The Union Cabinet on May 16, 2018 approved the National Policy on Biofuels 2018. The policy categorises biofuels into different groups such as First Generation, Second Generation and Third Generation to enable extension of appropriate financial and fiscal incentives under each category.
Considering that farmers are at a risk of not getting appropriate price for their produce, the Policy allows use of surplus food grains for production of ethanol for blending with petrol, with the approval of National Biofuel Coordination Committee. It encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, used cooking oil and short gestation crops. The policy indicates a viability gap funding scheme for 2G ethanol Bio refineries of Rs 5000 crore in 6 years in addition to additional tax incentives, higher purchase price as compared to 1G biofuels.
The ethanol supply year 2017-18 is likely to see a supply of around 150 crore litres of ethanol which will result in savings of over Rs.4000 crore of forex. Prolonged reuse of cooking oil for preparing food such as deep-frying is a potential health hazard and can lead to many diseases. However, the use of old cooking oil for making biodiesel will prevent the practice of used cooking oil in the food industry.The decline in crop burning and conversion of agricultural wastes to biofuels will further lead to reduction in green house gas emissions.