What is the Global Biofuel Alliance and How is India Contributing to It?

Several G20 nations, led by India, Brazil, and the US, along with 12 international organizations, spearhead the Global Biofuel Alliance for technology investment, expert collaboration, and global standards to reduce hydrocarbon reliance.

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The Global Biofuels Alliance is an initiative spearheaded by the G20, with a core membership comprising seven member nations: Argentina, Brazil, Canada, India, Italy, South Africa, and the USA. The initiative also enjoys the support of eight other nations, which include Sri Lanka, Kenya, Paraguay, Seychelles, Uganda, Iceland, Finland, and Guyana. Bangladesh, Singapore, Mauritius, and the UAE are G20 invitee countries who support the Alliance.

Beyond member countries, there are 12 international organizations that have joined this initiative. They are the World Bank, the Asian Development Bank, the World Economic Forum, the World LPG Foundation, UN Energy for All, UNIDO, the Biofutures Platform, the International Civil Aviation Organization, the International Energy Agency, the International Energy Forum, the International Renewable Energy Agency, and the World Biogas Association.

What is the Global Biofuel Alliance?

The purpose of the Global Biofuel Alliance is to work alongside private sector companies to build and transform the biofuel capacity of member states, across their value chains.

The Global Biofuel Alliance hopes to serve as a catalytic platform that will act as a central repository of knowledge and an expert hub, facilitate technological advancements, increase the use of sustainable biofuels, and shape robust standard setting and certification through the participation of a diverse range of stakeholders.

The Global Biofuel Alliance will be instrumental to the achievement of various UN Sustainable Development Goals (UNSDG), in particular, SDG-7 (provide access to affordable, reliable, sustainable, and modern energy for everyone).

The Alliance’s objectives also align with decarbonization efforts to meet climate action imperatives.

Why are biofuels important?

The fundamental benefit of biofuels is that they may provide a low-carbon alternative to fossil-fuel-based liquid transportation fuels, such as gasoline, diesel, and aviation fuels, while also assisting in the reduction of carbon emissions.

The Global Biofuel Alliance is committed to producing second-generation (2G) ethanol, derived from agricultural waste, used cooking oil, and processed animal byproducts like fats.

During the G20 summit held in India, participating stakeholders unanimously endorsed the New Delhi Declaration 2023, acknowledging “the importance of sustainable biofuels in our zero and low-emission development strategies” and “the establishment of a Global Biofuels Alliance.”

This increasing focus on clean fuels, particularly biofuels, stems from a growing consensus on the need to diversify energy demand in the wake of current and impending crises that disrupt energy supply networks. The Ukraine crisis acted as a wake-up call, creating significant interruptions in global crude oil supply, pushing several countries to seek other sources of fuel.

Biofuel supply and production in India and prospects for foreign firms

India currently produces 1151 MT of biogas and Compressed Biogas (CBG) daily, with a projected increase to 1750 MT by 2025. Technically put, CBG is generated through the anaerobic digestion of biomass and various waste sources, including agricultural residue, cattle dung, sugarcane press mud, municipal solid waste, sewage treatment plant waste, and more.

By harnessing the abundant biomass resources as CBG plant feedstock, India could achieve an impressive daily CBG production capacity of 170,000 MT. This capacity increase could potentially replace one-third of crude oil imports or triple the imported LNG.

The average cost of a biogas plant is US$4.25 million, per industry estimates, and the government’s target of establishing 5,000 such plants represents an enormous opportunity for foreign stakeholders, valued at over US$200 billion.

India’s rapid ascent in the biofuel sector can be attributed to well-coordinated regulations, strong political support, and the abundance of feedstocks. Further, states like Uttar Pradesh and Tamil Nadu have released their biofuel policies and are investing up to INR 750 billion crore in biofuels.

India has also established fixed pricing, long-term ethanol contracts, technical standards, and financial incentives for new and upgraded plants.

Back in 2018, India had introduced its National Policy on Biofuels, which set blending targets for ethanol (20 percent by 2030) and biodiesel (5 percent by 2030), specified feedstock requirements, and delegated responsibilities to 11 ministries for government coordination. Building on its success, the government has advanced the ethanol 20 percent volume blending target to 2025-26, as formalized in an amended National Policy on Biofuels in 2022.

Ethanol blending in gasoline production and consumption in India has nearly quadrupled from 2018 to 2023, reaching almost 12 percent (equivalent to seven percent on an energy basis).

• Sugar cane is the primary source of ethanol production, supplemented by food grains like maize and excess rice inventories assessed by the Food Corporation of India.
• India has also introduced separate pricing for maize-based ethanol and expanded to include ethanol from various sources like cotton stalks, wheat straw, rice straw, bagasse, and bamboo.

Achieving India’s 20 percent blending target necessitates greater effort to adapt more vehicles to absorb higher ethanol blends, with a focus on encouraging flex-fuel cars and retrofitting older vehicles, including two-wheelers. Implementing greenhouse gas (GHG) measurement and reporting can further enhance GHG reductions from biofuel use in the transportation sector.

Production gaps and potential capacity

Biodiesel production in India currently accounts for less than one percent of diesel consumption. India has set goals, defined feedstock criteria, and established measures to establish used cooking oil supply chains, with oil marketing companies showing interest in biodiesel derived from spent cooking oil.

However, biofuel production remains limited in India, and additional incentives are likely needed to boost production and consumption. The International Energy Agency (IEA) estimates that biodiesel made from leftover cooking oil alone could replace up to five percent of diesel use in the country. Hypothetically, taking advantage of India’s estimated 1.5 million tonnes of potential spent cooking oil could cover five percent of its diesel consumption by 2027.

India had access to over one billion tonnes of organic, solid feedstocks, including those suitable for biomethane production as of 2022. Ethanol generation from agricultural residues can act as a buffer during years of low agricultural output, in addition to crop-based ethanol production.

Expanding biodiesel, renewable diesel, and biojet fuel remain crucial, especially since diesel and jet fuel collectively account for over 60 percent of India’s total fuel consumption, with demand projected to grow by 25 percent over the next five years.

The transportation industry has already begun utilizing biomethane derived from organic waste and residues through initiatives like SATAT, resulting in the commissioning of 48 compressed methane and biogas plants so far.

What are the requirements for investors in the biofuel industry?

Despite India’s potential to harness its agrarian economy for energy exportation, there is limited understanding of the commercial viability of biofuels. Considering India’s commitment to climate action, along with many G20 nations, biofuels could emerge as a crucial element in reducing the carbon footprint of businesses.

According to industry projections, biofuels like bioethanol and biodiesel could achieve a five percent CAGR, offering numerous opportunities for sustainability-focused entrepreneurs and businesses striving to meet Environmental, Social, and Governance (ESG) targets.

Nonetheless, the key consideration for any business or consumer remains affordability and economic value. In this context, the Indian government must take a proactive role by offering incentives such as competitive pricing and tax holidays, besides enabling structural efficiencies in the supply chain to drive down overall costs.

India’s biofuel market currently comprises 230 biomass pellet manufacturers and 1030 briquette manufacturers, supplying to power plants and industries. Supported by investments from global green energy companies and government initiatives, the Indian biomass market is anticipated to reach INR 320 billion by the fiscal year 2030-31.