Sustainable biofuel policy: COP30 ended in Belém with a familiar sense of urgency. Temperatures touched new highs for the third year in a row, global food prices returned to levels last seen a decade ago, and the Russia–Ukraine conflict continued to inject volatility into oil markets. In South Asia, extreme heat undermined irrigation reliability and exposed the vulnerability of agriculture to prolonged climate stress.
These pressures have reopened India’s debate on whether to move beyond the current 20 per cent ethanol–petrol blend. What was once framed as a decarbonisation exercise is now tied to energy security, rural livelihoods, and the negotiating room that biofuels offer emerging economies in forums such as the EU’s Carbon Border Adjustment Mechanism (CBAM) and Article 6 carbon markets. Yet India cannot craft its biofuel future by replicating global blueprints that do not match its ecological or economic realities.
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Brazil’s Success Highlights India’s Constraints
Brazil’s achievements remain unmatched: rain-fed sugarcane produces close to 6,500 litres of ethanol per hectare and anchors an integrated bioenergy system. India’s sugarcane yields are lower and significantly more water-intensive. Each litre of ethanol extracted from cane consumes about 2,800 litres of water, according to the International Water Management Institute. Expanding such water-hungry crops in a country where per capita water availability has fallen by more than 70 per cent since independence is not a sustainable choice. Land scarcity compounds the problem; India simply cannot spare the acreage required to scale first-generation biofuels.
The lesson from Brazil is not about copying its crop choices, but about building a long-term, reliable policy and investment architecture. And that is precisely where India’s challenge begins.
The Rise of a Residue-Based Bioeconomy
A residue-led approach offers a far more suitable path. India generates more than 750 million tonnes of agricultural residues each year — the largest volume in the world. Paddy straw, sugarcane bagasse, cotton stalk, and other biomass streams could yield about 42 billion litres of ethanol-equivalent annually without diverting agricultural land, according to NITI Aayog. Surplus molasses and crude glycerol can meet another fifth of India’s projected ethanol demand.
Second-generation biorefineries extract more energy per tonne of biomass and produce co-products such as lignin, biogas, mixed sugars, fertiliser blends, and industrial biochemicals. Instead of a monocrop fuel economy, India can build a multiproduct biorefinery ecosystem that supports rural incomes, reduces stubble burning, and avoids the biodiversity and land-use penalties associated with 1G feedstocks.
The Missing Piece: Economics and Investment Risks
The sustainability argument, however, is only half the story. The more difficult half concerns the economics of scale. Most 2G ethanol plants in India produce fuel at between ₹85 and ₹110 per litre — far costlier than 1G ethanol. The final prices remain viable only when supported by offtake guarantees, viability gap funding, or long-term purchase agreements. In the absence of such certainties, private investment has been cautious.
A similar experience played out globally. Several 2G projects in the United States and Europe shut down after enzyme costs exceeded projections, conversion yields fell short, or feedstock supply became inconsistent. Investors remember these failures, which is why India must recognise that technological maturity alone does not guarantee commercial success.
Financing is another constraint. The capital cost of a 2G plant is three to four times that of a 1G distillery. Banks are reluctant to lend without a clear revenue visibility, and developers struggle to secure feedstock supply chains. Residues are bulky, seasonal, and unevenly distributed. Moving them from fields to biorefineries requires aggregation centres, baling equipment, storage yards, and short-distance logistics — infrastructure that does not yet exist at scale.
Ignoring these economic realities risks building a model that looks robust on paper but struggles to move beyond demonstration plants.
Why Life Cycle Assessment Still Matters
Even with higher production costs, 2G biofuels offer environmental advantages that 1G fuels cannot match. Sugarcane-based ethanol can reduce emissions by up to 70 per cent compared to petrol, but indirect land-use changes can offset much of the gain. One estimate suggests an iLUC payback period of about 250 years. Residue-based fuel avoids this penalty entirely. It requires far less water, preserves biodiversity, and replaces stubble burning with meaningful value addition.
This is why India must adopt a life cycle assessment lens that accounts for carbon savings, water intensity, soil impact, nutrient cycles, and biodiversity outcomes. Brazil’s model scores well on carbon but less so on land and water. India’s residue-based model delivers a more balanced environmental return per hectare, even if ethanol yields are lower.
Efficiency Beyond Cost: Jobs, Circularity and System Benefits
India is rapidly expanding solar and wind capacity, but cost-per-kWh comparisons obscure the broader role of biofuels. Solar photovoltaic systems convert 15–20 per cent of sunlight into energy; wind fares even better. Biofuels deliver lower energy per hectare, but they outperform renewables on job creation and rural value chains. Studies show that biofuels can generate up to 100 times more rural employment per megawatt equivalent than solar.
When co-products from biorefineries and avoided pollution costs are added, the economic and social multipliers of biomass become clearer. India needs a multidimensional efficiency index that evaluates not just energy output, but water use, biodiversity compatibility, rural livelihoods, and waste reduction.
Biofuels for Hard-to-Abate Sectors
The strategic use of biofuels is as important as how they are produced. India should not divert biofuels to sectors that will naturally electrify, such as cars and two-wheelers. The real opportunity lies in segments where electricity or hydrogen are distant prospects: aviation, long-haul trucking, heavy-duty freight, shipping, and inland waterways. These sectors will continue to rely on liquid fuels for decades. Channeling biofuels here delivers higher climate value for every litre produced.
Biofuel policy: Building India’s Own Blueprint
India’s biofuel future does not lie in replicating Brazil’s fields but in rethinking bioenergy through its own agro-ecological and economic context. Its strengths include abundant residue streams, flexible feedstock options, a strong biotechnology base, and labour-intensive rural markets. But success hinges on creating the investment conditions that 2G fuels need — predictable pricing, long-term purchase commitments, biomass aggregation systems, and financing for integrated biorefinery clusters.
India’s leadership in the Global Biofuel Alliance should translate into standards for life cycle assessment, sustainability certification for tropical ecosystems, and a financial architecture that makes residue-led biorefineries commercially viable.
Biofuels can be a game-changer, but only if India uses them where they matter most and produces them from what it already wastes. A land-neutral, water-resilient, economically viable biofuel strategy is not just desirable — it is the only path consistent with India’s long-term energy and agricultural realities.
Dr Akanksha Jain is a Research Consultant and Dr Debajit Palit is the Centre Head at the Centre for Climate Change & Energy Transition at Chintan Research Foundation.