National Policy on Biofuels

The National Policy on Biofuels (NPB) represents India’s comprehensive framework for advancing renewable energy through the production and utilisation of biofuels. Originally introduced in 2018 and amended in 2022, the policy seeks to reduce dependence on imported crude oil, mitigate greenhouse gas emissions, promote rural development, and foster innovation in alternative energy technologies. It is a cornerstone of India’s strategy to achieve sustainable energy security while balancing environmental and socio-economic objectives.

Background and Evolution

India’s interest in biofuels can be traced to the early 2000s, when the government launched the National Biodiesel Mission and the Ethanol Blended Petrol Programme (EBP). However, these initiatives encountered several challenges, including limited feedstock availability, logistical barriers, and volatile pricing. To address these issues, the Ministry of Petroleum and Natural Gas introduced the National Policy on Biofuels, 2018, replacing earlier fragmented frameworks and establishing a unified direction for biofuel development.
The policy was designed to align with broader national goals such as the Nationally Determined Contributions (NDCs) under the Paris Agreement, Make in India, and Atmanirbhar Bharat (self-reliant India). It also aimed to integrate the agricultural, industrial, and energy sectors through the sustainable utilisation of domestic biomass resources.

Objectives of the Policy

The National Policy on Biofuels pursues several interrelated objectives:

• Energy Diversification: Reducing India’s dependency on imported fossil fuels.
• Environmental Protection: Lowering carbon emissions and improving air quality.
• Rural Empowerment: Generating income and employment opportunities through the cultivation and collection of biofuel feedstock.
• Waste Utilisation: Promoting the productive use of agricultural residues, used cooking oil, and other organic waste.
• Technological Advancement: Supporting research, innovation, and adoption of advanced biofuel technologies.

Salient Features of the 2018 Policy

1. Expanded Feedstock Sources: The 2018 policy widened the base of raw materials for biofuel production. Ethanol could now be derived not only from sugarcane juice but also from sugar-containing crops like sweet sorghum and sugar beet, starch-based crops such as maize and cassava, as well as damaged or surplus food grains unfit for human consumption. This flexibility sought to stabilise supply chains and ensure that biofuel production did not compromise food security.
For biodiesel, feedstock sources include non-edible oilseeds, used cooking oil, short-gestation crops, and other forms of waste oils. The use of such materials reflects a circular economy approach, converting waste into valuable energy resources.
2. Blending Targets: The policy set an indicative target of 20% ethanol blending in petrol and 5% biodiesel blending in diesel by 2030. The purpose of blending is to progressively replace fossil fuels with renewable alternatives while maintaining energy efficiency and vehicle performance.
The 2022 amendment later advanced the ethanol blending target to 2025–26, underscoring India’s commitment to accelerating its clean energy transition.
3. Financial Incentives and Support Mechanisms: To promote investment in the biofuel sector, the government introduced several financial measures:

• Viability Gap Funding (VGF): A support mechanism of ₹5,000 crore for establishing second-generation (2G) ethanol biorefineries, which use lignocellulosic biomass such as crop residues.
• Price Differentiation: Higher procurement prices for advanced biofuels relative to first-generation fuels.
• Tax Relief and Infrastructure Support: Fiscal incentives for storage, transportation, and distribution networks to strengthen the biofuel supply chain.

4. Institutional Coordination: The policy mandates coordination among multiple ministries, including Petroleum and Natural Gas, Agriculture, Renewable Energy, and Finance, to ensure cohesive implementation. The National Biofuel Coordination Committee (NBCC) oversees inter-ministerial decisions such as approval for the use of surplus food grains in ethanol production.
5. Research and Development: Recognising that biofuel technology is rapidly evolving, the policy promotes R&D collaborations between public institutions, universities, and private industries. Emphasis is placed on developing advanced biofuels such as bio-CNG, bio-jet fuel, and algae-based biodiesel, which can substantially reduce lifecycle carbon emissions.

2022 Amendment and Updated Provisions

The National Policy on Biofuels (Amendment), 2022, introduced important updates to reflect new priorities and global developments:

• Accelerated Targets: Advancement of the ethanol blending goal from 2030 to 2025–26.
• Promotion of Advanced Biofuels: Enhanced emphasis on 2G, 3G, and bio-jet fuels, encouraging innovation in aviation and marine sectors.
• Feedstock Diversification: Inclusion of additional feedstocks and enhanced flexibility for regional adaptation.
• Private Sector Participation: Simplified regulatory procedures to attract private investment in biofuel production and infrastructure.

These revisions aimed to integrate India’s biofuel roadmap with global sustainability initiatives and the Net Zero Emission goal for 2070.

Challenges and Critiques

Despite its comprehensive framework, the policy faces several implementation hurdles:

• Feedstock Constraints: The supply of non-food biomass remains inconsistent, affecting production stability.
• Food vs. Fuel Debate: Although the use of damaged or surplus grains is regulated, concerns persist regarding diversion of edible crops.
• Infrastructure Limitations: Insufficient storage and distribution infrastructure hampers large-scale blending operations.
• Taxation and Pricing: Higher taxation on biodiesel relative to fossil diesel undermines market competitiveness.
• Institutional Overlap: Multiple regulatory agencies sometimes cause procedural delays and coordination challenges.

Addressing these issues requires ongoing reforms, investment in logistics, and the creation of transparent, farmer-friendly procurement systems.

Environmental and Economic Implications

The policy holds significant potential in advancing India’s dual goals of sustainability and self-reliance. Its broader implications include:

• Climate Change Mitigation: Reduction of carbon dioxide emissions by promoting renewable fuel alternatives.
• Waste Management: Conversion of waste materials into energy sources, reducing pollution and landfill burden.
• Rural Economic Development: Generation of employment in feedstock collection, transport, and biorefinery operations.
• Technological Progress: Encouragement of domestic innovation and skill development in renewable energy sectors.
• Energy Security: Diversification of India’s energy portfolio, decreasing vulnerability to international crude price fluctuations.

Significance in India’s Energy Transition

The National Policy on Biofuels exemplifies a strategic balance between economic development, environmental protection, and energy independence. By linking rural agriculture to industrial energy systems, it creates a model of inclusive and sustainable growth.