National Policy on Biofuels

Geography glossary

Also called: NPB 2018 · Topic: Energy Resources of India: Conventional and Non-conventional · NCERT: Beyond NCERT

Meaning

The National Policy on Biofuels (NPB 2018) is India's policy for fuels made from plant and waste material, such as ethanol. It set an indicative target to mix 20% ethanol into petrol by 2030. A 2022 amendment moved this target forward to Ethanol Supply Year (ESY) 2025-26.

It matters because India imports most of its crude oil. Every litre of ethanol mixed into petrol is a litre of imported fuel India does not buy. The same policy also creates a market for farm crops, and that raises questions about water and food.

Explanation

How it works: from crop to fuel tank

  • Step 1: grow and collect the feedstock (the raw plant material that ethanol is made from).

  • Sources: molasses, sugarcane juice, damaged grains, maize and broken rice.

  • Step 2: ferment it. Ethanol is an alcohol. It is made by fermenting plant biomass (letting yeast break down the sugar in the plant).

  • Step 3: blend it. Oil marketing companies (OMCs) mix the ethanol into petrol. The mix is named by its ethanol share:
  • E20 = 20% ethanol.
  • E85 = up to 85% ethanol.

  • E100 = pure ethanol.

  • Result:

  • Less crude oil to import, which helps energy security.
  • Farmers earn from the fuel market.
  • Some fossil fuel in transport is replaced by fuel from biomass.

What the policy set, and how it changed

  • 2013-14: ethanol blending in petrol was below 1.5%.
  • 2018: the NPB set an indicative 20% blending target for 2030. "Indicative" means a goal, not a legal order.
  • 2020-21: NITI Aayog's Expert Committee published the Roadmap for Ethanol Blending in India 2020-25.
  • 2022 amendment:
  • The 20% deadline moved forward to ESY 2025-26.

  • A notification allowed OMCs to sell E100 directly.

  • 6 February 2023: E20 fuel was launched at 84 OMC outlets in 11 States/UTs. It is now sold at more than 15,600 outlets.

  • ESY 2024-25: average blending reached 19.24%.
  • ESY 2025-26: 20% blending was achieved, about five years ahead of the original 2030 target.

Generations of biofuel

  • First-generation (1G) ethanol is made from food or sugar crops: cane juice, molasses, grains and maize.

  • Problem: it competes with food and animal feed, and sugarcane needs a lot of water.

  • Second-generation (2G) ethanol is made from crop residue (stalks and straw left after harvest).

  • Example: IOCL Panipat (2022).

  • It eases the food-versus-fuel conflict because it uses waste, not food.

  • Compressed biogas is a separate biofuel route. It is promoted under SATAT (2018), not through ethanol blending.

Conditions it needs, and the trade-offs

  • Enough feedstock:
  • Food Corporation of India (FCI) rice gave 0.02% of ethanol in ESY 2023-24. By ESY 2025-26, its share had risen to 24.64%.

  • In 2024-25, a total of 5.2 million tonnes of FCI rice was allotted for ethanol, which raised food-security concerns.

  • Water:

  • About 2,860 litres of water go into one litre of ethanol made from sugar, if you count the water used to grow the cane.

  • Inside the plant itself, only 3–5 litres of water are used per litre of ethanol.

  • Vehicles that can take the fuel:

  • Older vehicles may not handle high blends.
  • A vehicle that runs on E20 is not automatically suitable for E85.

Where it occurs

  • Who runs it:
  • The Ministry of Petroleum & Natural Gas (MoPNG) runs the fuel and blending side.

  • The OMCs carry it out through the Ethanol Blended Petrol (EBP) Programme.

  • Where it operates: across India. E20 is sold at more than 15,600 retail outlets. ETHANOL 100 was launched at 183 IndianOil outlets.

  • Where the feedstock comes from:
  • Sugarcane and molasses come from sugar mills.
  • Maize and surplus or broken rice come from grain stocks.

  • Under a scheme notified on 6 March 2025, cooperative sugar mills are being turned into multi-feed plants, which can make ethanol from more than one crop.

