India has quickly joined the ranks of major biofuel producer and consumer thanks to a set of coordinated policies, high-level political support, and an abundance of feedstocks. Over the next five years it has the potential to nearly triple consumption and production by removing roadblocks to higher ethanol blends and diversifying biofuel use to replace diesel and jet fuel.
Last year the IEA released “Biofuel Policy in Brazil, India and the United States: Insights for the Global Biofuel Alliance” to support the GBA’s development. In it the IEA recommends the GBA focus on developing new and existing markets since over 80% of production is concentrated in four regions: the United States, Brazil, Europe and Indonesia, which account for only half of global transport fuel demand.
India is the third largest global ethanol producer and can build on its rapid growth
It has potential to expand further with the right policies, keeping costs in check and securing sustainable feedstocks. In 2018 India released its National Policy on Biofuels which set blending targets for ethanol (20% blending by 2030) and biodiesel (5% by 2030), feedstock requirements for different fuels and laid out the responsibilities of 11 ministries to coordinate government actions. Beyond blending targets, India established guaranteed pricing, long-term ethanol contracts, and technical standards and codes. Financial support for building new facilities and upgrading existing ones was also provided. Buoyed by its success, the Government moved the 20% volume blending target for ethanol forward by 5 years to 2025-26, which was enshrined in an updated National Policy on Biofuels in 2022.
20% ethanol blending on average across India will require increasing the fleet of vehicles capable of accepting higher ethanol blending levels. India is encouraging flex-fuel vehicles and retrofits are possible for older vehicles, including two wheelers. In addition, a greenhouse gas (GHG) measurement and reporting requirement would help India assure and improve GHG reductions from biofuel use in the transport sector. India will also need to continue to diversify feedstocks to help avoid shortages as it experienced at the end of 2023. India has other opportunities to expand biodiesel for use in diesel vehicles and biojet fuel as a replacement for jet fuel. The government has already established a 5% biodiesel target by 2030 which would require almost 4.5 billion litres of biodiesel per year according to IEA estimates. Biojet fuel is another growth area. On 25 November 2023, the Ministry of Oil, Petroleum and Natural Gas announced indicative blending targets of 1% by 2027 and 2% by 2028 for international flights leaving India. We estimate this would require near 100 million litres of biojet fuel per year, likely to come from residue or vegetable oils grown on marginal land. However, future growth could come from other technologies such as alcohol-to-jet using ethanol and gasification technologies whereby agricultural, forestry and municipal solid waste can be converted into jet fuel.
Contribution of Biofuels to India’s Net Zero Transformation
India’s commitment to achieving net-zero emissions by 2070 emphasizes a multi-pronged approach to reducing its carbon footprint, enhancing energy security, and promoting sustainable development. Biofuels play a pivotal role in this transformation due to their renewable and low-carbon nature. Below are the key ways in which biofuels contribute to India’s net-zero transformation:
1. Reduction in Greenhouse Gas (GHG) Emissions
- Biofuels, such as ethanol, biodiesel, and biogas, are produced from organic waste, agricultural residues, and other renewable sources.
- These fuels have a significantly lower carbon footprint compared to fossil fuels, as the carbon released during combustion is partially offset by the carbon absorbed during biomass growth.
- Replacing fossil fuels with biofuels in transportation, industries, and power generation helps mitigate climate change by reducing GHG emissions.
2. Decarbonizing the Transportation Sector
- India’s transport sector is one of the largest consumers of fossil fuels, contributing substantially to CO₂ emissions.
- Ethanol blending in petrol (E20 target by 2025) and the use of biodiesel in diesel engines reduce dependence on imported crude oil while lowering emissions.
- Introduction of bio-CNG and green hydrogen derived from biomass provides cleaner alternatives for heavy-duty vehicles, thereby reducing pollution.
3. Waste Management and Circular Economy
- Biofuel production leverages agricultural residues, municipal solid waste, and industrial by-products, which would otherwise contribute to pollution and landfills.
- Efficient utilization of such waste promotes a circular economy by turning waste into valuable energy, reducing methane emissions from organic decomposition.
4. Energy Security and Rural Development
- Biofuels help diversify India’s energy mix and reduce reliance on imported crude oil, improving energy independence.
- Setting up biofuel plants fosters rural employment by creating a steady demand for feedstock like sugarcane, rice husk, and other residues.
- Initiatives like ethanol-based bio-refineries provide economic opportunities in agricultural regions, supporting livelihoods and infrastructure development.
5. Scaling Up Advanced Biofuels
- Second- and third-generation biofuels, derived from non-food crops, algae, and agricultural waste, address food security concerns while delivering higher energy yields.
- Advanced biofuels, such as lignocellulosic ethanol and biohydrogen, are essential for decarbonizing hard-to-abate sectors like aviation and shipping.
6. Contribution to Renewable Energy Goals
- Biofuels align with India’s National Bio-Energy Mission, contributing to the target of 175 GW renewable energy capacity by 2022 (now revised to 500 GW by 2030).
