Author: Thasny Rahiman

India’s biofuel policies have experienced a major transformation in 2025, driven by ambitious government targets, cutting-edge technology from companies like Khaitan Bio Energy, and a strong push to blend biofuels with conventional fuels. These developments are changing India’s energy landscape and helping the country move toward a sustainable, low-carbon future.

Rapid Growth in India’s Biofuel Sector

India has achieved a milestone by reaching 20% ethanol blending in petrol five years ahead of schedule—a feat celebrated by both policymakers and environmentalists. This target, previously set for 2030, was brought forward to 2025-26 under the National Policy on Biofuels (2018, amended in 2022). The policy prioritizes a diverse mix of biofuel sources such as sugarcane, maize, damaged food grains, and agricultural residues, aiming to stabilize supply while minimizing risks to food security.

Ethanol Blending: India’s Flagship Achievement

• In July 2025, the ethanol blending rate reached 19.93%, just shy of the official 20% goal.
• Ethanol blending has reduced oil imports, saved billions of rupees, and cut millions of tonnes in carbon emissions since 2014.
• India now requires an estimated 10 billion liters of ethanol annually to sustain E20 blending, prompting relaxation of restrictions on ethanol production from sugarcane derivatives.

Expanding the Biofuel Push Beyond Petrol

Notably, India is preparing to extend biofuel blending to the diesel-powered construction and heavy industry sector. Discussions between key ministries aim to mix biofuels into diesel for commercial equipment, marking a significant expansion from current petrol-centric programs. With diesel consumption far exceeding petrol, this initiative has the potential to further accelerate India’s green energy goals.

Government Policies and Support Mechanisms–India’s Biofuel Policies

Enabling Environment for Ethanol Production

Several policy changes have catalyzed biofuel growth:

• Ethanol procurement prices are now governed by an administered mechanism, improving financial incentives for producers.
• GST for ethanol used in blending has been slashed from 18% to 5%, lowering overall production costs.
• The government has lifted all major restrictions on ethanol production from sugarcane juice, syrup, and molasses for the 2025/26 supply year, allowing sugar mills and distilleries to scale up output without caps.
• Robust financial schemes like the Ethanol Interest Subvention Scheme (EISS) and Long-Term Offtake Agreements (LTOAs) ensure stable demand and timely payments under the Ethanol Blended Petrol Programme.
• Dedicated support for cooperative sugar mills and multi-feedstock distilleries has enabled diversification in ethanol feedstock, promoting production from agricultural waste and non-food crops.

Supporting Advanced Biofuel Technologies

The “Pradhan Mantri JI-VAN Yojana” encourages setting up projects that use agricultural and forestry residues, industrial waste, and algae to make advanced biofuels. Financial assistance is provided for these plants as part of the government’s strategy to advance second-generation (2G) and even third-generation biofuels.

Recent Challenges and Ongoing Debates Regarding India’s Biofuel Policies

Impact on Farmers and Food Security

While the biofuel revolution brings energy independence, it is not without challenges. Increased demand for maize (corn) and other feedstocks is affecting small poultry farmers by driving up the price of livestock feed. Therefore there are ongoing debates on balancing the use of food crops for fuel against the country’s food security needs.

Technological and Infrastructure Issues

Many current vehicles are not compatible with the new E20 fuels, raising concerns among consumers about engine performance and longevity. So many ongoing research is working to address these compatibility issues and educate the public on the benefits and risks of biofuels.

Khaitan Bio Energy: Leading the Transformation

Pioneers of Second-Generation Biofuels

Khaitan Bio Energy is at the forefront of innovative biofuel technology in India. The company’s patented technology produces second-generation (2G) ethanol from cellulosic materials like rice straw—an agricultural waste commonly burned in fields, causing massive air pollution. Thus their breakthrough process utilizes all components of lignocellulosic biomass, resulting in high-value bioenergy products and substantially reducing stubble burning.

