Fact Box: National Policy on Biofuels

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The union government recently has approved a National Policy on Biofuels, which encourages the generation and use of biofuels such as ethanol.

Addressing various challenges through the new policy:

Raw material

  • The policy tries to address supply-side issues that have discouraged the production of biofuels within the country.
  • The policy allows for a wider variety of raw materials to be used as inputs to produce ethanol that is blended with petrol. Until now, only ethanol produced from sugarcane was approved for this purpose.
  • The new policy allows feedstock for biofuels which includes sugar beet, corn, damaged food grain, potatoes, even municipal solid waste for the generation of bio-wastes.
  • This will likely reduce the cost of producing biofuels and improve affordability for consumers, particularly during times when oil prices reach discomforting levels.

Addressing the bottlenecks

  • In India the industrial-scale availability of ethanol was only from sugar factories which were free to divert it to other users such as alcohol producers who would pay more.
  • Even though oil companies used to float tenders for ethanol, the availability was in question due to the non-attractiveness of the price.
  • The Centre hopes the new policy will also benefit farmers, who will be able to sell various types of agricultural waste to industry at remunerative prices.

Saving of Forex

  • As per the government estimates ethanol supply of around 150 crore litres in 2017-18 could save foreign exchange worth over ₹4,000 crore.

Air pollution

  • The production of biofuels from agricultural waste, it is hoped, will also help curb atmospheric pollution by giving farmers an incentive not to burn it, as is happening in large parts of northern India. This will aid in tackling the pollution challenges of India.