, rises to 3% in 2026-27 and 4% in 2027-28, and reaches 5% from 2028-29 onwards.

Why 1% is a big deal

A single percent sounds modest until you consider the scale. India consumes natural gas on the order of 165 million standard cubic metres a day, so even 1% blending translates into very large volumes of CBG, and every step up multiplies the requirement.

Crucially, the buyers can no longer opt out. Turning gas distributors into obligated purchasers transforms the risk that always hung over CBG projects, which was whether anyone would reliably buy the gas.

How the blending actually works

Mixing biogas into a national gas grid needs coordination, so the system is being synchronised centrally. A designated national carrier is tasked with co-mingling CBG with conventional gas and supplying it to distribution companies at a uniform base price, and a separate scheme funds the pipeline infrastructure needed to inject CBG from plants into the grid.

A central monitoring body tracks compliance. Together these mechanisms make sure the obligation is not just a target on paper but something that can be measured and enforced.

Why India is doing this

• Import substitution: less reliance on expensive imported liquefied natural gas
• Foreign exchange savings: keeping fuel spending within the domestic economy
• Circular economy: converting crop residue and waste into fuel instead of pollution
• Investment and jobs: the obligation is expected to draw large investment and hundreds of new CBG plants

The CBO is often described as doing for gas what the ethanol programme did for petrol. It creates a guaranteed market that pulls private investment into clean fuel, while advancing energy security and India's net-zero goals at the same time.