• The company set up a pilot plant for rice straw management in partnership with BIRAC in 2021, validating its approach and revealing its commercial potential.
• Khaitan Bio Energy’s patented technology has been certified at Technology Readiness Level – 8 (TRL-8). This is by the Department of Biotechnology. Government of India and has also been evaluated by the Centre for High Technology, Ministry of Petroleum and Natural Gas, Government of India.
• With a focus on decarbonizing India’s transport sector, Khaitan Bio Energy’s solutions complement national efforts for a sustainable energy transition.

Sustainable Value Creation

Combining technology and sustainability, Khaitan Bio Energy embodies India’s push for green innovation. So their expertise in producing 2G ethanol and bioenergy from rice straw and other residues offers a scalable model for other regions. This approach not only tackles pollution but also creates new economic opportunities for rural communities.

Shaping the Next Decade

Khaitan Bio Energy reflects broader trends in India’s biofuel space. This is by increasing adoption of newer technologies, government backing for advanced biofuel production, and integration of waste-to-energy solutions. Therefore experts predict this synergy between technological advancements and robust policy will define India’s energy future over the next decade.

India on the Global Stage

India’s proactive biofuel policies have put the nation at the forefront of the Global Biofuels Alliance. Thus strengthening international cooperation in renewable energy and clean technology. Also events like Green Rev 2025 have highlighted India’s innovations in ethanol and compressed biogas. This is done with partnerships forming between public and private sectors to scale up green energy solutions.

What’s Next for India’s Biofuel Policy?

• Continued expansion of ethanol and biodiesel blending to sectors like aviation and diesel-heavy industries.
• Increasing support for advanced biofuel technologies to tap new feedstocks and waste streams.
• Ongoing adjustments to policy and production standards to address food security, pricing, and infrastructural compatibility.
• Steady rise in private sector innovation, with companies such as Khaitan Bio Energy shows how sustainable business can drive national change.

India’s biofuel journey in 2025 is marked by aggressive targets, sophisticated technology, and growing environmental consciousness. Thus overlapping efforts of government, industry innovators, and farmers signal that India is making rapid, meaningful progress toward sustainable energy. With Khaitan Bio Energy serving as a model for how local companies can power national transformation.

What Does “National Imperative” Mean?

When ISMA—the Indian Sugar & Bio-Energy Manufacturers Association—calls ethanol blending a national imperative, they mean it shouldn’t just be a policy goal—it must be a must-do for India’s future. Ethanol blending is tied directly to energy security, cleaner air, rural prosperity, and economic independence. It is not just about fuel; it’s about reshaping India’s growth story.

A Milestone Already Achieved Ahead of Time

India has blown past its ethanol blending target. The country achieved 20% ethanol blending (E20) in petrol five years before its 2030 deadline. Back in 2014, the program started with just 1.5% blending.

• From 380 million liters in 2014, blended ethanol surged to about 6,610 million liters by June 2025. That’s almost a 17-fold jump.
  
• Those efforts led to a massive 69.8 million tonnes of CO₂ reduction. 

This achievement signals that ethanol blending can scale fast—and it’s delivering real results.

A Huge Boost for Farmers and Distilleries

Ethanol blending isn’t just about fuel—it’s about income. Over the years:

• Farmers collectively received around ₹1.18 lakh crore. 
• Distilleries gained approx ₹1.96 lakh crore.

That’s huge—for many rural families, it means stable payments, less crop wastage, and stronger local economies.

Economic Benefits for Farmers and Distilleries

The ethanol story is not just about energy; it’s about income stability and rural upliftment:

• Farmers have earned around ₹1.18 lakh crore collectively.
• Distilleries have gained nearly ₹1.96 lakh crore.

This means less crop wastage, reliable income, and stronger local economies. Farmers today aren’t just food providers—they are also energy suppliers.

