Cabinet approves National Policy on Biofuels, 2018

May 17, 2018

The Union Cabinet has approved National Policy on Biofuels – 2018 in order to promote biofuels in the country. Biofuels in India are of strategic importance as it augers well with ongoing initiatives of Government such as Make in India, Skill Development and Swachh Bharat Abhiyan. It also offers great opportunity to integrate with ambitious targets of doubling of import reduction, farmers’ income, employment generation, waste to wealth Creation.

Salient features of Policy

The policy categorises of biofuels to enable extension of appropriate financial and fiscal incentives under each category

Basic Biofuels: First Generation (1G) bioethanol and biodiesel.
Advanced Biofuels: Second Generation (2G) ethanol, Municipal Solid Waste (MSW) to drop-in fuels, Third Generation (3G) biofuels, bio-CNG etc.

Expansion scope of raw material for ethanol production: It allows use of sugarcane juice, sugar containing materials like sweet sorghum, sugar beet, starch containing materials like corn, cassava, damaged food grains like broken rice, wheat, rotten potatoes, unfit for human consumption for ethanol production.
Use of surplus food grains: The policy allows use of surplus food grains for production of ethanol for blending with petrol with approval of National Biofuel Coordination Committee. This will ensure farmers get appropriate price for their produce during the surplus production phase.
Incentives to advanced biofuel: Viability gap funding scheme indicated for 2G ethanol Bio refineries of Rs.5000 crore in 6 years for giving special emphasis to advanced biofuels. It also proposes additional tax incentives, higher purchase price as compared to 1G biofuels.
Supply chain mechanisms: The policy encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, used cooking oil, short gestation crops.
Synergising efforts: It predefines roles and responsibilities of all the concerned Ministries and Government Departments with respect to biofuels to synergise efforts.

Expected Benefits

Reduce Import Dependency: The ethanol supply will help to reduce import dependency on crude oil which will in turn result in savings of forex.
Cleaner Environment: The use of ethanol will reduce CO2 emissions. It will also reduce Green House Gas emissions by reducing crop burning and conversion of agricultural residues and wastes into biofuels.
Health benefits: Prolonged reuse of cooking oil for preparing food, particularly in deep-frying causes health hazard and can lead to many diseases. By using cooking oil as a potential feedstock for biodiesel will prevent diversion of used cooking oil in the food industry.
Municipal Solid Waste (MSW) Management: Using advance technologies waste and plastic in MSW can be converted in use fuels. One ton of such waste has potential to provide around 20% of drop in fuels.
Infrastructural Investment in Rural Areas: Addition of 2G bio refineries across country will spur infrastructural investment in the rural areas.
Employment Generation: Setting up one 100klpd 2G bio refinery contributes to 1200 jobs in plant operations, village level entrepreneurs and supply chain management.
Additional Income to Farmers: By adopting 2G technologies for producing biofuels, agricultural residues and waste which otherwise are burnt by farmers can be converted to ethanol. Through this process farmers can fetch price for these waste. Moreover, conversion of surplus grains and agricultural biomass can also help in price stabilization for farmers.