National Biofuels Policy

Key Highlights:

1. The Policy classifies biofuels into:
   1. Basic Biofuels – First Generation (1G) bioethanol & biodiesel
   2. Advanced Biofuels – Second Generation (2G) ethanol, Municipal Solid Waste (MSW) to drop-in fuels
   3. Third Generation (3G) biofuels, bio-CNG etc.
2. Crops to be utilized:
   1. Sugarcane, Sugar Beet, and Sweet Sorghum.
   2. Starch-rich crops like Corn, Cassava, damaged food grains such as wheat, broken rice, and rotten potatoes unfit for human consumption.
3. Financial incentives to stimulate the sector:
   1. Viability gap funding for 2G ethanol bio refineries of Rs.5000 crore in 6 years
   2. Additional tax incentives, higher purchase price compared to 1G biofuels.
4. The Policy encourages the establishment of supply chain mechanisms for biodiesel production from non-edible oilseeds and used cooking oil.

Initiatives:

• The NITI Aayog's Roadmap for Ethanol Blending In India 2020-25.
• The launch of the Ethanol Blended Petrol Programme in 2003, which allowed the sale of 5% ethanol blended petrol in nine states and four UTs.
• The RUCO initiative by the FSSAI for the collection and conversion of used cooking oil to bio-diesel.

National target: Achieve a 20% ethanol blending target within five years, by 2025.

Benefits:

• Enhances energy security and reduces dependence on the unstable Middle-East.
• Decreases import dependence, helping to bridge the current account deficit due to the inelastic nature of crude oil imports.
• Provides a boost to clean energy, aiding in fulfilling our commitments under the Paris agreement. A litre of 10% ethanol blended petrol can reduce 20000 tons of CO2 emissions.
• Can lead to improved employment opportunities and provide an alternative income for farmers. A 100 KLPD 2G biorefinery can contribute 1200 jobs in plant operations.
• Facilitates efficient waste management by diverting the annual waste produced in India towards ethanol production.
• Health benefits: Reusing cooking oil, especially in deep frying, can lead to various diseases. Using used cooking oil to produce biodiesel can prevent its diversion to the food industry.
• Aligns well with the government's current initiatives such as Make in India, Swachh Bharat Abhiyan, Skill Development, and offers a great opportunity to integrate with the ambitious targets of doubling Farmers’ Income, Import Reduction, Employment Generation, Waste to Wealth Creation.

Challenges:

• Potential creation of artificial scarcity if food grains and tubers are diverted to ethanol production, leading to food inflation.
• Diversion of agricultural land for the cultivation of biodiesel crops.
• Modification of vehicles and the introduction of E-20 compatible components may be challenging.
• Uneven distribution of ethanol production areas in the country.
• Lack of ethanol storage infrastructure like storage tanks, nozzle calibration issues, etc.

Suggested Approach: (Recommendations by NITI Aayog)

• Enhancing the ethanol production capacity and promoting the use of water-efficient crops like maize for ethanol production.
• Focusing on 2G advanced biofuels to avoid any trade-off with food security.
• Launching a nationwide awareness campaign to educate citizens about the benefits of ethanol blending.
• Speeding up ethanol production clearances and facilitating ethanol transport across the country, which is currently regulated by the Industries (Development and Regulation) Act, 1951.
• Providing incentives for the production of ethanol-blended compatible vehicles.

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