Saving Foreign Exchange

India imports most of its oil, which strains the economy. With E20, ethanol blending has already replaced 181 lakh metric tonnes of crude oil, saving the nation ₹1.36 lakh crore in foreign exchange. Every liter of ethanol used reduces dependence on costly imports, strengthening energy independence.

Cleaner Air, Healthier Cities

Ethanol contains oxygen, which helps fuel burn more completely. The results:

• Lower carbon monoxide and particulate matter emissions.
• By 2025, 700 lakh tonnes of CO₂ emissions were avoided.

For India’s urban centers, this translates into healthier air and a reduced carbon footprint.

The Road to 25%: Why 2G Ethanol Is Critical

While India has reached E20 ahead of time, going further to E25 will be more challenging. Traditional feedstocks—like sugarcane juice, B-heavy molasses, and surplus grains—can barely sustain 20% blending. Pushing beyond risks food security and agricultural strain.

This is where second-generation (2G) ethanol becomes essential. Unlike first-generation ethanol, 2G ethanol is produced from non-food biomass such as rice straw, wheat straw, corn cobs, and bagasse. Instead of burning residues in fields, which causes smog and pollution, farmers can sell them for ethanol production. This provides a cleaner, more sustainable path forward.

Key benefits of 2G ethanol:

• Environmental Gain: Reduces stubble burning, cutting urban smog.
• Energy Security: Adds new streams of ethanol supply.
• Farmer Income: Provides extra revenue from crop residues.
• Climate Impact: Much lower lifecycle emissions than fossil fuels.

India’s first 2G ethanol plants—like IOCL’s Panipat facility—are proof that scaling is possible. But to hit 25% blending by 2030–31, 2G ethanol adoption is non-negotiable. Put simply: 1G ethanol got India to E20; 2G ethanol will get India to E25 and beyond.

Smart Use of Resources: Waste to Wealth

Ethanol’s beauty lies in its versatility. India has made strategic use of:

• Sugarcane juice
• B-heavy molasses
• Surplus/damaged grains
• Agro-residues

This approach turns potential waste into wealth, supports the circular economy, and reduces dependence on food crops. With 2G ethanol, this “waste to wealth” approach reaches a whole new level.

India is a sugar powerhouse. Ethanol uses not just sugarcane juice, but also:

• B-heavy molasses, surplus grains, damaged rice, and other agro-residues.
  

This approach is efficient: it turns leftover biomass into value, supports circular economy goals, and avoids misuse of food crops. It’s strategic and sustainable.

Cleaner Air and Fewer Emissions

Ethanol has oxygen in its structure, which fuels more complete combustion. This leads to:

• Lower emissions of carbon monoxide (CO) and particulate matter—a big win for city air quality. 
• Lifecycle studies show ethanol cuts greenhouse gases by a large margin. By 2025, ethanol blending had already avoided 700 lakh tonnes of CO₂ emissions. 

Cleaner vehicles mean healthier cities—and a smaller carbon footprint.

Momentum Toward Renewable Growth

India isn’t stopping at E20:

• ISMA’s roadmap suggests expanding capacity to reach 25% blending by 2030–31.
  
• This will require an additional 7.7 billion liters capacity, supported by nearly ₹35,000 crore in subsidies.
• They also recommend slashing GST on flex-fuel vehicles to 5% and ensuring fair ethanol pricing.
  

Overcoming Doubts and Controversy

Despite strong evidence, some concerns persist:

• A PIL in the Supreme Court questions whether all vehicles are ready for E20 and highlights potential engine issues.
• Critics also worry about fuel efficiency, food prices, and distribution gaps.
  

Yet ISMA calls such fears misleading, pointing to certifications by ARAI and petroleum boards. Tests show only a minor 1–2% fuel efficiency drop—and modern vehicles are up to the challenge. 

Strategic Recommendation: Build Bio-Hubs

ISMA proposes establishing bio-hubs near sugar mills, combining ethanol with bioelectricity, biofertilizers, and biogas. This strengthens resource use and creates a sustainable local ecosystem.

