The National Policy on Biofuels, 2018 is a policy concept notified by the Ministry of Petroleum and Natural Gas on June 4, 2018, in supersession of the earlier 2009 policy promulgated by the Ministry of New and Renewable Energy. Its creation was driven by the need to reduce India's heavy dependence on imported crude oil, mitigate climate change, and provide an additional income source for farmers. The policy aims to increase the usage of biofuels in the energy and transportation sectors, contributing to national energy security and the Make in India initiative.
The policy works by categorizing biofuels into "Basic Biofuels" (First Generation or 1G bioethanol and biodiesel) and "Advanced Biofuels" (Second Generation or 2G ethanol, and Third Generation or 3G biofuels like bio-CNG) to extend appropriate incentives. A key mechanism is the expansion of raw materials, or feedstock, for ethanol production to include sugarcane juice, sugar beet, and damaged food grains like broken rice and rotten potatoes unfit for human consumption. It also allows the use of surplus food grains for ethanol production, subject to the approval of the National Biofuel Coordination Committee (NBCC).
The policy was significantly amended in May 2022. The most notable change was advancing the indicative target of 20% blending of ethanol in petrol (E20) from the original deadline of 2030 to the Ethanol Supply Year (ESY) 2025-26. The amendment also allowed more feedstocks, promoted biofuel production under the Make in India program by units in Special Economic Zones (SEZ), and granted permission for the export of biofuels in specific cases. This policy connects directly to the Ethanol Blended Petrol (EBP) Programme, which was first launched in 2003.