A European Union-supported climate investment fund has committed $32.2 million to finance the construction of a commercial waste-to-biogas facility in northern India, marking another example of international capital flowing into climate infrastructure projects across emerging markets.
The investment, made by Climate Fund Managers through its Climate Investor Two Construction Equity Fund, will support the development of the Akaia Green Fuels project in Uttar Pradesh. The facility is designed to convert agricultural and organic waste into compressed biogas and organic fertiliser, addressing persistent environmental challenges while expanding India’s renewable energy supply.
The initiative highlights the growing role of climate investment funds and blended finance structures in accelerating the global energy transition. As countries seek to reduce greenhouse gas emissions while meeting rising energy demand, investors are increasingly directing capital toward infrastructure that combines environmental impact with long-term economic returns.
Once operational, the plant will process approximately 94,000 tonnes of agricultural and organic waste each year, transforming crop residues and livestock waste into renewable fuel and organic fertiliser.
The project also reflects strengthening climate cooperation between Europe and India, with European financial institutions supporting projects that advance industrial decarbonisation, renewable energy deployment and sustainable infrastructure development across the region.
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Turning Agricultural Waste Into Renewable Energy
India is one of the world’s largest agricultural producers, particularly of rice and sugarcane. These crops generate vast volumes of agricultural residues such as paddy straw and sugar mill press mud, much of which is traditionally burned in open fields after harvest.
This practice has long contributed to severe seasonal air pollution across northern India, particularly during the post-harvest months when crop residue burning leads to widespread smog affecting both rural communities and major cities.
The Akaia Green Fuels project aims to tackle this issue directly by converting agricultural waste into renewable energy through anaerobic digestion technology.
In this process, organic materials are broken down by microorganisms in oxygen-free environments, producing biogas that can be purified into compressed biogas suitable for commercial energy use.
The facility is expected to generate approximately:
- 20 tonnes per day of compressed biogas, and
- 123 tonnes per day of fermented organic manure, a nutrient-rich fertiliser produced as a by-product of the process.
The compressed biogas will be injected into India’s city gas distribution network, supplying renewable fuel to homes, transport systems and industrial users.
Long-term offtake agreements have already been secured with GAIL India, the country’s largest natural gas utility, and Hindustan Petroleum Corporation Limited (HPCL).
By replacing imported fossil gas with domestically produced renewable gas, the project contributes to India’s energy diversification strategy while reducing greenhouse gas emissions.
Climate Fund Managers estimates the facility will prevent more than 100,000 tonnes of carbon dioxide equivalent emissions each year, while improving air quality for more than 700,000 people living across approximately 640 villages.
Climate Investment Supporting India’s Energy Transition
The investment reflects the growing role of international climate finance in supporting energy transition infrastructure in emerging economies.
Climate Investor Two, the investment platform behind the funding, focuses on mobilising capital toward projects that address climate change while supporting economic development.
The fund invests across sectors such as renewable energy, water management, waste-to-energy infrastructure and climate-resilient agriculture.
Through its blended finance approach, the fund combines capital from public institutions with private investment, enabling projects to reach financial close even in markets where early-stage risks might otherwise deter investors.
Blended finance structures have become an important tool for accelerating climate investment in developing economies, where infrastructure projects often face higher financing costs and regulatory uncertainties.
The Akaia Green Fuels project illustrates how climate finance can support solutions that address multiple development priorities simultaneously, including air pollution, renewable energy expansion, rural income generation and energy security.
The investment also aligns with commitments made during the 16th India–EU Summit, where leaders from both regions emphasised stronger collaboration on climate action and sustainable energy development.
European institutions have increasingly prioritised investments in emerging markets that support industrial decarbonisation, renewable energy infrastructure and emerging technologies such as green hydrogen and bioenergy.
Blended Finance Model Enables Project Development
The $32.2 million construction equity investment builds on $3.3 million in early-stage development funding provided in 2023 through the Climate Investor Two Development Fund.
That initial funding helped advance several key milestones needed to prepare the project for full construction.
Among the activities supported during the development phase were:
- Land acquisition and site preparation
- Securing pipeline access for gas injection
- Negotiating long-term feedstock supply agreements with farmers and agricultural suppliers
- Finalising gas offtake agreements with utilities
- Developing technical and financial structures aligned with international investment standards
These early steps helped reduce project risk and create the conditions necessary for large-scale construction financing.