They highlight how ethanol turned farmers from pure food producers into energy providers.

Summary Table: Why Ethanol Blending Is Critical

Area	Impact
Energy Security	Less oil imports, more home-grown fuel—₹1.36 lakh crore saved
Farmers & Economy	₹1.18 lakh crore to farmers; ₹1.96 lakh crore to distilleries
Climate & Air	≈70 million tonnes CO₂ avoided; cleaner air in cities
Policy Momentum	E20 achieved early; plans for 25% blending underway with ₹35k cr subsidy
Innovation	Using agro-waste smartly, building circular bio-hubs near sugar mills
Consumer Trust	Certifications and tests reassure vehicle safety and performance

Why This Truly Matters for India

• Supports Rural Livelihoods: Reliable buyers for crops and residues.
• Strengthens the Economy: Saves foreign currency, reduces oil imports.
• Delivers Cleaner Cities: Lower emissions and pollution.
• Encourages Innovation: 2G ethanol and bio-hubs build renewable infrastructure.
• Global Leadership: India showcases how to balance agriculture with clean transport.

Final Thought

When ISMA calls ethanol blending a “national imperative,” it reflects real wins—economic, environmental, energy, and social. India proved with E20 that scaling is possible. Now, with 2G ethanol leading the charge, the country is ready to achieve E25 and set an example for the world in clean, sustainable energy.

Why “synergy” matters now

Clean technologies don’t win in silos  anymore. Solar plus batteries beats solar alone. EVs plus smart chargers beat EVs alone. Heat pumps plus rooftop PV slash bills more than either on its own. Over the next decade, these combinations—not single technologies—will drive the biggest gains in cost, reliability, and emissions. Here’s a simple tour of the most important pairings about Rise of Renewable Synergies, what the data says, and how markets are likely to evolve.

The backdrop: Demand up, costs down

• Electricity’s role is expanding. The IEA projects electricity’s share of final energy use rises from ~20% today to 26–29% by 2035, driven by EVs, heat pumps, and data centers. More “things” will run on electrons, not molecules.
  
• Renewables are scaling at record pace. In 2024 the world added ~585 GW of renewables, with solar ~452 GW and wind ~113 GW; renewables made up 92.5% of new power capacity.
  
• Storage and batteries keep getting cheaper. Global Li-ion pack prices fell to $115/kWh in 2024 (down 20% year-over-year), unlocking bigger storage projects across more countries.
• EV momentum continues. Electric car sales reached ~17 million in 2024, up 25% from 2023, with China leading.  

Below are trends that set the stage for powerful “renewable synergies.”

Solar + Storage: The new baseload for sunny hours

What’s changing: Solar gives the cheapest daytime electrons in much of the world. Pair it with batteries, and you shift solar into the evening peak, cut curtailment, and firm output.

Why it matters:

• Batteries now frequently clear grid tenders because capex is falling and project sizes are scaling into the multi-GWh range across the US, China, Australia, the UK, Chile, South Africa and more. 
• Every $/kWh drop increases the number of viable use-cases—from peak shaving to fast frequency response—making solar-plus-storage (S+S) a default design for new utility projects. Expect S+S to become the “standard” configuration in high-solar regions by the late 2020s. (Inference based on the cost and project pipeline trends.)
  

What to watch (2025–2035) About Rise of Renewable Synergies:

• Four- to eight-hour batteries are becoming commonplace in markets with evening peaks.
  
• Co-location rules that share grid interconnections, cutting soft costs.
  

Wind + Storage: Smoothing the gusts

What’s changing: Wind often peaks at night; batteries can soak up nighttime surpluses and support morning ramps.

Why it matters:

• In regions with strong wind (US plains, North Sea, parts of India and Latin America), pairing storage can cut balancing costs and help wind compete in capacity markets.
  
