The government’s move to tighten emission norms, in a bid to encourage industries to move to clean fuels, is propelling industries, particularly in the Delhi national capital region (NCR), to explore using natural gas and biomass.

The Commission for Air Quality Management in NCR & Adjoining Areas (CAQM) is tweaking pollution norms to propel industries using fossil fuels such as coal and diesel to move to natural gas and biomass.

For instance, the air quality panel has directed NCR States not to use coal as a fuel in industries from January 1, 2023. It has also been issuing directions on permissible fuels for industries to maintain sustainable operations and check emissions.

Scales tilting towards natural gas

However, analysts point out that easy availability of natural gas through city gas distribution (CGD) entities is tilting the scales in its favour against biomass, which faces issues of costs, availability and transporting over long distances.

Besides, CO2 emissions from various biomass fuels are in range of 93.80-118.17 kg per mBtu (million British thermal units), compared to 53.06 kg per mBtu from gas. Gas also wins over biomass on methane and nitrous oxide emissions. Particulate matter (PM) emission from gas is also low, generally less than 1mg/ MJ. The PM from biomass is in the range of 10-70 milligrams/ megajoule (mg/ MJ).

Natural gas

Since the latest CAQM notification, the majority of industries have been opting for clean fuels such as PNG and biomass to ensure legal compliance, said an Adani Group spokesperson. Adani Total Gas, a JV between Adani Group and Total Energies, is a key player in CGD.

For instance, in the Faridabad region, gas consumption rose 30-40 per cent during the previous ban (Mid November 2021 to December 2021) compared to average consumption from October 2021-Mid November, he added.

As gas prices seem to be stabilising post the Russia-Ukraine crisis, there is a significant uptick in signings and negotiations, where leading industries want to lock long-term gas contracts with CGD firms.

A total of 223 new industrial and commercial PNG connections were added in Q4 FY22, which is 18 per cent higher than new connections in Q3 FY22 (189), and is equivalent to 31 per cent of the total new connections in FY22 (710).

Biomass losing ground

Industries have shown a clear preference for PNG, owing to supply reliability constraints with biomass. Additionally, CAQM has instructed use of emission control devices for biomass which further adds up to a steep upfront expenditure of ₹7-50 lakh to purchase the device, said the Adani Group spokesperson.

Karthik Ganesan, a fellow and Director of Research Coordination at the Council on Energy, Environment and Water (CEEW), points out that the big challenge is entities which actually have to do retrofitting are small in terms of size of operations and for them cost of conversion is high.

“Biomass at the end of the day will probably work to a price point closer to the cost of coal, if not higher. This can be in states like Punjab where biomass is available locally and cost of coal delivery is high. But if you are transporting biomass in some form to far flung areas, it starts losing competitiveness,” he added.

That apart, modifications have to be made to boilers to accommodate it. So putting a bet on biomass to be a replacement of coal in a big way is also not correct.

“It is a pipe dream as we do not have a value chain in place to cater to volumes of coal replacement even at 5-10 per cent, which means picking up biomass and converting it into a form that is dense and transporting it in an efficient manner to the end use site. Even if you manage to do it, the price parity is a big challenge,” Ganesan said.

Fuel costs

In a January 2021 report, CEEW examined the economics of crop residue supply chain in Punjab. It revealed that biomass aggregation, involving residue collection, baling and transiting to nearest straw bank at a distance of 15 km, would cost Rs 1,330 per tonne bale. Out of this, the cost of cutting and baling of residue entails 50 per cent of procurement cost.

“Dispatching bales to the end-user at a distance of 50 km from straw bank will incur a total delivered cost (includes biomass aggregation cost) of Rs 2,500-3,000 per tonne bale. Delivered price is even higher in the range of ₹4,000-5,000 per tonne for densified biomass briquettes and pellets for the same distance,” it added.

In March 2022, government raised the price of domestic gas from $2.9 per mBtu to $6.10. Similarly, the price ceiling for deep water, ultradeep water, high temperature, and high-pressure gas was raised to $9.92 per mBtu from $6.13.

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