| Reference Date | Version | November 2, 2023 | 1.0 |
| Keywords | Biofuel, Renewable, GHG emissions, Ethanol |
| Legislation(s) |
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| Jurisdiction | India |
The relationship between technology, infrastructure and energy is multidimensional and a balanced and sustainable approach is required for a green and sustainable future.
Expert guidance from energy legal advisor and infrastructure legal advisor is advisable to handle projects in these areas as an integrated approach would be required which needs to flow down to transaction and documentation structuring.
Introduction
Recently, India has advanced the target of 20 percent ethanol blending in petrol by Ethanol Supply Year 2025-26 (December to November).
The Ethanol Blended Petrol program aims to:
- Protect the economic interests of farmers
- Reduce import bill and increase self-reliance
- Lower CO2 emissions and create a cleaner environment
- Encourage Ease of Doing Business through Technology
Bio-fuels might seem like a viable solution towards reducing India’s reliance on imports to meet its crude requirements and to reduce Greenhouse Gas (‘GHG’) emissions.
Is it? There may not be an easy answer.
It would be relevant to examine the present legal and policy landscape concerning bio-fuels in India.
This article aims to decode India’s Biofuels Policy and examine the regulatory roadmap, and identify the issues in the context of the larger picture.
What are Biofuels?
As defined by the Food and Agriculture Organization of the United Nations, “fuel produced directly or indirectly from biomass is named biofuel”. [1]
The Organisation for Economic Co-operation and Development defines ‘biofuel’ as:
“liquid, solid, or gaseous fuel produced by conversion of biomass such as bioethanol from sugar cane or corn, charcoal or woodchips, and biogas from anaerobic decomposition of wastes.” [2]
Generally, the term biofuels is used to exclusively refer to liquid or gaseous biofuels for the transport sector. [3]
‘Biomass’ is a renewable resource as its source of energy can be traced to the sun.
However, it is also limited as it requires finite resources such as land, water, and nutrients for production.
There is also a growing concern about the competitive uses of biomass and its limited availability, which requires an accurate analysis of the biomass demand concerning the existing potential for the development of a sustainable bioeconomy. [4]
A brief introduction to ‘biofuels’ is given below to place the biofuel policy of India in context.
The National Policy on Biofuels defines ‘biofuels’ as:
“fuels produced from renewable resources and used in place of or in blend with diesel, petrol or other fossil fuels for transport, stationary, portable and other applications.” [5]
‘Biomass resources’ are defined as:
“the biodegradable fraction of products, wastes and residues from agriculture, including vegetal and animal substances, from forestry and related industries, as well as the biodegradable fraction of waste, including industrial and municipal waste of biological origin.” [6]
We may subdivide biofuels into four categories based on the feedstock used in production:
- First-generation biofuels: Produced from edible oils such as rapeseed, soybeans, sunflower, safflower, palm oil, coconut, and peanut. Large-scale utilization would significantly impact the global food supply and hence are not considered sustainable.
- Second-generation biofuels: Produced from lignocellulosic feedstocks and municipal solid wastes. These are considered greener because they are made from sustainable feedstocks.
- Third-generation biofuels: Mainly made from algae due to their relatively high yields and low resource inputs.
- Fourth-generation biofuels: Require genetically engineered microorganisms and biomass to enhance biofuel yields.
Based on the chemical nature of biofuels, they can be classified into biodiesel, bioethanol, biomethane, biohydrogen and other categories.
Why Biofuels?
Indigenous production of biofuels will undoubtedly aid in reducing India’s dependence on imports of crude and also reduce GHG emissions.
Of course, biomass cannot realistically fulfill India’s future energy demands.
However, the versatility of biomass with the diverse portfolio of conversion options makes it possible to meet the demand for secondary energy carriers.
To avoid CO2 emissions, replacing natural gas is, at present, a highly selective way of using biomass.
Replacing natural gas with biomass for power generation results in levels of CO2 mitigation similar to second-generation biofuels.
Using biomass for transport fuels has the potential to become more attractive from a CO2 mitigation perspective because of their lower GHG emissions.
Policy and Legal Framework
Law-making Power
In India, the law-making power can broadly be understood as follows:
In relation to matters falling under List I of the 7th Schedule of the Constitution of India, the Centre has the power to make laws.
The State has the power to make laws with respect to matters falling in List II of the 7th Schedule of the Constitution of India.
Both the Centre and State have the power to make laws with respect to matters falling in List III of the 7th Schedule of the Constitution of India.
Subject matters relevant for the production and utilization of bio-fuels are identified below:
List I
- Entry 41. Trade and commerce with foreign countries; import and export across customs frontiers.
- Entry 50. Establishment of standards of weight and measure.
- Entry 53. Regulation and development of oilfields and mineral oil resources.
- Entry 83. Duties of customs including export duties.
List II
- Entry 8. Intoxicating liquors.
- Entry 14. Agriculture.
- Entry 25. Gas and gas-works.
List III
- Entry 33. Trade and commerce in products of industry and foodstuffs.
- Entry 33A. Weights and measures except establishment of standards.
- Entry 34. Price control.
- Entry 36. Factories.
- Entry 38. Electricity.
Overview
India does not have a single legislation which addresses issues in respect of biofuels.