• Longer-duration storage (8–24h) and emerging chemistries will help manage multi-hour lulls, complementing short-duration lithium. (Forward-looking inference consistent with storage expansion data.)
  

Rooftop Solar + Heat Pumps: The home energy bundle

What’s changing: Heat pumps electrify heating and cooling; rooftop solar lowers the operating cost.

Why it matters:

• Even with a dip in European heat pump sales in 2024 due to cheaper gas and policy uncertainty, the long-term logic is intact: pairing PV with heat pumps shields households from price swings and cuts emissions. Expect a rebound as policies stabilize and building retrofits accelerate.

What to watch:

• Smarter controls that pre-heat or pre-cool when solar output is high.
  
• Utility tariffs that reward flexible heating loads.

EVs + FFVs: Cars as Clean Energy Allies

What’s changing: Vehicles are no longer just about mobility—they’re becoming central to the clean energy transition. EVs act as flexible batteries on wheels, while FFVs (Flex-Fuel Vehicles) provide a low-carbon option where electrification is slower to spread.

Why it matters:

• With ~17 million EVs sold in 2024, smart charging can shift demand to cheaper, cleaner hours.
  
• At the same time, FFVs running on 2G Ethanol blends (made from biomass) cut lifecycle emissions, reduce oil imports, and support rural economies through biofuel demand.
  
• Together, EVs and FFVs offer a dual-pathway to clean transport—one electrified, one biofuel-powered—ensuring broader adoption across diverse markets.
  

What to watch:

• V2G standards enabling EV fleets (buses, vans) to act as grid resources.
  
• Policy support for higher ethanol blending so FFVs can scale quickly.
  
• Workplace charging and ethanol fueling stations expand in parallel, giving drivers more clean choices.

Bioenergy + Electrification: Filling gaps you can’t easily electrify

What’s changing: Sustainable biofuels and bio-based feedstocks complement electrification in aviation, shipping, and heavy industry.

Why it matters:

• Where direct electrification is hard, biofuels, biogas, and e-fuels provide drop-in options while hydrogen infrastructure matures. Expect tighter sustainability rules, more waste- and residue-based supply, and blending mandates targeting aviation and marine sectors. (Generalized view consistent with IEA and IRENA transition pathways.)
  

Five Big Synergy Playbooks (2025–2035) 

Clean Firm Power: Biofuels + Renewables

• Solar and wind supply cheap power, while biofuel plants from Khaitan Bio Energy ensure round-the-clock reliability.
  
• Result: Stable, low-cost clean energy even when sun and wind drop.
  

Community Energy Hubs

• Rooftop solar and batteries keep homes resilient, while local biofuel supply chains add backup and reduce dependence on fossil fuels.
  
• Result: Stronger rural economies and reliable community power.
  

Green Mobility with Biofuels + EVs

• EV fleets charge on renewables, but bioethanol and fuel long-haul transport and hard-to-electrify vehicles.
  
• Result: Cleaner, cheaper mobility across both short and long distances.
  

Industrial Decarbonization

• Factories use a mix of solar/wind PPAs and biofuels for heat and power, with hydrogen emerging later.
  
• Result: Industries cut emissions faster while securing affordable energy.
  

Buildings of the Future

• Homes run on PV + heat pumps, with bio-based fuels covering peak or backup needs.
  
• Result: Lower bills, comfort, and resilience for households.

Risks and reality checks

• Policy whiplash: Incentives and rules can change, temporarily slowing adoption (as seen with EU heat pumps in 2024). Long-term economics still favor electrification + renewables, but stable frameworks matter. 
• Grid bottlenecks: Transmission delays can strand cheap projects. Expect a greater push for grid-enhancing technologies and streamlined interconnection.
• Widespread adoption for 2G Ethanol: Currently most of the ethanol production is happening from Maize, sugarcane and rice, which directly affects food availability for the population. Adopting 2G Ethanol made using biomass not only does not eat into the food chain but also helps curb pollution by utilising rice straw to make ethanol which otherwise is burnt in open fields, leading to harmful fumes. Government needs to support policies for mass adoption of such technologies.

