India does not need to offer additional subsidies for to biofuels industry and hopes that higher demand will drive capacity expansion, Minister of Petroleum and Natural Gas Hardeep Singh Puri said in an exclusive interview to Moneycontrol.
Puri said biofuel plants do not cost much and incentives already in place are enough for development.
“Biofuel story is not because of incentives. It is to make them economically viable. Biofuel plants don't cost more. And the ones that do cost more, we are getting the OMCs to do it. I think the incentives on the ground are more than enough,” said Puri.
Providing a boost to the biofuels industry, Finance Minister Nirmala Sitharaman in the interim budget announced financial assistance for the procurement of machinery to help in biomass collection. She did not specify the allotment, though.
The government has also mandated the blending of compressed biogas (CBG) in compressed natural gas (CNG) and piped natural gas (PNG) in a phased manner to reduce the country’s reliance on energy imports.
Several energy companies, including Reliance Industries Limited (RIL) and Indian Oil Corporation (IOCL) are setting up CBG plants across India to increase production.
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On February 7, city gas distribution company Indraprastha Gas Limited (IGL) signed MoUs with technical partners for setting up 19 CBG plants in four states. RIL also plans to set up 100 CBG plants across India in the next three years.
The International Energy Agency (IEA) in a report on February 7 said that biofuels are expected to play a key role in India’s decarbonisation of the transport sector.
“The South Asian nation is already the world’s third-largest producer and consumer of ethanol, as domestic production has tripled over the last five years. Supported by the country’s abundant feedstocks, political support and effective policy implementation, its ethanol blending rate of around 12% is among the world’s highest,” said IEA in a report.
IEA also said that India is on course to be the largest source of global oil demand growth by 2030.
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