The Union Cabinet on Wednesday unveiled a comprehensive biofuels policy which, among other things, allows farmers to divert excess crop produce for biofuels production and sets aside ₹5,000 crore to help establish second-generation (2G) ethanol refineries.

The National Biofuels Policy 2018 seeks to expand the range of feedstock available for ethanol production beyond sugar molasses, an official statement said.

Sugarcane juice, sugar-containing crops like beet, sorghum, corn and cassava, and damaged grains unfit for human consumption, such as rotten potato, wheat and broken rice, can be considered for ethanol production.

Besides, farmers who are “at risk of not getting the appropriate price for their produce during the surplus production phase” can use the surplus grains to generate ethanol which cannot be blended with petrol, provided they have the approval of the National Biofuels Coordination Committee, the statement said.

The policy will offer a mechanism to address the mounting municipal solid waste problem in the country by converting it into drop-in fuels.

The new policy also proposes a viability gap funding scheme of ₹5,000 crore for 2G biorefineries, to be deployed over six years.

The scheme will be in addition to other incentives and higher purchase prices available to 2G biofuels as compared to 1G biofuels (bioethanol and biodiesel).

Oil marketing companies are in the process of setting up 12 2G bio refineries at an investment of around ₹10,000 crore.

To source non-edible oilseeds, used cooking oil and short-generation crops to produce biodiesel, the policy suggests the setting up of supply chain mechanisms.

To synergise efforts to improve biofuels production, the policy delineates the roles and responsibilities of various ministries and departments.

Forex savings

According to the statement, the total ethanol production for fuel blending in 2017-18 is expected to be 150 crore litres, leading to forex savings of ₹4,000 crore.

There will be considerable environmental and health benefits, as the use of 1 crore litre in fuel blending reduces CO2 emission by 20,000 tonnes.

Besides, the use of crop residues such as rice and wheat straw for biofuels production will further bring down toxic emissions, it said.

Further, the 2G ethanol refineries will improve infrastructure in rural areas and create thousands of jobs in plant operations and supply chain management, in addition to promoting village level entrepreneurship, the statement added.