India’s transport sector faces the challenge of balancing energy security, emissions, economic growth, and climate impact. Rising transport sector demands coupled with the need for decarbonisation have created an opportunity to invest in alternate fuels like bioenergy. Derived from biomass—crop waste, forestry residues, energy crops, and even municipal waste—bioenergy is gaining traction across sectors, from clean cooking, cosmetics to industrial heating. The IEA estimates biofuels cut GHG emissions by 50% compared to fossil fuels, reinforcing their role in a sustainable transition.

In the world of transport, while electric mobility has gained traction, bioenergy remains an underutilised yet crucial alternative for hard-to-electrify segments like long-haul freight, aviation, as well as an alternate fuel for public transport. Globally, IEA projections for achieving a Net Zero scenario by 2050 underscore the crucial role of bioenergy in replacing the heavy carbon-intensive fossil fuel industry by 2030.

India’s Bioenergy Policy Playbook

In India, there is a mix of technology-push and demand-pull policies which have frontlined the diffusion of bioenergy as an alternate fuel. In the transport sector, bioenergy primarily encompasses three types: Ethanol, Compressed Bio-Gas (CBG), and Sustainable Aviation Fuel (biojet fuel), with India making significant strides toward their production.

India is well placed to drive the low carbon pathways-led energy transition. Despite such supportive developments, what are the key barriers that prevent the scaling up of biofuel adoption tailored to the transport sector. 

Scaling jitters: Why bioenergy adoption lags

Despite being an agriculture-rich country, India has bottlenecks when converting feedstock into fuel. Largely attributed to ineffective supply chain linkages which result in agricultural residue being burnt, looming concerns of food security, land use conflicts, improper logistics, storage infrastructure and other behavioural factors, the bioenergy potential is massively underutilised.

Additionally, high capital investment in setting up biofuel refineries, processing feedstock, lack of dedicated pipelines for transportation, cost of retrofitting aircraft and ships, inconsistent blending mandates, uncertain taxation rules (ethanol at 18% and biodiesel at 12%) are reasons behind the transport sector’s unwillingness to scale up bioenergy adoption.

Road transport

While the electrification of our transport systems has caught public, market and policy attention, integrating and diversifying it with bioenergy presents an interesting case towards decarbonisation efforts.

Through biofuels like ethanol, biodiesel, and compressed biogas (CBG), passenger vehicles can utilise ethanol-blended petrol (E10, E20, E85, E100), with flex-fuel vehicles (FFVs) offering greater ethanol compatibility, while diesel cars and taxis can benefit from biodiesel blends (B5, B10, B20). Public transport, including buses and fleet vehicles, can transition to biodiesel and CBG, particularly under initiatives like SATAT. 2W and 3Ws can run on higher ethanol blends, and auto-rickshaws using CNG can shift to CBG with minimal modifications. While EVs remain a long-term solution, biofuels offer an immediate, scalable alternative to reducing emissions in road transport without the need for extensive new infrastructure.

To make this happen, a slew of policy measures are needed such as strengthening ethanol blending targets beyond E20, setting phased timelines for E85 and E100 introduction, introducing regulations requiring automakers to produce flex-fuel vehicles (FFVs) compatible with E85/E100, offering tax incentives and subsidies for FFVs similar to EV benefits, and have FAME & PM E-DRIVE inspired policies to popularise biofuel-led transport options. 

Greening the Wings and Propelling Green Shipping

Aviation

India lacks a regulatory framework mandating low-carbon fuels in aviation and shipping but efforts are underway to promote their adoption. To achieve energy Atmanirbhar by 2047, the National Biofuels Coordination Committee set SAF (sustainable aviation fuel) blending targets: 1% by 2027, 2% by 2028 (including international flights), and 5% by 2030.

High production costs, 3-8 times higher than conventional fuel, however, make SAF commercially unviable. Unlike EVs, it lacks consumer incentives or tax benefits. India has no large-scale SAF refineries, with existing biofuel facilities focused on ethanol and biodiesel. Establishing refineries requires heavy investment and government support, which are lacking. Distribution networks are also underdeveloped, needing upgrades in storage, blending, and refuelling. Unlike Europe, India lacks carbon pricing and SAF incentives to drive adoption.

Shipping

Shipping is one of the most carbon-efficient transport modes, contributing just 2-3% of global GHG emissions. However, most vessels rely on crude oil derivatives, valued for their high energy density but notorious for sulphur, nitrogen oxide, and particulate emissions. To curb this, the International Maritime Organization (IMO) is promoting marine biofuels to green the shipping industry. 

Realising this goal faces key challenges: a lack of strong financial incentives, biofuel feedstock cost uncertainties, and evolving regulations. While modifying engines for biofuels is manageable, ensuring economic viability and regulatory clarity is harder. Revising fuel standards requires costly large-scale testing, adding to commercial adoption hurdles. Currently, retrofitting ships for biofuels remains a deterrent. Stable, long-term policy support is crucial to drive investment and large-scale deployment of alternative marine fuels in India.

India’s Directorate General of Shipping approved biofuels in 2023 outlining sustainability criteria and certification, but more action is needed. Beyond financial and regulatory support, marine-specific biofuel blending mandates—akin to the Ethanol Blending Programme—are essential. Green shipping corridors with priority access, lower port charges, and concessional tariffs, along with dedicated refineries near key ports (Mumbai, Chennai, Kochi, Visakhapatnam), can bolster adoption while linking India to global carbon trading for maritime decarbonisation.

Fueling the future

Scaling bioenergy for transport is a crucial public policy priority. While biofuel blending mandates boost consumption, they alone do not drive innovation or lower carbon intensity. Bioenergy is cheaper than green hydrogen in India, with ethanol and biodiesel at ₹70/L compared to green hydrogen’s ₹320-330/kg (which is expected to drop to ₹160-170/kg by 2030). The challenges lie in poor infrastructure development, sub-optimal financial subsidies, and insufficient public-private participation. With road transport focused on electrification, biofuels can decarbonise shipping and aviation, thereby, heralding a new dawn for alternative fuels. Bioenergy production, through its support for rural economies, creation of jobs, and reduction in agricultural waste, is hence crucial for both the environment and the economy.