India, EU affirm new biofuels

The prospects for second-generation biofuels were boosted this week by lawmakers in India and the European Union.

India’s cabinet today approved a national policy on biofuels, mandating a 20 percent blend in gasoline and diesel by 2017. The policy requires bioethanol and biodiesel derived from non-edible sources and be grown on non-farming land.

Meanwhile, the EU’s Industry Committee on Thursday upheld its mandate for 5 percent biofuel blends by 2015 and 10 percent by 2020 but adjusted the policy to require that no more than 4 percent of the target comes from today’s crop-based biofuels.

The EU’s directive came amongst a backlash from member states and a World Bank report that blamed the biofuel target for driving up food prices during the last three years (see World Bank says food prices hit by biofuels).

The majority of the EU’s biofuels by 2010 must come from "new alternatives that do not compete with food production," the committee said. That includes sources such as hydrogen, algae, wood and waste, or non-food crops such as switchgrass, sorghum or jatropha.

A new report from Accenture this week said biofuels could make up 10 percent to 15 percent of the fuel supply in the next 10 to 20 years if it overcomes challenges with distribution, infrastructure and government policy. The food-versus-fuel debate might also slow demand for biofuels, Accenture said (see Global biofuels market faces challenges).

Although biofuels contributed to more than 80 percent increase in global food prices from 2005 to 2008, governments are still interested in biofuels to insulate their economies from high oil prices, energy security and climate change, according to the World Bank.

India has been finalizing its biofuel policy for about two years. The new rules promote biofuels by classifying biodiesel and bioethanol as declared goods to ease commerce within and outside the country’s states.

India's new rules call for the elimination of tax and duties on biodiesel and the establishment of a minimum price for oil seeds used for biodiesel to encourage growers. A minimum price for bioethanol is expected to be based on actual production and distribution costs.

India also plans to give preference to homegrown biodiesels, mandating they come from non-edible oil seeds and be grown on waste, degraded or marginal lands. Biodiesel crops will not be allowed to grow on fertile, irrigated land, and the government plans to ban the import of free fatty acids, such as palm oil.

India’s biofuel plan also pushes the government to encourage research and development, while aiding plantations, processing and production technologies including cellulosic biofuels.