EU-backed fund invests USD 32.2 million in UP biogas project

Climate Fund Managers has committed USD 32.2 million in construction equity from its Climate Investor Two fund, supported by the European Union, to Akaia Green Fuels for a compressed biogas project in Uttar Pradesh. The investment marks a scale-up from earlier development-stage funding and supports construction now underway.

Project scope
The facility will process about 94,000 tonnes of agricultural and organic waste each year, including paddy straw, press mud, and cow dung. It is designed to produce around 20 tonnes per day of compressed biogas and 123 tonnes per day of fermented organic manure. The biogas will be supplied to the city gas distribution network under long-term offtake agreements with GAIL and Hindustan Petroleum Corporation Limited (HPCL). Commissioning is targeted for the first half of 2027, with expected emissions reduction exceeding 100,000 tonnes of CO2-equivalent annually. Construction began in February 2026.

GPS Renewables has been contracted on a fixed-price engineering, procurement and construction (EPC) basis and will also manage operations and maintenance over multiple years. Technical advisory and oversight will be provided by Fichtner and TÜV.

Financing and market context
The investment follows USD 3.3 million in development funding provided by Climate Fund Managers in 2023 for land acquisition, feedstock arrangements, pipeline connectivity, and financial structuring. The project uses a blended finance structure, with EU-backed capital absorbing early-stage risks that may limit participation from commercial investors.

The project also targets the issue of crop residue burning in northern India by creating a market for agricultural waste. It offers farmers an additional revenue stream and provides fermented manure as a lower-cost alternative to chemical fertilisers.

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