India has announced a novel $2.5 billion initiative to scale up production of compressed biogas (CBG) as it looks to shore up energy security and slash reliance on imported liquefied natural gas (LNG) in the wake of the Middle East conflict.

On Thursday, New Delhi approved a 10-year National Circular Bioenergy Scheme to boost CBG production 10-fold, aimed at partially addressing the South Asian nation’s energy supply vulnerabilities. 

The closure of the Strait of Hormuz has resulted in supply disruptions that impacted India, which imports 50-60% of its LNG. Qatar used to be India’s primary LNG supplier and the bulk of these shipments passed through the strait, through which a fifth of the world’s energy cargoes were moved before the conflict began.

“India currently imports around 50% of its natural gas requirement, making domestically produced compressed biogas an important alternative, particularly amid geopolitical uncertainties,” Information and Broadcasting Minister Ashwini Vaishnaw told reporters.

CBG, also called bio-CNG, is a methane-rich fuel made from cattle dung, crop residue, food waste, sewage, and municipal organic waste. It undergoes a purification process before it can replace liquefied natural gas (LNG) for use in industries, vehicles, and piped gas networks for households. The leftover waste can be used as manure. 

CNG and LNG are essentially the same, with CNG being the super-cooled version used for long-distance shipping. India is already drawing up plans to expand its strategic petroleum reserves to include liquified gas.

The plan mandates city gas distribution companies to procure CBG to meet blending targets of 3% in the initial year, 4% in FY28, and 5% from FY29. The blending targets apply to both CNG used in transportation, and piped natural gas supplied to households.

India has a similar program for blending ethanol with petrol and diesel, to lower import dependence.

New Delhi aims to save a tad over $4 billion in foreign exchange over a decade from FY27 to FY36 through reducing LNG imports. The program is also expected to create an $8 billion local biogas industry.