Union Cabinet approves National Policy on Biofuels 2018

May 17, 2018 08:27 IST
Union Cabinet approves National Policy on Biofuels 2018

The Union Cabinet on May 16, 2018 approved the National Policy on Biofuels 2018.

The policy categorises biofuels into different groups such as First Generation, Second Generation and Third Generation to enable extension of appropriate financial and fiscal incentives under each category.

The Policy categorises biofuels as :

  • First Generation (1G) - Basic Biofuels such as Bioethanol & Biodiesel
  • Second Generation (2G) - Advanced Biofuels, ethanol, Municipal Solid Waste (MSW) to drop-in fuels
  • Third Generation (3G) biofuels - Bio-CNG

National Policy on Biofuels 2018

The Policy expands the scope of raw material for ethanol production by allowing use of products that are unfit for human consumption for ethanol production. These are:

  • 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

Considering that farmers are at a risk of not getting appropriate price for their produce, the Policy allows use of surplus food grains for production of ethanol for blending with petrol, with the approval of National Biofuel Coordination Committee.

The policy indicates a viability gap funding scheme for 2G ethanol Bio refineries of Rs 5000 crore in 6 years in addition to additional tax incentives, higher purchase price as compared to 1G biofuels.

It encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, used cooking oil and short gestation crops.



• Reduce dependency on imports: The ethanol supply year 2017-18 is likely to see a supply of around 150 crore litres of ethanol which will result in savings of over Rs.4000 crore of forex.

• Cleaner environment: The decline in crop burning and conversion of agricultural wastes to biofuels will further lead to reduction in green house gas emissions.

• Health benefits: Prolonged reuse of cooking oil for preparing food such as deep-frying is a potential health hazard and can lead to many diseases. However, the use of old cooking oil for making biodiesel will prevent the practice of used cooking oil in the food industry.

• Management of municipal solid waste: As per the estimates, 62 MMT of municipal solid waste gets generated in India annually. One ton of such waste has the potential to provide around 20 percent drop in fuels. There are technologies which can convert MSW to drop in fuels.

• Boost infrastructural investment in rural areas: At present Oil Marketing Companies are in the process of setting up 12 2G bio refineries with an investment of around Rs 10,000 crore. The further addition of 2G bio refineries across the country will encourage infrastructural investment in the rural areas.

• Employment generation: One 2G bio refinery may contribute 1200 jobs in plant operations, village level entrepreneurs and supply chain management.

• Additional income to farmers:
The conversion of surplus grains and agricultural biomass to ethanol can help in price stabilisation.


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