1 December 2021

Bio-Fuels: Awaiting Their Policy Push!

Luthra and Luthra Law Offices India


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As an aftermath of the climate change debates in the previous decade, a National Policy on Bio-fuels was drafted by Ministry of New and Renewable Energy ("MNRE"), Government of India in 2009.
India Energy and Natural Resources
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As an aftermath of the climate change debates in the previous decade, a National Policy on Bio-fuels was drafted by Ministry of New and Renewable Energy ("MNRE"), Government of India in 2009. However, slow movement in the industry and un-workable commercials for production and usage of bio-fuels have posed a challenge, one that has easily rendered the attention on bio-fuels on the back burner.

With concrete shift of focus of the energy industry towards sustainable and renewable alternatives, the Government has been seen rolling out incentives, schemes and policies to facilitate renewable energy. The same amount of focus is required in Bio-fuels. After a considerable wait, aided by policy concerns, the Government of India, via the Ministry of Petroleum and Gas, Government of India, had finally issued the National Policy on Bio-Fuels in 2018. The wait of almost a decade could have hurt the early-mover's advantage that was presented; however, such is the sensitivity of the sector that any initiative is better late than never.

This National Policy on Bio-Fuels, 2018 targets at doubling of farmer's income, import reduction, employment generation, waste to wealth creation. Bio-fuel programme in India has been largely impacted due to the sustained non-availability of domestic feedstock for biofuel production. Major hurdles have been inadequate manufacturing capacity and non-availability of non-edible vegetable oils and molasses for making biodiesel and bioethanol respectively.

On the other hand, both molasses based bioethanol and vegetable or tree-borne oil-based biodiesel though indeed are renewable fuels, fare badly in terms of net energy ratio and net carbon reduction. While these are genuine concerns at the commercial level, the lack of initiative to buttress these concerns through policy decisions, is a bigger concern.

Municipal solid waste traced and collected, could replace the petrol needs of the country. Agricultural states like Punjab and Haryana, with ample rice straw production, cotton stalks in Maharashtra and Gujarat, and bamboo in Assam Bengal and Odisha all together amount to millions of tonnes of surplus agricultural residues. With proper collection logistics in place, these have the potential to compete with the petrol demands of the country. However, without regulatory support for collection and transfer of these waste products, the scenario for bio-fuels looks stagnant.

India has been spending on research on biofuel technologies for more than a decade through Council of Industrial & Scientific Research, MNRE, Department of Science & Technology and Department of Biotechnology. Legal issues like ownership of potential waste land, security of investment in initial 3-4 years of relevant plantations, provisioning of alternate livelihood for landless or marginal labourers engaged in such plantations, ensuring some level of pricing ceilings and floors to ensure reasonable returns and guarantee of returns are required to be answered while framing and implementing any biofuel policy, which is currently seen lacking. Adoption of any biofuel on commercial level requires adept price parity with petro-products either through subsidization or taxation concessions.

Through the National Policy on Bio-fuels, 2018, the Government of India has undertaken to initiate various financial as well as fiscal measures from time to time to ensure effective development, promotion and adoption of biofuels in the country. The need for research and development in the sector is high and needs adequate support. However, the lack of concrete initiative in this direction has been a major hindrance. No budgetary allocations or policy announcements since 2018 is indicative of slow movement in the sector at both levels, Government as well as corporations. Regulatory by-passes, tax concessions, PLI Schemes etc. are needed to energize this sector.

Unlike USA, which has given incentives at the federal and the state level for bio-fuels, India has lacked the aggression in providing for incentives to supplement the production and consumption of bio-fuel. In comparison to foreign jurisdictions as well as the efforts of India in other sources of energy, bio-fuels being left behind is a dent in the overall efforts towards sustainability.

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