Farmers to benefit under Biofuel Policy 2018

The Union Cabinet chaired by Prime Minister Narendra Modi approved the National Policy on Biofuels – 2018 on Wednesday, expanding the scope of raw material for ethanol production by allowing use of sugarcane juice, sugar-containing materials such as sugar beet, sweet sorghum; starch-containing materials such as corn, cassava; damaged food grains like wheat, broken rice, rotten potatoes unfit for human consumption.

The National Policy on Biofuels was first made by Ministry of New and Renewable Energy during the year 2009 under UPA II government.

The Policy categorises biofuels as "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 to enable extension of appropriate financial and fiscal incentives under each category.

Taking into account the risk of farmers of not getting appropriate price for their produce during surplus production, the Policy allows the use of surplus food grains for production of ethanol for blending with petrol with the approval of National Biofuel Coordination Committee.

With a thrust on Advanced Biofuels, the Policy indicates a viability gap funding scheme for 2G ethanol Biorefineries of Rs 5,000 crore in six years in addition to additional tax incentives, higher purchase price as compared to 1G biofuels, the cabinet note said.

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

Government said 2017-18 is likely to see a supply of around 150 crore litres of ethanol, which will result in savings of over Rs 4,000 crore of forex as one crore litre of E10 saves Rs 28 crore of forex at current rates.

The predicted ethanol supply for 2017-18 is also expected to provide a cleaner environment by arresting CO2 emissions to the tune of 30 lakh tonnes.

As used cooking oil is a potential feedstock for biodiesel and its use for making biodiesel will prevent diversion of used cooking oil in the food industry thereby removing the chances of health hazards that can lead to many kinds of serious health diseases such as heart blockages.

The technology to convert waste/plastic into fuel is expected to put 62 MMT of Municipal Solid Waste (MSW) in use and bring a substantial drop in fuels.

The government said the policy is also aimed at infrastructural development in rural areas and give a boost to employment generation as it is estimated that each 100 klpd 2G biorefinery will require around Rs 800 crore capital investments and would contribute 1,200 jobs in plant operations, village level entrepreneurs and supply chain management.

By adopting 2G technologies, agricultural residues/waste, which otherwise are burnt by the farmers can be converted to ethanol and can fetch a price for this waste if a market is developed for the same. Thus conversion of surplus grains and agricultural biomass can help in price stabilisation of the produce.