Bio-gas is produced naturally through a process of anaerobic decomposition from waste/biomass sources like agriculture residue, cattle dung, sugarcane press mud, municipal solid waste, sewage treatment plant waste, etc.

The biogas produced contains approximately 55% to 60% methane, 40% to 45% carbon dioxide and trace amounts of hydrogen sulphide. Biogas is purified to remove carbon dioxide and hydrogen sulphide gases. After purification, it is compressed and called CBG, which has pure methane content of over 95%. The CBG can then be transported through cylinder cascades or pipelines to retail outlets.

As the second largest producer of agricultural product, Indian agricultural sector constitutes to around 15.4% of its GDP and accounts for about 7.39% of total global agricultural output in 2017. Thus generating about 350 million tonnes of agricultural waste every year as per researchers at IIT-B and the Ministry of New and Renewable.

Energy estimates this waste can generate more than 18,000 MW of power every year, apart from generating green fertilizer for farms. If the farmers do not find buyers for the waste they either burn it which releases huge amount of emissions, or dump it leading to soil and water contamination because of high residue of toxic chemicals. These wastes can be utilized effectively to produce fuels like ethanol and biogas.

Sugar industry is the second largest agro based industry in India and contributes significantly for the socioeconomic development of the rural population. Indian sugar industry plays a major role in global sugar market, being the world’s second largest producer of sugar after Brazil, producing 15%-20% of the total sugar production worldwide. These industries also produce considerable amount of waste and by-products.

• RBI has announced CBG funding under “Priority Sector Lending” under Renewable Energy.
• MNRE has notified Central Financial Assistance (CFA) of Rs. 4 Cr. per 4800 Kg of CBG per day generated with max. of Rs. 10 Cr. per project.
• For exclusive financing of CBG plants, SBI has developed a new Loan Product titled “Compressed Bio Gas (CBG) under SATAT recently in the month of October, 2020.
• Bank of Baroda has developed a new Loan Product titled “Bank of Baroda Scheme for Financing Compressed Bio Gas Plants under SATAT and the proposal received on 22/12/2020.
• Inclusion of Digester BioGas Slurry DBGS under Fertilizer Control Order 1985 has been approved by the Minister of Agriculture vide Gazette notification dated 13/07/2020.
• MoP&NG is in discussion with Global Financial Institutions like ADB, World Bank, JICA, KfW, etc. for financing of CBG Plants
• CPCB vide letter dated 30/04/2020 directed to inclusion of CBG under ‘White Category’. Pollution Control Boards of Delhi, Gujarat and Uttar Pradesh, Madhya Pradesh, Punjab 7 West Bengal have already classified Bio-gas plants under "White category".