The National Policy on Biofuels is a government policy document, not an Act or a judgment, that aims to increase the use of biofuels in India's energy and transportation sectors. The current iteration, the National Policy on Biofuels, 2018, was notified by the Ministry of Petroleum and Natural Gas, superseding the earlier policy promulgated in 2009 by the Ministry of New & Renewable Energy. It was created to address India's heavy reliance on imported crude oil, promote national energy security, mitigate climate change, and generate employment.
The policy works by setting ambitious blending targets and expanding the scope of raw materials for biofuel production. A key mechanism is the indicative target of achieving 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel. It categorizes biofuels into "Basic Biofuels" (First Generation or 1G) and "Advanced Biofuels" (Second Generation or 2G, and Third Generation). The policy encourages the production of 2G ethanol from non-food crops and waste by offering a viability gap funding scheme of ₹5,000 crore over six years for 2G ethanol Bio refineries. It also allows the use of surplus food grains for ethanol production, subject to the approval of the National Biofuel Coordination Committee (NBCC), which is headed by the Union Minister for Petroleum and Natural Gas.
The policy connects directly to the Ethanol Blended Petrol (EBP) Programme and is aligned with concepts like the Make in India and Atmanirbhar Bharat initiatives, aiming to reduce petroleum imports. The policy was significantly amended in June 2022. The most notable change was advancing the target date for achieving 20% ethanol blending in petrol from 2030 to the Ethanol Supply Year (ESY) 2025-26. The amendment also allowed more feedstocks for biofuel production, permitted the export of biofuels in specific cases, and added new members to the NBCC. The core objective of reducing import dependency and promoting domestic production remained the same.