What “good” looks like by 2035

• Clean additions dominate: Renewable capacity keeps growing, but with a stronger mix—solar, wind, storage, and advanced biofuel power plants. Khaitan Bio Energy helps ensure that even agricultural residues and waste streams are turned into clean power, reducing both emissions and stubble burning.
  
• Round-the-clock portfolios: Utilities and corporations design energy packages that don’t just rely on the sun and wind. Biofuel-based power plants provide firm, dispatchable energy, complementing solar + wind + batteries. This ensures industries, hospitals, and AI-driven data centers get clean electricity even when the grid is under stress.
  
• Electrified living: EVs, rooftop PVs, heat pumps, and household batteries are standard, but the backbone of reliability comes from a steady supply of green fuels. By integrating biofuels into regional grids, companies like Khaitan BioEnergy make electrified lifestyles more affordable and stable.
  
• Early hydrogen and biofuel wins: Alongside green hydrogen pilots, bioethanol plants scale up to commercial levels. Refineries, fertilizers, and steel plants begin blending and switching to these green fuels, supported by Khaitan Bio Energy’s investments in 2G ethanol from crop residues. This not only cuts industrial emissions but also builds rural economies.

Bottom line About Rise of Renewable Synergies

The next decade is about connecting technologies: pairing renewables with storage, vehicles with grids, buildings with smart controls, and industry with green molecules. The economics are moving fast in favor of these combinations: record renewable additions, falling battery costs, strong EV sales, and surging corporate demand are all pointing the same way. If policy can keep pace—especially on grids and permitting Renewable Synergies— will do the heavy lifting for a cheaper, cleaner, and more reliable energy system by 2035. 

India’s transport future is changing fast. In the last two years the country has moved from pilot projects and local experiments to nation-scale action on ethanol blending and alternative fuels. That shift is now meeting a second, powerful push from vehicle regulation: the next version of India’s Corporate Average Fuel Efficiency rules (often called CAFE-3) is expected to recognise flex-fuel engines alongside electric vehicles. That regulatory change makes it much more attractive for automakers to build cars that can run safely on petrol mixed with higher shares of ethanol . And it could reshape vehicle design, fuel markets, and farming economics across the country. 

Why flex fuel matters right now

Ethanol blending has mushroomed into a national priority. The government’s Ethanol Blending with Petrol (EBP) programme, backed by policy and financial incentives. This pushed the blend target to 20% (E20) well ahead of schedule. By early 2025 India was already reporting blend levels close to or above 18–19% and aiming to hit or exceed 20% for the ethanol supply year. That means more pumps, more logistics, and more pressure on vehicle makers . This is to ensure cars can run on E20 without problems. A car that is “flex-fuel” can operate on a range of blends. From traditional petrol up to much higher ethanol mixes — allowing drivers to switch fuels without engine damage or performance loss.

What CAFE-3 is likely to change

CAFE rules set fleet-average emissions (or fuel efficiency) targets for manufacturers. Past iterations in India leaned heavily toward rewarding electric vehicles. The upcoming CAFE-3 is being talked about as more balanced. Not only will it keep pushing EVs, but it will also offer regulatory benefits to flex-fuel cars by allowing a “biogenic derogation” or other favourable accounting for emissions when biofuels are used. In plain terms, that lowers the effective emissions score for vehicles that run on biofuel blends. Thus making it cheaper for manufacturers to meet fleet targets if they add flex-fuel models. Automotive companies notice incentives like this quickly; when regulators reward a technology, product pipelines and investment plans shift fast.

