India’s CBG Blending Push: How Reliance Industries and Adani Total Gas Are Well Placed to Benefit 

Synopsis: India’s CBG blending mandate is set to accelerate India’s renewable gas ecosystem by creating long-term demand and attracting significant investments. With integrated energy operations, expanding bioenergy initiatives, and extensive gas distribution infrastructure, Reliance Industries and Adani Total Gas are strategically positioned to capitalise on this emerging clean-energy opportunity while supporting India’s energy transition. 

The clean energy transition in India is now gradually diversifying its sources from solar, wind, and electric vehicle sectors to yet another major component: compressed biogas (CBG). This biogas is generated using agriculture residue, cattle dung, municipal solid waste, and other forms of organic biomass. It acts as a greener option to natural gas while addressing issues such as stubble burning, waste management, and increasing dependence on foreign fossil fuels.

To promote its uptake, the Government of India has launched a Compressed Biogas Blending Obligation (CBO) policy for the City Gas Distribution (CGD) sector. According to the phase-wise implementation process, the CGD company will be required to blend 1%, 3%, 4%, and 5% of CBG during FY26, FY27, FY28, and FY29 and onwards, respectively. 

As per the estimates of the Ministry of Petroleum & Natural Gas, this policy is expected to generate investment worth around Rs 37,500 crore and help build about 750 CBG plants till FY29. In terms of the listed firms, Reliance Industries Limited and Adani Total Gas Limited are among those that deserve attention owing to their diversified energy business, investments in CBG projects, and extensive infrastructure for gas distribution.

CBG Blending Creates a Structural Opportunity

In India’s case, the CBG industry has depended mainly on voluntary procurement through schemes like SATAT. However, the mandate for blending alters the economic conditions of the sector by ensuring sustained demand for the fuel over time. As the blending target increases to 5%, by the 2028–2029 fiscal year, City Gas Distribution will have to buy more and more renewable gas each year.

The blending mandate is consistent with India’s objective of raising the share of natural gas in its primary energy consumption to 15% by 2030, while relying less on imported LNG. The Government of India estimates that the program will lead to investments worth Rs 37,500 crore and set up about 750 CBG units.

Whereas previous policy measures relied on providing incentives that induced investment in renewable gas production alone, blending mandates ensure that there is guaranteed demand, which will incentivise investments in other aspects of production too.

Reliance’s Big Bet on Bioenergy         

Bioenergy has been identified as one of the main components of Reliance’s New Energy segment along with solar manufacturing, batteries, and green hydrogen through Reliance Bioenergy. It will develop 55 CBG plants in Phase I, which is among the biggest private sector investments in the sector.

Reliance is working towards building a value chain by obtaining agricultural residue, sugarcane press mud, cattle manure, and other biomass resources to generate CBG. Apart from ensuring raw material supply, it helps in tackling environmental issues like crop residue burning.

Existing capabilities of Reliance can be utilised to build on this business opportunity. Reliance BP Mobility, an arm of Reliance Industries, has over 112 CBG retail outlets and is able to provide pre-existing networks to sell fuel. Along with the logistics capacity, refining facilities, and financial stability, Reliance Industries is capable of scaling up the CBG business with rising demand.

Adani Total Gas Gains Directly

This organisation is in a unique situation, as the government’s blending mandate is applicable to the city gas distribution firms. As one of the biggest operators of city gas distribution in India, Adani Total Gas operates in several locations for the distribution of CNG and PNG via an increasing network of pipelines and CNG stations.

In order to increase its involvement in renewable gas, the company has created Adani Total Biofuels Ltd (ATBL). The Barsana Biogas plant in Mathura has completed its initial phase, with an output of over 42 tonnes per day of compressed biogas, as well as about 217 tonnes of organic manure per day. The plans for more CBG plants enable Adani Total Gas to incorporate upstream and downstream operations in order to obtain renewable gas.

Infrastructure Provides an Edge

Infrastructure is bound to be among the largest competitive advantages in light of India’s growing CBG ecosystem. Although many firms join the renewable gas production, only a handful of them can boast a fuel retail network across the country, pipelines for gases, logistics abilities, and loyal clients.

