India Sets Target of 20% Biofuels by 2017

12 September 2008

India’s Cabinet approved implementation of the National Biofuel Policy that sets an indicative target of 20% ethanol and biodiesel in transportation fuel by 2017.

The country currently sells 5% ethanol blended gasoline (E5) and has a number of pilot projects underway with biodiesel. The ethanol component is due to double next month to 10% (E10), but availability of sugarcane for ethanol feedstock may hinder achieving that deadline.

The new policy scraps taxes and duties on biodiesel, and confers “declared goods status” on both—meaning that they will be taxed at a uniform central rate rather than varied sales tax rates prevalent in states.

Blending will use standardized protocols and certifications, which the industry and oil marketing companies (OMCs) will jointly establish.

Importing of free fatty acid is prohibited, as that would hinder indigenous development of plantations of non-edible oil seeds (e.g., jatropha) which provides employment in rural areas.

While biodiesel plantations on community or government wastelands are encouraged, the government is discouraging planting on fertile or irrigated land areas.

The Cabinet also approved establishing a National Biofuel Coordination Committee to be chaired by the Prime Minister and have seven member ministers, while also approving the establishment of a Biofuel Steering Committee.

The Steering Committee will be chaired by the Cabinet Secretary which, along with the National Biofuel Coordination Committee will be serviced by the Ministry of New and Renewable Energy.

A sub-committee, comprising the Department of Biotechnology and the Ministries of Agriculture, New and Renewable Energy and that of Rural Development under the Steering Committee will aid research on bio-fuels.

A minimum support price (MSP) for oil seeds will be determined and ensured with provisions for its periodic revision to provide a fair price to farmers, which would be looked into by the Steering Committee.

Consumption of gasoline in India as indicated by sales has climbed 56% over the past 8 years, from 6.613 million tonnes in 2000-2001 to an expected 10.327 million tonnes (approximately 3.8 billion gallons US) in 2007-2008, according to statistics from India’s Ministry of Petroleum and Natural Gas.

Sales of high speed diesel oil (HSDO) are expected to decrease slightly to 42.847 million tonnes (about 13.1 billion gallons US).