The biofuel business in India is expected to touch ₹50,000 crore by 2022, based on the demand of petrol and diesel in the country, said Dharmendra Pradhan, Minister of State (Independent Charge) for Petroleum and Natural Gas, on Wednesday.

Currently, the bio-diesel and ethanol industry in India is worth ₹6,000 crore. However, this is mainly driven by ethanol procurement.

In the current sugar year (October 2015-September 2016), public sector oil marketing companies will be able to supply four per cent of ethanol blended fuel by procuring 120 crore litres of biofuel.

Bio-diesel procurement started only in 2014 and a pilot programme started in August 2015. It has now been extended to six States.

“With five per cent blending of bio-diesel, the requirement of bio-diesel will be 675 crore litres by 2022 or a business size of around ₹27,000 crore while ethanol requirement for 10 per cent ethanol blended petrol will be 450 crore litres or a business size of ₹23,000 crore,” said Pradhan while speaking at a national conference on biofuels.

Pradhan sees the size of the biofuels industry rising to close to ₹1.25 lakh crore by 2040, if demand for petrol and diesel grows as per the International Energy Agency’s outlook.

The Minister also assured the industry stakeholders all necessary policy support to biofuel manufacturers provided that the raw material or feedstock is procured in India.

“Our condition is that the raw material has to be sourced from India. Our message to the industry is to manufacture as much energy as possible from the waste that is generated in India,” the Minister said.

In December 2014, the government fixed a price of ₹48.50 to ₹49.50 per litre for procurement of ethanol for blending in petrol. The price is costlier than the cost of producing petrol which is why Pradhan also indicated that there may be a move towards market linked pricing.

“We need to move away from the fixed price and move towards linking the price to market dynamics,” he said.

At the event several investment announcements by the biofuels industry was also made. Till 2019, a total of ₹12-13,000 crore is expected to be invested by the biofuel industry.

Praj Industries will set up multiple biofuel refinery projects worth ₹2,500-3,000 crore over the next two years. Numaligarh Refinery Ltd will also develop a plant for processing 3 lakh tonne of ethanol from bamboo with an investment of ₹950 crore.

Public sector oil marketing companies will invest ₹5,000 crore to set up nine 2nd generation ethanol plants based on lingo-cellulosic biomass.

Further, CRI Catalyst Company, a subsidiary of global oil and gas major Shell, entered into a licensing agreement for its IH2 Technology with Sunlight Fuels India Ltd for commercial production of biofuel by converting 500 tonne of dry bagasse per day into 150 tonne of liquid hydrocarbon transportation fuel per day.

Shell India Markets Pvt Ltd will also set up a demonstration plant which would convert 5 tonne of dry bagasse per day into liquid hydrocarbon transportation fuel.

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