How automakers are responding

Automakers in India are already moving. Major players — including legacy OEMs and newer manufacturers. Also they have stepped up development of flex-fuel powertrains, testing materials, fuel systems, and software calibration to cope with E20 and higher blends. Some are exploring flex-fuel versions of popular models. While others are investing in research partnerships and supplier upgrades to ensure parts resist ethanol’s different chemical properties. The carrot of CAFE-3 makes this work commercially sensible. A flex-fuel model could earn a manufacturer regulatory credits that count toward fleet compliance in 2027 and beyond. Reports show design pipelines and test programs accelerating in the past few months following official signals from transport ministry leaders.

Supply side: where will Ethanol will come from

Meeting higher blending targets depends on feedstock and capacity. India has broadened feedstocks beyond just sugarcane molasses to include B-heavy molasses, damaged or surplus rice, corn, and other grains when needed. For 2024–25 the USDA and other official tracking estimated India’s blending rate around 19.3 percent and noted that the government authorised large quantities of Food Corporation of India rice for ethanol to cover shortfalls from sugarcane. Thus diverting surplus foodgrain into fuel is a major, sometimes controversial move . But it shows how policy tools and market signals are being used to expand ethanol availability quickly. So practical outcome is that more ethanol will be available at more pumps. And so consumers can choose E20 without hunting for rare outlets. 

Benefits

For drivers –

• More choice at the fuel pump.
  
• Cleaner combustion than pure petrol.
  

Environmental benefits –

• Ethanol burns cleaner, cutting some pollutants.
  
• Modest reduction in carbon intensity if produced sustainably.
  

For cities –

• Lower tailpipe emissions of carbon monoxide.
  
• Fewer particulate precursors → better air quality.
  

        For the climate –

• Ethanol from residues or sustainable crops lowers lifecycle greenhouse gases.
  
• Second-generation (2G) ethanol from agricultural waste avoids using food crops.
  

Why it’s supported –

• Climate benefits attract funding from government and global partners.
  
• Support for second-gen projects and biofuel production clusters.
  

Concerns and trade-offs to watch

The shift is not risk-free. Using foodgrains for fuel can raise food security and price questions if not carefully managed. Ethanol production facilities have environmental impacts also. Distilleries can be pollution-intensive if wastewater and emissions aren’t controlled. Also some experts caution the EBP programme’s benefits depend on good feedstock choices and pollution controls. Similarly technical concerns also exist: older vehicles not designed for E20 could see diminished seals or fuel system issues unless manufacturers certify compatibility or consumers switch to flex-fuel models. That is why policy signals from the transport ministry and assurances from the petroleum ministry matters. Regulators must coordinate to ensure fuel standards, vehicle compatibility, and consumer information are aligned.

What CAFE-3 incentives mean for rural economies

• If flex-fuel cars become more common, ethanol demand will increase, directly benefiting farmers.
  
• Surplus rice can be used for ethanol production, creating new markets for farmers.
  
• Also sugar mills diverting sugarcane to ethanol will receive more payments, supporting the sugar industry.
  
• Incentives for growing energy crops could improve rural incomes across many regions.
  
• The government already offers higher prices for corn-based ethanol to encourage production.
  
• Viability Gap Funding is available for 2G ethanol projects that turn agricultural residues into fuel.
  
• This could create new value chains, such as:
  
  • Small depots collecting crop stubble and residues
    
  • Local distilleries processing ethanol
    
  • New logistics and transport jobs
    
• If managed well, farmers who currently burn residues could earn extra income instead.
  
• Social benefits will depend on transparent supply chains and ensuring food crops are not replaced by fuel crops.
  

What consumers should know today

Check your vehicle’s compatibility. Many new cars produced after 2023 are being built with E20 in mind. But older models or imports might not be compatible. Also follow the official guidance from manufacturers and fuel stations. The government has also clarified concerns that E20 will dramatically kill fuel efficiency or damage most modern engines — official statements and testing suggest impacts are manageable when standards are followed. Practical consumer steps include monitoring the label at the pump, checking manufacturer advice, and being alert to announcements about flex-fuel model launches from car makers.

