Biofuels are fuels produced from renewable resources and used in place of or blended with diesel, petrol, or other fossil fuels for transport, stationary, portable, and other applications.
Types: Categorised into four generations (refer to infographic).
Key Players: The USA is the largest producer followed by Brazil.
It includes ethanol and biodiesel blending, Compressed Biogas (CBG), Sustainable Aviation Fuels (SAF), etc.

The below infographic gives details about evolution of biofuels from first to fourth generation.

Significance of Biofuels

Environmental Benefits: Biofuels can reduce well-to-wheel emissions by up to 80% compared to their fossil fuel counterparts.
- Biofuels also tackle the issue of stubble burning, by using the stubble itself to create biofuel. E.g. Asia's first 2G Ethanol bio-refinery in Haryana.
Energy Security: E.g., During the last ten years, ethanol blending in petrol by Public Sector Oil Marketing Companies (OMCs) has resulted in savings of more than Rs. 1,13,007 crore of foreign exchange (as of 2024).
- Biofuels could also aid mitigate the impact of recurrent volatilities in the oil and gas sector.
Circular Economy/Waste Management: Enables circularity by employing waste (e.g., waste Municipal Solid Waste Management) for wealth creation and delivering wider socioeconomic benefits.
Fostering Rural Economy: Provides additional financial incentives to farmers through the development of the market for agricultural residues/wastes.
- Also, additional income for farmers through biofuel crop production.
Downstream Product Applications:
- Renewable methanol can be used to produce a wide range of polymers and fuels.
- Biofuel production also generates byproducts with widespread industrial applications. E.g., Crude glycerin, obtained from the production of biodiesel

Existing Challenges with Biofuel

Feedstock challenges:
- Feedstock for biofuels competes with other commercial applications of feedstock – for instance, forest residue is also used in paper manufacturing.
- Seasonal and regional availability of agricultural waste. E.g. Paddy straw
- Lignocellulosic biomass is quite resistant to breakdown and affects the commercial viability of advanced biofuel production.
Infrastructure Constraint: E.g. Absence of decentralised storage and sorting facilities.
Food Security vs. Fuel Dilemma: Including major crops like Sugar to produce more biofuels will further negatively impact India's food security.
Funding Requirement: Investments of at least USD100-270 billion in biofuels by 2030 are necessary to meet the targets outlined in current policies.(International Energy Agency (IEA))
Competition from Conventional Fuel: SAF is between 2-10x more expensive than conventional jet fuel.
Low Energy Efficiency: Biofuels have less energy density than fossil fuels, requiring greater volume to offer equal power output. E.g. Diesel provides 46 megajoules of energy per kilogram whereas Biodiesel provides 38.

Key Initiatives/Steps which Promoted Production of Biofuels

Policy and Roadmap Initiatives

National Policy on Biofuels (2018, amended in 2022): Expanded the feedstock base for biofuels, allowing sugarcane juice, damaged grains, and agricultural waste.
- Also, introduced incentives for second-generation (2G) biofuels.
Ethanol Blended Petrol (EBP) Programme: India has achieved 19.6% ethanol blending in petrol (as of January 2025) and is on track to reach 20% a target by 2025 ahead of its original 2030 target.

Infrastructure & Production Support

Pradhan Mantri JI-VAN Yojana (2019): Promotes latest advancements in 2G ethanol capacity.
GOBAR-Dhan (Galvanizing Organic Bio-Agro Resources) Scheme: Promotes biogas and compressed biogas (CBG) from agricultural waste and animal dung.
Sustainable Alternative Towards Affordable Transportation (SATAT) Initiative (2018): To extract economic value from bio-mass waste in the form of Compressed Bio Gas (CBG) and bio-manure.

International Collaborations

Global Biofuels Alliance (2023): India-led initiative to promote biofuel production and technology exchange.
Bilateral Mechanism: India and Brazil have launched a Center of Excellence on Ethanol.
- Technical exchange initiatives are improving the production efficiency of sugarcane/molasses ethanol.

Other

Reduction of GST rate for procurement of biodiesel for blending programme from 12% to 5%.
Roll out of E20 fuels, ETHANOL 100, etc.

Conclusion

India's rise as the third-largest biofuel producer highlights its push for energy security and decarbonization. While biofuels offer economic and environmental benefits, challenges like feedstock shortages and high costs persist. Strengthening R&D, policy support, and global collaboration will be key to scaling sustainable biofuel production for a cleaner, self-reliant future.