A Sustainable Future
India's renewable energy sector has witnessed significant growth in solar, wind, and bioethanol. Now, biodiesel is poised to be the next big story.
Driven by India's commitment to reducing greenhouse gas emissions and achieving net-zero status, biodiesel offers a sustainable solution for import substitution and carbon reduction. Recognized globally as a crucial tool in the fight against climate change, biodiesel's renewable nature makes it a valuable asset for developing countries.
The National Policy on Biofuels (NPB), launched in 2021, aims to contribute to national energy security, mitigate climate change, and create sustainable employment opportunities. The policy outlines guidelines for promoting the growth of various renewable fuels, including ethanol, biodiesel, drop-in fuels, and biogas.
With a target of blending 20% ethanol and biodiesel in petroleum-based diesel, India's demand for biodiesel is expected to reach 200 lakh metric tonnes per year, considering the current consumption of 1000 lakh metric tonnes of petroleum diesel.
The government's focus on biodiesel is evident in the recent tenders announced by Public Sector Oil Marketing Companies (PSU OMCs) for the purchase of biodiesel at a fixed price. This win-win situation for both manufacturers and OMCs ensures the sale of entire production capacities to public sector OMCs.
Furthermore, an additional levy of Rs 2 per litre of unblended diesel, effective from April 1st, 2025, incentivizes the blending of biodiesel. This indirect boost to the industry further strengthens its growth potential.
Currently, only 36 technically certified manufacturers across India can supply biodiesel to OMCs under the Biodiesel Blending program. Their total installed capacity of 12 lakh metric tonnes per year falls short of the 200 lakh metric tonnes requirement. This significant gap presents a massive opportunity for capacity expansion in the biodiesel sector.
The use of 200 lakh metric tonnes of biodiesel will result in a phenomenal reduction of 400 lakh metric tonnes of carbon dioxide emissions annually, significantly contributing to India's net-zero goals.
The implementation of NPB guidelines for biodiesel will bring forth numerous direct and indirect benefits, including rural employment, carbon sequestration, and land development.
With the government's strong push for biodiesel blending, the sector is poised for exponential growth. Key players like Emami Limited, Kalesuwari Refineries, Monopoly Innovations, Universal, Biomax, and BioD Energy are expected to benefit significantly from this boom.
The recent IPO of Rajputana Biofuels, which was oversubscribed 730 times, and the current share price of Kotyark Industries Limited at 990 per share, are clear indicators of the investor confidence in the biodiesel sector's future.