Against the backdrop of the recent auto fuel price hike, mainly due to soaring international crude prices, the ministry of new & renewable energy has redrafted the national policy on biofuels. The focus of the new policy is on indigenous production of biofuels as an alternative to petroleum-based fuels, as well as meeting the objectives of environmental protection and climate change mitigation.

The ministry has outlined a strategy to achieve energy security through the sustainable production, convention and application of biofuels. The new policy has been proposed to be applicable up to the end of the 12th Plan period, subject to periodic review. The policy lays down clear targets for the substitution of conventional fuels with biofuels for the short term (5% by 2012), medium term (10% by 2017) and long term (20% beyond 2017).

Informed sources told FE that the petroleum ministry has strongly argued that oil companies would not be in a position to agree to a long-term support price for biodiesel and would blend it with diesel only if commercially viable. Should the government wish to consider a minimum support price, it would need to put in place an appropriate mechanism, including budgetary support, the ministry says.

The ministry of new & renewable energy has supported the petroleum ministry?s position. However, sources noted that in such a situation, it would fall on the ministry of new & renewable energy to put in place the mechanism for the necessary budgetary support to ensure the commercial viability of biodiesel.

The policy has proposed the setting up of a national biofuel development board (NBDB) to be chaired by the Prime Minister and with members drawn from the Planning Commission and other concerned ministries, including the petroleum ministry.

The proposed NBDB would oversee planning, coordination, effective implementation and monitoring of all policy on biofuels and prepare a national roadmap for biofuel production and application. An executive council under the NBDB would also be set up to oversee the effective implementation of the new biofuels policy.