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India’s Biofuel Push
Mapping The Evolution Of Biofuels in India
Context: India’s road transport sector, a critical component of its economic engine, is also a significant contributor to fossil fuel consumption and greenhouse gas emissions.
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- As of 2021, the sector consumed 44% of the country’s total oil, with petroleum-based fuels meeting 95% of its energy demand.
- Despite contributing around 12% of India’s total carbon emissions, per capita emissions from road transport have surged by 2.5 times since 2000.
- With over 326 million registered vehicles—primarily internal combustion engine (ICE)-based—as of 2020, carbon emissions from transport are projected to rise by 60% by 2050 unless urgent interventions are made.
- Decarbonising India’s transport sector through cleaner fuel alternatives like biofuels is vital for achieving energy security and environmental sustainability.
- Ethanol, biodiesel, compressed biogas (CBG), and sustainable aviation fuel (SAF) are central to this transition.
India’s Biofuel Policy Evolution: A Decade of Strategic Reforms
India has adopted a phased and adaptive approach to mainstream ethanol blending and biofuel adoption. Key milestones in the evolution of biofuel policy in India include:
- 2014–15: Revival of a price-linked procurement policy for ethanol and diversification of feedstock pathways.
- 2015–16: Amendments to the Industries Act to clarify central and state roles in ethanol regulation and distribution.
- 2016–17: Regular consultations with industry stakeholders to streamline the Ethanol Blended Petrol (EBP) programme.
- 2018: Launch of the National Bioenergy Policy, laying the foundation for long-term regulatory and economic frameworks.
- 2019–20: Expansion of eligible raw materials like sugarcane juice and damaged grains; pan-India rollout of the EBP programme.
- 2020–21: Tripling of ethanol storage capacity; approval for the use of surplus rice and maize in ethanol production.
- 2021–22: Financial incentives extended to distilleries using non-molasses feedstock, boosting ethanol production diversification.
India’s Biofuel Ecosystem: Key Stakeholders and Infrastructure
- Feedstock Producers: Farmers and agro-processors supply first-generation (1G) ethanol feedstocks like sugarcane, broken rice, and corn, and second-generation (2G) biomass such as bagasse, cereal straws, and forestry residues.
- Feedstock Suppliers: Agri-market intermediaries and ethanol processors bridge the gap between raw feedstock production and fuel manufacturing units.
- Technology Providers & EPC Companies: Companies like Praj Industries play a crucial role by delivering advanced fermentation and distillation technologies and managing end-to-end Engineering, Procurement, and Construction (EPC) of ethanol and biogas plants.
- Biofuel Producers & Off-takers: Public and private players, including oil marketing companies (OMCs) and aviation firms, blend and integrate biofuels into commercial energy use.
- Logistics Providers: Specialised transport networks ensure the movement of feedstocks, biofuels, and by-products across India.
- By-product Off-takers: Industries use residuals from biofuel production, contributing to circular economy goals and economic efficiency.
Challenges to Scaling Biofuel Adoption in India
- Lack of Inter-Ministerial Coordination: Fragmented responsibilities across ministries—such as DFPD (feedstock allocation), MoPNG (offtake), MoAFW (agri feedstock promotion), MNRE (CBG subsidies), and MoEFCC (environmental clearances)—lead to policy implementation delays.
- A unified command structure or single-window clearance mechanism is urgently needed.
- Economic & Regulatory Constraints:
- Feedstock Price Volatility: MSP-linked sugarcane pricing often incentivises sugar production over ethanol conversion.
- Seasonal & Weather-Dependent Yields: Crop supply fluctuations affect consistent ethanol output.
- Distribution Inefficiencies: Although OMCs regulate denatured ethanol movement, state-level enforcement remains uneven, causing delivery delays and logistical bottlenecks.
- Policy Bias Toward Electric Vehicles (EVs): India strongly incentivises battery electric vehicles (BEVs) through lower GST (5%) and state-level exemptions.
- Meanwhile, hybrid electric vehicles (HEVs) face a steep tax burden of up to 48%.
- This asymmetry may overlook HEVs as a transitional solution, especially in rural regions lacking EV infrastructure.
- With only 6,500 public EV charging stations nationwide in 2023, BEV adoption remains challenging outside major cities.
Strategic Roadmap: Building a Resilient Biofuel Future
To unlock the full potential of biofuel production in India, a multi-pronged strategy is essential:
- Regulatory Strengthening: Standardise ethanol transport regulations across states. Expand permissible feedstock categories, especially untapped agricultural waste (estimated at ~500 million tonnes annually).
- Institutional Reform: Establish inter-ministerial working groups. Implement a single-window approval system for biofuel-related projects.
- Economic Incentives: Promote subsidies for non-traditional feedstocks like lignocellulosic biomass. Ensure timely farmer payments to encourage feedstock supply.
- Infrastructure Development: Expand ethanol blending facilities and storage capacity. Invest in dedicated pipelines and rail-based transport networks. Create regional biofuel production clusters to optimise logistics and resource use.
- Technology & R&D Investment: Support the development of second- and third-generation (2G & 3G) biofuels, which offer higher energy yields and lower emissions. Foster public-private partnerships (PPPs) to accelerate technology deployment.