According to Jirong Lim, Investment Director at Climate Fund Managers, the project demonstrates how agricultural waste can be transformed into a valuable economic and environmental resource.
“Agricultural residue burning remains one of the most persistent environmental challenges in northern India,” Lim said.
“Projects like Akaia Green Fuels show how this waste can be transformed into clean energy, organic fertiliser and new income streams for farmers, while delivering meaningful improvements in air quality and emissions.”
Lim added that the production of renewable gas for injection into India’s gas network supports the country’s national goal of reducing reliance on imported natural gas while strengthening domestic energy resilience.
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Economic Opportunities for Rural Communities
Beyond its environmental benefits, the project is expected to create meaningful economic opportunities for rural communities.
Farmers will be able to sell agricultural residues that would otherwise be burned in fields, creating new revenue streams from agricultural waste.
This additional income can help improve rural livelihoods while encouraging farmers to adopt more sustainable residue management practices.
The organic fertiliser produced during the biogas process will also benefit local agriculture.
Unlike synthetic fertilisers, fermented organic manure improves soil structure, moisture retention and long-term soil fertility, helping farmers maintain productivity while reducing reliance on chemical inputs.
The project is expected to create:
- Approximately 480 jobs during the construction phase, and
- Around 110 permanent operations and maintenance positions once the facility becomes operational.
Additional employment opportunities are likely to emerge across the biomass supply chain, agricultural logistics networks and transportation services that support the project.
Rajkumar Roy, Project Co-Sponsor of Akaia Green Fuels, said the development demonstrates how environmental challenges can be turned into economic opportunities.
“This project turns an everyday problem for farmers and sugar mills into a long-term opportunity,” Roy said.
“By securing feedstock, offtake and strong technical standards from the outset, we are building a robust and scalable model for compressed biogas infrastructure in India.”
Engineering Oversight and Technical Standards
The facility will be delivered by GPS Renewables, one of India’s leading bioenergy engineering firms, under a fixed-price engineering, procurement and construction (EPC) contract.
The company will also oversee a long-term operations and maintenance agreement once the plant becomes operational.
Independent European engineering firms Fichtner and TÜV will supervise the project’s technical compliance, ensuring the facility meets international engineering, environmental and safety standards.
According to Mainak Chakraborty, Co-Founder of GPS Renewables, the project demonstrates growing global confidence in India’s compressed biogas sector.
“We are delighted to welcome Climate Fund Managers into India’s CBG sector through their investment in Akaia Green Fuels,” Chakraborty said.
“Their commitment underscores the maturity and scalability of compressed biogas as a climate and energy solution for India.”
Community Development Initiatives
In addition to the infrastructure investment, the project includes a community development programme aimed at improving living conditions in surrounding rural areas.
An independent needs assessment will guide the design of initiatives scheduled to launch later in 2026.
Early activities already underway include funding medical check-ups and providing medication for residents through partnerships with nearby healthcare facilities.
Future initiatives are expected to focus on areas such as education, healthcare access, agricultural training and climate-resilient livelihoods.
By integrating social development initiatives with infrastructure investment, project developers hope to ensure that local communities share in the long-term benefits of the project.
Outlook:
The Akaia Green Fuels facility highlights the growing role that bioenergy infrastructure could play in India’s energy transition strategy.
As the country seeks to address air pollution, reduce greenhouse gas emissions and strengthen energy security, converting agricultural waste into renewable fuel offers a practical and scalable solution.
India has been expanding its compressed biogas (CBG) sector through national initiatives designed to promote waste-to-energy technologies and reduce reliance on imported fossil fuels.
These programs aim to establish a network of bioenergy facilities capable of converting agricultural waste, municipal waste and industrial by-products into renewable gas.
For investors and policymakers, projects like Akaia Green Fuels demonstrate how climate investment and blended finance structures can mobilise capital toward infrastructure that simultaneously addresses environmental challenges, strengthens energy systems and supports rural development.
As India continues to scale its bioenergy sector, waste-to-biogas facilities could become an increasingly important component of the country’s strategy to build a more resilient, diversified and sustainable energy system.
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Photo Source: Google
By: Rosemary Wambui
16th March 2026