Reliance Industries has the advantage of possessing an integrated energy platform, experience in fuel marketing, and a retail network that will help the company monetise CBG without having to make many additional investments. 

At the same time, Adani Total Gas will be able to deliver and distribute CBG with the help of existing CGD infrastructure and CNG stations without making additional investments into downstream operations. Furthermore, both companies have solid balance sheets that will enable them to actively invest in biomass acquisition, production, transportation, and distribution.

India’s Gas Demand Is Rising

The potential for CBG in India is directly related to the growth of India’s natural gas-based economy. The government plans to raise the share of natural gas in India’s primary energy mix from 6-7% to 15% by 2030 through pipeline connectivity and CNG usage along with industrial requirements.

India produces increasing amounts of natural gas; however, it is still highly dependent on imported liquefied natural gas (LNG). Almost 46% of the demand for natural gas in India comes from imports, according to the World Biogas Association. Domestic production of CBG would replace some of these imports.

CBG contains methane similar to natural gas, which means that CBG could easily blend into the current CGD network without making significant changes in the infrastructure. Reliance Industries and Adani Total Gas will thus be able to use their assets in a better way.

Beyond CBG: Multiple Revenue Streams

The economics of CBG operations go beyond renewable gas sales. In the course of CBG production, the leftover digestate can be used for the manufacture of organic fertilisers, adding an extra source of recurrent income.

Further, the enterprises will get the opportunity to earn carbon credits and benefits from sustainable projects as the world is becoming more eco-friendly, focusing on lowering its CO₂ emissions. This will increase the profitability of the projects and lessen their dependency on gas prices alone.

Reliance Industries can combine the CBG business with their portfolio of other clean energy products that include green hydrogen, solar power generation, and energy storage systems. Adani Total Gas can increase utilisation of its pipeline infrastructure and CNG stations along with other CGD facilities and diversify renewable fuels. With the growth of CBG production capacity, these diverse sources of revenue may become more profitable for both companies in the future.

Growth Drivers Ahead

There are a few reasons why CBG can witness accelerated growth in the next few years in India. For instance, the gradual hike in blending obligations is going to increase the demand for renewable gases, while measures like SATAT, the CBG-CGD synchronisation programme, and biomass aggregation are projected to enhance the supply chain.

With a vision of having about 750 CBG plants up and running by FY29, it indicates that the government is committed towards renewable gases for the long term. Higher investments in waste management, agricultural residue gathering, and pipeline networks are some of the areas that are likely to boost both feedstock availability and the economics of projects.

Continued growth of the bioenergy business along with the existing integrated energy ecosystem of Reliance Industries can open new vistas of opportunities for the company. Similarly, Adani Total Gas Company can capitalize on increased blending requirements and procure renewable gases through its CGD network.

Key Risks to Watch

Despite the supportive policy framework, India’s CBG ecosystem is currently at the nascent stage, and there exist some execution risks as well. Firstly, the feedstock availability is a key risk, as consistent feedstock supply is contingent on effective logistics, farmer cooperation, and agricultural output. 

Secondly, the risks of delays in plant commissioning, pipeline connections, and regulatory approvals may arise as well. Lastly, the transportation costs and speed of ramp-up of domestic CBG manufacturing will affect the ability of the companies to comply with the government’s blending requirements.

Nonetheless, we believe that Reliance Industries and Adani Total Gas have more chances compared to their peers to succeed in executing the projects. Reliance is developing a bioenergy ecosystem based on its vast network of retail fuel stations, logistics assets, and diverse portfolio of energy assets, while Adani Total Gas is integrating a fast-growing city gas distribution business with CBG production capacity through Adani Total Biofuels.

As the blend obligation increases from 1% in FY26 to 5% in FY29, the renewable gas demand is likely to grow gradually. Provided that both players manage to expand the capacity efficiently, India’s CBG blending program could serve as a significant source of growth in the future.

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