A recent study supported by the Ministry of New and Renewable Energy (MNRE) and German development agency GIZ has found that India’s micro, small, and medium enterprises (MSMEs) can significantly reduce emissions and energy costs by switching to biomass-based ‘green steam’ for generating industrial heat. The report, “Decarbonizing MSMEs: Use of Biomass for Green Steam and Heat Applications,” suggests that biomass can replace up to 100% of fossil fuels currently used for steam and heat generation across various MSME-dominated sectors, including textiles, food processing, pharmaceuticals, and paper.
India has a significant advantage in terms of biomass resources, with an estimated 750 million metric tons of biomass produced annually, primarily as a byproduct of agricultural processes. The report highlights that more than 200 million metric tons of additional biomass are available every year, which can be utilized to generate green steam. Biomass briquettes and pellets can be used in existing boilers with minimal retrofitting, making it a viable option for many industrial operations.
The MSME sector is well-positioned to adopt biomass energy, as they require large amounts of heat for drying products and are located close to agricultural areas where biomass is readily available. The report identifies several MSME clusters, including textile production hubs like Panipat and Surat, as potential markets for biomass boilers. The food processing sector, which employs heat during low-temperature drying processes, is also a significant opportunity for biomass adoption.
The economic benefits of biomass heating technology are substantial, with the potential to reduce fuel energy costs by up to 80% for pharmaceutical manufacturers. The report estimates that the net present value of total savings for companies adopting biomass boilers could be approximately Rs 38 crores after 10 years.
The government is stepping up efforts to mainstream bioenergy, with the introduction of a 5-7% requirement for biomass co-firing in coal-fired thermal generating facilities. The National Bioenergy Programme is providing central financial assistance to support the establishment of biomass gasification and thermal energy applications, and several state governments are offering subsidies and incentives to encourage the adoption of biomass projects.
The report concludes that biomass-based green steam can help India meet its near-term climate goals while advancing towards net zero by 2070. However, challenges such as developing a consistent quality of biomass, strengthening aggregation and transportation logistics, and ensuring access to affordable finance for MSMEs need to be addressed to support large-scale adoption of biomass systems. The government is emphasizing the need for deeper international collaboration, particularly with Germany, to accelerate the adoption of advanced boiler technologies across Indian industry.