Several legislations, schemes and programs affect the production and utilization of biofuels.
Foreign Trade
The import and export of biofuels has been restricted by the Government.
The import of biofuels is ‘Restricted’ under three Harmonized System (HS) codes.
Export of biofuel is permitted under license only for non-fuel purposes.
Export of Biofuels from Special Economic Zones (SEZ)/Export Oriented Units (EoUs) is allowed for fuel as well as non-fuel purposes without restriction when produced using only imported feedstock.
Weights and Measures
There is a need for a robust metrology infrastructure with respect to biofuels in order to:
- Develop measurable criteria for the assessment of biofuel quality.
- Set up systems to trace the origin and differentiation of biofuels.
- Provide a reference for the physical and chemical characteristics of biofuels.
Environment
The Ministry of Environment, Forest and Climate Change (MoEF&CC) and State Environment Impact Assessment Authorities issue Environmental Clearance under the Environment Impact Assessment Notification issued under the Environment (Protection) Act, 1986.
Thermal Power Plants up to 25 MW based on biomass or Municipal Solid Waste using auxiliary fuel up to 15% are exempt from Environmental Clearance requirements.
The Central Pollution Control Board has categorized Compressed Biogas (CBG) plants under various categories such as Orange, Green and White based on pollution index.
Renewable Energy
The Electricity Act, 2003 and Renewable Energy Certificate Regulations govern renewable energy generation from biofuels.
The certificate multiplier for Municipal Solid Waste and non-fossil fuel-based cogeneration technology is 2.
The multiplier for Biomass and Biofuel technology is 2.5.
Foreign Direct Investment
Foreign investment in the plantation sector is permitted only for tea, coffee, rubber, cardamom, palm oil tree and olive oil tree.
In the absence of any specific restriction, foreign direct investment in the biofuel sector is permitted up to 100% on the automatic route, subject to applicable laws and regulations.
Standards
The Bureau of Indian Standards has developed several Indian standards relating to biofuels, including:
- IS 15464 : 2022 – Ethanol blending component in Motor Gasoline
- IS 15607 : 2022 – Biodiesel B-100 Specification
- IS 16087 : 2016 – Biogas Specification
- IS 17021 : 2018 – E20 Fuel Specification
- IS 17821 : 2022 – Ethanol as Fuel for Positive Ignition Engines
Government Policy Statements
National Biodiesel Mission 2003
This mission initiated the journey of the National Biodiesel Mission in India.
The first phase aimed to convert wasteland suitable for Jatropha farming.
The second phase aimed to create a self-sufficient biodiesel industry backed by private sector and international investment.
Bio-Diesel Purchase Policy 2005
Oil marketing companies were mandated to purchase biodiesel (B100) through purchase centres.
National Policy on Biofuels 2018
The Ministry of Petroleum and Natural Gas notified the National Policy on Biofuels – 2018.
The policy was amended in 2022 to advance the introduction of twenty percent Ethanol Blended Petrol throughout the country.
The policy focuses on:
- Increasing domestic ethanol and biodiesel production
- Setting up second-generation bio-refineries
- Developing new feedstock and technologies
- Creating a suitable ecosystem for biofuels
SATAT
The Sustainable Alternative Towards Affordable Transportation (SATAT) initiative was launched on October 1, 2018.
It aims to establish an ecosystem for producing Compressed Bio Gas (CBG) from various waste and biomass sources.
Integrated Bio-Refinery Model
The Government envisions integrated bio-refinery parks encompassing:
- 2G Ethanol Plants
- 1G Ethanol Plants
- CBG Plants
- Chemical production units
- Cogeneration plants
Global Biofuel Alliance 2023
The Global Biofuel Alliance was launched on September 9, 2023 during the G20 Summit in New Delhi.
It aims to intensify the use of sustainable biofuels, facilitate technology advancement, shape standards and certification systems and foster global collaboration.
The Alliance is expected to support India’s biofuel initiatives including PM-JIVAN Yojna, SATAT and the GOBARdhan scheme.
Viewpoint
- It would be useful to appreciate the biofuel policy with a multidimensional approach to address energy security, sustainability and climate change.
- Reliance on biofuels alone may lead to unintended consequences such as unsustainable land use and competition with food production.
- There is an urgent need to develop standardized methods and practices to assess life-cycle impacts, sustainability criteria and GHG emissions associated with biofuels.
- The roadmap for Ethanol Blending in India has identified challenges including feedstock availability, transportation costs, storage infrastructure and engine optimization for higher ethanol blends.
A singular approach may not address India’s goal to achieve ‘atmanirbharta’.
A multidimensional analysis of the impact of the biofuel policy and implementation status would help evolve parameters for measuring India’s progress towards Sustainable Development Goals.
Sources
[1] FAO, 2004, Unified Bioenergy Terminology (UBET).
[2] OECD, 2002.
[3] OECD Agricultural Outlook: 2002–2007.
[4] Scarlat et al., 2015.
[5] National Biofuels Policy, 2018.
[6] Directive 2009/28/EC of the European Parliament.
[7] Notification S.O.1533(E) dated 14.09.2016.
[8] MoEF&CC Notification dated 14th July 2022.
[9] Central Pollution Control Board Pollution Index Classification.
[10] Clause 2.2, National Policy on Biofuels – 2018.
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