  • 2G site: IOCL Panipat (Haryana), which makes ethanol from crop residue (2022).

  • Related vehicle rules: these come from a different ministry, the Ministry of Road Transport and Highways (MoRTH). It amended the Central Motor Vehicles Rules, 1989, to allow E100 in flex-fuel vehicles. Flex-fuel vehicles can run on petrol, on any ethanol blend or on pure ethanol.

Don't confuse with

  • Ethanol Blended Petrol (EBP) Programme: the NPB is the parent policy that sets the targets. The EBP is the programme through which MoPNG and the OMCs actually blend the fuel.
  • E100 / flex-fuel vehicle rules: these are vehicle rules issued by MoRTH under the CMVR 1989. The NPB blending targets come from MoPNG. E85 and E100 are allowed only in flex-fuel vehicles designed by the vehicle makers (original equipment manufacturers, or OEMs). No one is forced to switch.
  • SATAT: SATAT promotes compressed biogas, a gas used as vehicle and industrial fuel. The NPB's main target is liquid ethanol mixed into petrol.
  • 2030 vs 2025-26: 2030 was the original 2018 target year. The 2022 amendment moved it to ESY 2025-26.

Prelims Hooks

  • NPB came in 2018 and was amended in 2022. The 20% blending target moved from 2030 to ESY 2025-26.
  • Blending rose from below 1.5% (2013-14) to 19.24% (ESY 2024-25) to 20% (ESY 2025-26).
  • E20 was launched on 6 February 2023 at 84 outlets in 11 States/UTs.
  • The 2022 amendment allowed OMCs to sell E100 directly.
  • Feedstocks: molasses, cane juice, damaged grains, maize and broken rice. 2G ethanol from crop residue is made at IOCL Panipat (2022).
  • Trap: the blending policy belongs to MoPNG, while E100 vehicle rules come from MoRTH. An E20-compatible vehicle is not E85-ready.

Mains Points

  • Energy security vs food security (GS-III):
  • Blending cuts crude imports and gives farmers a new market.
  • But FCI rice's share of ethanol jumped from 0.02% to 24.64% in two years.
  • Grain surplus changes from year to year, so a bad harvest could force a choice between fuel and ration stocks.

  • ICRIER suggests a flexible blending programme that uses FCI rice only when there is a real surplus.

  • Water stress (GS-III, environment):

  • Counting crop water, ethanol from sugar uses about 2,860 litres of water per litre. Counting only plant water, it uses 3–5 litres.
  • Growing more cane for ethanol could speed up groundwater depletion in dry regions.

  • Analysts argue that a water audit is needed before going beyond E20.

  • Policy responses:

  • Multi-feed cooperative sugar mills reduce dependence on cane alone.
  • 2G ethanol from crop residue (IOCL Panipat) avoids using food.
  • Both widen the supply of ethanol without taking more food or water.

Recent developments

  • July 2026: no decision yet on going beyond E20. The Government said it has not decided to raise ethanol blending above 20%. So E20 (20% ethanol in petrol) is still the ceiling for now, and E27 or E30 is not official policy. This matters because the water and food-security concerns would only grow if the blend went higher.
  • 2022 amendment and feedstocks (newly highlighted in 2026): The 2022 amendment did more than move the E20 deadline to ESY 2025-26. It also formally widened the permitted feedstocks (the raw material ethanol is made from) to include damaged food grains and broken rice. This is the legal basis for diverting FCI rice to ethanol, and it links the NPB directly to the food-versus-fuel debate.
  • November 2026: the E20 fuel-quality dispute. Karnataka claimed in October 2026 that some pumps sold petrol with 26–31% ethanol. On 7 November 2026, MoPNG and the OMCs replied that all 893 samples across 27 States/UTs were within the 19–21% band set by IS 17021, a BIS standard. This shows that E20 means a permitted range, not exactly 20%. It also shows that testing fuel quality depends on Centre–State coordination under the Essential Commodities Act, 1955.

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