Material Insights · Understanding the Material World

Biogas and biomethane and Sugar

Every tonne of cane crushed for sugar leaves 3 to 4% of its weight as press mud, a wet residue that digests well into biogas, so India's sugar belt is a natural base for compressed biogas plants under SATAT. The tie runs through a by-product, not through sugar prices, and its weak points are seasonal supply and a rising press mud price.

Biogas and biomethane (chemical) and Sugar (commodity): 4 relationships.

How they are linked

1. Feedstock: press mud

Physical flow · Medium · Sugar mill residue to biogas

Clarifying cane juice before crystallising sugar leaves press mud, an organic sludge rich in digestible matter, which anaerobic digesters turn into biogas that can be upgraded to compressed biogas (CBG).

  • 3 to 4% press mud as a share of cane crushed, by weight
  • about 11.4 Mt press mud from India's 2022-23 sugar season
  • about 25 t press mud per tonne of CBG, against about 50 t of cattle dung

By these figures press mud yields about twice as much gas per tonne as cattle dung, which is why CBG developers seek it. India's 2022-23 output could in theory make about 460,000 t of CBG, worth about Rs 2,484 crore at the scheme's guaranteed price, though only part of it is collected for digestion.

Sources: Down To Earth

2. Seasonal mill, year-round digester

Joint production · Medium · CBG plants sit beside sugar mills

Press mud is produced only while mills crush cane, but a digester must run all year, so CBG plants are built at or near mills and must store months of feedstock.

  • 531 operating sugar mills in India, 2022-23

Stored press mud slowly decomposes, which complicates storage and raises costs for plants that rely on it alone. Uttar Pradesh and Bihar, both major cane states, have introduced bioenergy policies that support CBG plants.

Sources: Down To Earth

3. SATAT price and CBG blending

Policy · High in India · Indian gas policy creates the market

Under the SATAT scheme oil companies offer CBG producers a guaranteed offtake price, and a phased blending obligation on city gas distributors makes them buy CBG for transport CNG and household PNG.

  • Rs 54 per kg SATAT minimum guaranteed CBG price cited in 2023
  • 1% to 5% CBG blending obligation, FY2025-26 rising to 2028-29 onwards
  • more than 130 CBG plants commissioned in India by 1 November 2025

The obligation was voluntary until FY2024-25 and is set at 1%, 3% and 4% of CNG and PNG consumption for FY2025-26 to FY2027-28, then 5%. Whether the plants built so far can supply the higher obligations of later years is the open question.

Sources: Down To Earth; Indian Chemical News; IAMRenew

4. Price link: press mud feedstock

Cost and price · Weak · Both ways

Press mud is a residue whose value is set locally by CBG demand, not by the sugar price, so sugar and the gas proxy do not move together.

  • 0.03 monthly change correlation
  • -0.04 12-month change correlation
  • Rs 500 to 600 press mud price per tonne in 2023, up from Rs 100 two years earlier

The price that matters is that of press mud itself, which rose five to six times in two years as demand from CBG plants grew. That turns a waste into a revenue stream for mills and squeezes CBG margins, since the offtake price is administered.

Sources: Material Insights (World Bank, FRED, IMF data); Down To Earth

For investors

Key learnings

  1. Sugar mills with CBG plants turn a disposal problem into a second revenue line, but the value depends on press mud prices and the administered CBG price.
  2. CBG economics are set by policy, the SATAT price and the blending obligation, not by world gas or sugar prices.
  3. Seasonal press mud supply makes feedstock storage and mixing with other wastes a key operating risk for stand-alone CBG developers.

What to track

  • CBG plants commissioned and CBG sold: Shows whether the blending obligation is being met with real supply (Quarterly · Ministry of Petroleum and Natural Gas, SATAT portal)
  • Press mud price paid to mills: A rising price lifts mill income and cuts CBG margins (Seasonal · state cane departments, company disclosures)
  • CBG offtake price under SATAT: A revision changes the return on every plant (As revised · oil marketing companies)

For policymakers

Key learnings

  1. Press mud gives India a concentrated, already collected biogas feedstock that can supply early CBG blending without new collection systems.
  2. The blending obligation creates demand, but supply depends on plants overcoming seasonal feedstock and storage limits.
  3. Rising press mud prices show that residues gain value once a market forms, which affects how subsidies and guaranteed prices should be set.

What to track

  • CBG blending achieved against the obligation: A shortfall signals supply constraints or weak economics (Annually · Ministry of Petroleum and Natural Gas)
  • Cane crushed and sugar season length: Shorter seasons cut press mud and CBG output (Season · ISMA, Department of Food and Public Distribution)

India

India's sugar sector produced about 11.4 Mt of press mud in 2022-23 from 531 operating mills, concentrated in Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu and Bihar, which makes the cane belt a ready feedstock base for SATAT compressed biogas.

Sources

  1. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  2. Sugarcane byproduct pressmud can be a sweet spot for India's compressed biogas sector, Down To Earth (2023)
  3. Mandatory CBG blending obligation to start from FY2025-26, Indian Chemical News (2023)
  4. 130 CBG projects commissioned as biofuels dash in 2025: Petroleum Ministry, IAMRenew (2025)