- Biogas and bio-CNG are increasingly being integrated into the grid to provide sustainable energy for domestic and industrial use.
Government Policies and Initiatives
- National Policy on Biofuels (2018): Promotes ethanol blending and biofuel production through fiscal incentives and investments.
- Ethanol Blending Program (EBP): Targets 20% ethanol blending in petrol by 2025.
- GOBAR-Dhan Scheme: Supports biogas production from cattle dung and other organic waste.
- SATAT Initiative: Encourages the production and use of compressed biogas (CBG) for a cleaner energy ecosystem.
Impact on Net Zero Goals
Biofuels not only address India’s immediate energy needs but also lay a foundation for long-term sustainability. By integrating biofuels into its energy and transportation policies, India can achieve significant progress in reducing carbon intensity, promoting renewable energy, and building a resilient and sustainable energy ecosystem.
Biofuels are more than a fuel—they represent a transformational step toward a cleaner, greener, and net-zero future for India.
India’s Ethanol Push: A Path to Energy Security
Achieving 15% ethanol blending in 2024, India targets 20% by 2025
(Ministry of Petroleum & Natural Gas)
The government’s proactive approach to ethanol blending is evident in its decision to advance the target of 20% ethanol blending from 2030 to 2025, demonstrating a strong commitment to sustainable energy practices. During the 7th G-STIC Delhi Conference, ShriHardeep Singh Puri, Minister of Petroleum and Natural Gas, emphasized India’s growing success in ethanol blending and its broader commitment to sustainable energy solutions. He highlighted that, in recognition of the progress made, the government has already begun planning for the future by exploring goals beyond the 20% ethanol blending target. This forward-looking approach indicates that India is not only focused on meeting its immediate energy needs but is also preparing for long-term sustainable energy solutions to address future demands.
Major Achievements of EBP
An indicative target of 20% ethanol blending in petrol was initially set for 2030 under the EBP Programme. However, in 2020, the Cabinet Committee on Economic Affairs (CCEA) advanced this target to 2025, reflecting the government’s commitment to accelerating ethanol usage.
The progress of India’s Ethanol Blended Petrol (EBP) Programme has been noteworthy, with the ethanol production capacity more than doubling in the last four years to reach 1,623 crorelitres as of September 18, 2024. This substantial increase highlights the government’s commitment to enhancing the role of ethanol in the nation’s energy landscape.
In the Ethanol Supply Year (ESY), which runs from November to October, the blending of ethanol with petrol stood at 38 crorelitres with a blending percentage of 1.53% in ESY 2013-14. Over the following years, the government implemented various initiatives that led to remarkable growth in ethanol blending. By ESY 2020-21, the blending volume surged to 302.3 crorelitres, increasing the blending percentage to 8.17%. During this same period, petrol consumption also rose by approximately 64% 
The momentum continued, with blending further increasing to over 500 crorelitres in ESY 2022-23, raising the blending percentage to 12.06%. In the current ESY 2023-24, the blending percentage surpassed 13% with approximately 545.05 crorelitres of ethanol blended as of August 31, 2024. This remarkable progress underscores a significant increase in the overall ethanol blending percentage, rising from 1.53% in 2014 to an impressive 15% in 2024.
Encouraged by this progress, the government set an ambitious target of achieving 20% blending by 2025. Over the past decade, this initiative has delivered significant benefits, including savings of ₹1,06,072 crore in foreign exchange, a reduction of CO2 emissions by 544 lakh metric tons, and a substitution of 181 lakh metric tons of crude oil. Furthermore, the program has had a considerable economic impact, with OMCs disbursing ₹1,45,930crore to distillers and ₹87,558 crore to farmers.
Here are the key initiatives:
❖ In August 2024, The Union Cabinet, chaired by Prime Minister ShriNarendraModi, approved the modified PradhanMantri JI-VAN Yojana to keep pace with the latest developments in biofuels and attract more investment. This modified scheme extends the timeline for implementation by five years, until 2028-29, and expands its scope to include advanced biofuels produced from lignocellulosicfeedstocks, such as agricultural and forestry residues, industrial waste, synthesis (syn) gas, and algae.
❖The government has developed a detailed roadmap for ethanol blending to guide effective implementation.
❖ Efforts are underway to expand the feedstock used for ethanol production, allowing for more efficient and sustainable sourcing.
❖Afavourable procurement price for ethanol has been established under the EBP Programme, ensuring fair compensation for producers.
❖ The Goods and Services Tax (GST) on ethanol for the EBP Programme has been reduced to 5%, making it more financially attractive for producers and consumers.
❖ Changes have been made to the industries (Development & Regulation) Act to facilitate the free movement of ethanol across states, promoting easier blending operations.
❖An interest subvention scheme has been introduced to provide interest subsidies aimed at enhancing and augmenting ethanol production capacity in the country.
❖ Public Sector Oil Marketing Companies (OMCs) are actively floating Expressions of Interest for the procurement of ethanol, ensuring a steady demand and fostering market growth.