Draft National Biofuel Policy target 20% blending by 2017

MNRE invites comments on New National Bio-Fuel Policy by 20th September 2015 via email to biofuels.mnre@gov.in

Preamble/Need for the Policy:

  1. As a fast developing nation its is a requirement of India to become energy sufficient and achieve energy security with sustainable solutions
  2. Dependence on imports and fluctuating price of crude oil from $140 to $39
  3. Unique approach of India for biofuels so it does not have any conflict with food security, by using only wastelands and non-feedstock for bio-fuel production.
  4. The Policy sets out the Vision, medium term Goals, strategy and approach to biofuel development, and proposes a framework of technological, financial and institutional interventions and enabling mechanisms.

Vision and Goal of Policy

  1. Making bio-fuels main stream source of energy with support of central government
  2. Substituting Petrol and Diesel with an initial target of 20% blending by 2017
  3. Providing alternative sustainable source with accelerated development and cultivation of bio-fuels
  4. Creating new jobs

Scope of Policy

  1. ‘Bio-ethanol’: ethanol produced from biomass such as sugar containing materials, like sugar cane, sugar beet, sweet sorghum, etc.; starch containing materials such as corn, cassava, algae etc.; and, cellulosic materials such as bagasse, wood waste, agricultural and forestry residues etc. ;
  2. ‘Biodiesel’: a methyl or ethyl ester of fatty acids produced from vegetable oils, both edible and non-edible, or animal fat of diesel quality; and,
  3. Other biofuels: bio-methanol, biosynthetic fuels etc.

Strategy and Approach

  1. Focus on development of next generation technology on non-feedstock based technology
  2. All inclusive approach by involving farmers, laborers and corporates to undertake cultivation supported by Minimum Support Price for the non-edible oil seeds used to produce bio-diesel.
  3. Provide level playing fields with fossil fuels with required financial support
  4. Thrust on R&D of second-generation bio-fuels and other feedstock for production of bio-diesel and bio-ethanol.

Interventions And Enabling Mechanisms

  1. Plantation:
  • Potential of more than 400 species of trees bearing non-edible oil seeds will be exploited
  • Consultation of local community and gram-panchayat in identifying the land for plantation. The Provision of PESA would be respected in Fifth Schedule Areas.
  • Minimum Support Price will be announced in consultation with all stake holders with provision of periodic revision, this will be reviewed by National Bio-fuel Coordination Committee
  • Concept of Statuary Minimum Price (SMP) prevalent in sugarcane price determination will also be studied.
  • Payment of SMP would be the responsibility of the bio-diesel processors. Certain States has already declared different levels of Minimum Support Price for oilseeds.
  • Employment provided in plantation will be made eligible under NREGP
  1. Processing
  • 5% blending of ethanol is already done in most of the states and sugar industry already allowed to produce ethanol directly from sugarcane juice.
  • The sugar industry will be promoted to augment the ethanol production
  • Village level units for bio-oil extraction and promoting industries for setting up bio-oil processing units.
  • Blending level will be based on the availability of bio-fuels. National Register Feedstock will be maintained to avoid demand supply mismatch
  • Oil Marketing company (OMC) will be allowed to stock bio-diesel and bio-ethanol
  • The blending will be done as per BIS standards
  1. Distribution & Marketing of Bio-fuels
  • The responsibility of storage, distribution and marketing of biofuels would rest with OMCs.
  • The Minimum Purchase Price (MPP) of bio-diesel will be linked to pricing of retail diesel price
  • MPP of bio-ethanol will based on actual cost of production and import price.
  • In case of MPP of bio-fuels falling below price of diesel and petrol, Government will compensate OMCs.
  1. Financing
  • Activities related to bio-fuels ranging from plantation to storage and distribution will be declared priority-lending sector.
  • NABARD will be providing re-financing for plantation
  • IREDA, SIDBI and other commercial banks will be providing financing across the value chain
  • 100% FDI will be allowed in bio-fuel technologies, only for domestic use
  • Planation will be kept out of FDI
  1. Financial and Fiscal Incentives
  • Financial incentives for second generation technology with option of creating National Bio-fuel Fund
  • All incentives applicable to Renewable Energy
  • Concession and exemption from excessive duty
  • Custom duty concession for plant and machinery
  1. Research & Development and Demonstration
  • High priority in developing indigenous technology across value chain
  • R&D for improving efficiencies of end use applications
  • Time bound multi-institutional research program with clearly defined goal will be supported
  • Demonstration project under PPP model
  • In regard to Research and Development in the area of biofuels, a Sub- committee under the Biofuel Steering Committee proposed in this Policy comprising Department of Bio-Technology, Ministry of Agriculture, Ministry of New and Renewable Energy and Ministry of Rural Development would be constituted, led by Department of Bio-Technology and coordinated by the Ministry of New and Renewable Energy.

International Cooperation

  • Joint research and technology programs will be initiated
  • Technology transfer with ultimate goal of developing domestic technology

Import And Export Of Biofuels

  • Imports be governed by National Biofuel Coordination Committee
  • Import duties to ensure that price of imported fuel is not less than domestic fuels
  • Import of Free Fatty Acid oils will not be permitted
  • Export will be allowed only after meeting domestic requirement and will be governed by National Biofuel Coordination Committee

Role Of States

  • States to play crucial role by designating empowered and well funded agency to act as nodal agency
  • States required to have suitable policy in line with National Biofuel Policy
  • States will decided on land usage for plantation

Awareness And Capacity Building

  • Support for creating awareness about import of biofuels in energy sector
  • Thrust on capacity building by introducing required courses at different levels
  • Enhancing consultancy capabilities for supporting sector

Institutional Mechanisms

  • MNRE will be responsible for policy making and overall coordination
  • Responsibility allocation to under ministries as well including MoEF, MoPNG, MoRD and Ministry of Science and Technology.
  • As multi ministry at high level is involved National Biofuel Coordination Committee under chairmanship of Prime Minister will be constituted
  • Biofuel Steering Committee headed by Cabinet Secretary and membered by sectaries of other concerned department for following the progress on continuous basis

IndianPowerSector.com View

  • The draft seems to be old with oil pricing and blending references of 2008 and 2009
  • The source and amount of funding is not defined, this may be fine tuned
  • The price of oil has fluctuated from $ 140 to $ 39 per barrel, in such fluctuating market how will price determination be done.
  • The target of 20% blending by 2017, seems unrealistic
  • What will be the expected subsidy burden on government to guarantee MSP and fund allocation for it.
  • Not allowing FDI in plantation for protecting farmers stake is good move, however, foreign investment will be reluctant if raw material supply will not be in there hand
  • Will wastelands be suitable for the plantation of feedstock, is there any study conducted by MNRE or other department on this.
  • What will be the impact of such plantation on irrigation available in the area, also to be used for food grain farming

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1 Response

  1. makhdum ali says:

    I want to instal bio ethanol plant what are facilitating through Karnataka govt to enterpener s

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