National Policy on Biofuels – 2018

The Government has unveiled a new National Biofuel Policy (2018) that incentivises biofuel generation through multiple measures. Major steps include encouragement of biofuel generation from excess crop production and setting apart Rs 5000 crores viability gap funding to establish second generation ethanol refineries. For providing specific fiscal incentives, the policy categorises biofuels into several groups:1G (First Generation), 2G, 3G, and bio-CNG.

The Policy widens the range of feedstocks that can be used for producing ethanol and allows the use of damaged grains that is unusable for food purposes for ethanol production. As per the policy, besides sugar molasses, beet, sorghum, corn, damaged grains etc. can be used for ethanol production. Following are the main features of the National Policy on Biofuels 2018.

Main features of the Policy

  1. Categorisation of Biofuels: Biofuels will be categorised into ‘Basic Biofuels’ viz. First Generation (1G) bioethanol &biodiesel and ‘Advanced Biofuels’ – Second Generation (2G) ethanol, Municipal Solid Waste (MSW) to drop-in fuels, Third Generation (3G) biofuels, bio-CNG etc. for providing appropriate financial and fiscal incentives under each category.
  2. Expansion of the scope of raw materials for ethanol production: The Policy expands the type of bio-raw materials for ethanol production by including Sugarcane Juice, Sugar containing materials like Sugar Beet, Sweet Sorghum, Starch containing materials like Corn, Cassava, Damaged food grains like wheat, broken rice, Rotten Potatoes etc. which are unusable for human consumption.
  3. Surplus food grains can be used for ethanol production: During excess production, crop prices fall. Here, the Policy allows use of surplus food grains for production of ethanol with the approval of National Biofuel Coordination Committee.
  4. Viability Gap Funding: For the generation of Advanced Biofuels, the Policy proposes a viability gap funding scheme for 2G ethanol Bio refineries with Rs.5000 crore in 6 years. In addition to this, additional tax incentives, higher purchase price as compared to 1G biofuels will be given for 2G ethanol generation.
  5. Supply chain for biodiesel production: The Policy encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, Used Cooking Oil, short gestation crops etc.

For the success of the policy, roles and responsibilities of all the concerned Ministries/Departments regarding biofuels has been ensured.

Similarly, the National Policy also specifies the various benefits from the use of biofuels. These include reduction of import dependency, promoting cleaner environment, ensuring health benefits, waste management benefits, raising of infrastructure in rural areas besides providing additional income to the farmers. The Policy was brought by the Ministry of New and Renewable Energy (MNRE). MNRE previously unveiled a National Biofuel Policy in 2009.


May 17, 2018
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