                                                A quick way to see the scale of change is to think of the fuel pool as a pie. Projections from official sources put ethanol’s share of the petrol pool around 19.3% for 2025 — roughly one slice in five is now ethanol by volume. That is a huge shift compared with a few years ago when ethanol’s share was in single digits. Industry moves and likely timelines.

Also expect to see more announcements from vehicle makers about flex-fuel models between now and 2027. Pilot runs, certification tests, and the first small-series launches may happen as early as 2025–26, followed by wider rollouts if CAFE-3 final rules arrive as signalled for April 2027. At the same time, expect infrastructure work: more retail outlets stocking E20, upgrades in storage tanks and dispenser materials, and supply chain tweaks to avoid cross-contamination with unblended petrol. Investors in automotive components, pumps, and ethanol logistics will watch policy timelines closely because regulatory credits are what will turn R&D investments into near-term profit. 

Global comparisons and lessons

Brazil is the classic example of a country that built a flex-fuel ecosystem and reaped both energy security and rural benefits. India is not copying Brazil exactly, but it is learning from that model while adding its own priorities — a heavy focus on second-generation feedstocks, careful targeting of surplus grains, and international partnerships to import best practices. The global takeaway is simple: policy clarity plus predictable incentives unlock private investment. If CAFE-3 gives clear, long-term recognition to flex fuels, India could accelerate a transition that balances EV growth with biofuel options in a complementary way. 

What success looks like

Success would be a transport sector where consumers enjoy choice, emissions fall, farmers gain new markets for residues and surplus crops, and distilleries operate cleanly and transparently. So it would mean refurbished supply chains that don’t harm food availability, strict pollution controls for ethanol plants, and vehicle fleets where flex-fuel and electric options together help meet climate and air-quality goals. Therefore achieving this requires careful regulation, investment in cleaner ethanol routes (like 2G Ethanol), and strong monitoring to ensure public goods — food security and clean air.

Final thought

CAFE-3 is more than a technical update on paper. If it formally recognises the climate and fleet benefits of flex-fuel vehicles, that will change commercial logic for automakers and fuel suppliers. The result could be a genuine speed-up in ethanol-compatible cars on Indian roads by 2027, better use of agricultural residues, and an added lever to cut emissions from transport. The details will matter — the mix of feedstocks, the strength of pollution controls, and how incentives are structured — but the direction is clear: flex fuel is stepping onto the main stage alongside electric vehicles, and that could be one of the most practical ways India balances climate goals with energy security and rural livelihoods

Introduction

As climate concerns become more urgent and fossil fuel supplies increasingly uncertain, 2025 marks a critical turning point for the transportation sector. In this green transition, three sustainable alternatives—biofuels, electric vehicles (EVs), and green hydrogen—are leading the way toward cleaner, more efficient mobility. Together, they promise to reduce carbon emissions, support energy independence, and reshape how people and goods move across cities, countries, and continents.

This blog explores how these three technologies are shaping India’s and the world’s mobility landscape in 2025, the challenges they face, and the crucial role of policy, innovation, and industry players like Khaitan Bio Energy in driving change.

Why Green Mobility Matters Now More Than Ever

Transportation accounts for nearly 25% of global CO₂ emissions, with road transport being the biggest contributor. In India, the sector is not just a source of pollution but also a major drain on imported fossil fuels. As cities choke on smog and fuel prices fluctuate, governments, businesses, and citizens are realizing the need to transition to greener options.

Key Goals of Green Mobility:

• Reduce dependence on imported oil
  
• Cut greenhouse gas and particulate emissions
  
• Improve urban air quality
  
• Create local jobs in clean tech sectors
  
• Align with international climate targets (like Net Zero by 2070 for India)
  

Green Mobility – A Bridge Toward Cleaner Transport

Biofuels, particularly ethanol and biodiesel, are renewable fuels made from organic materials like sugarcane, maize, used cooking oil, and agricultural waste. In India, the Ethanol Blending Programme (EBP) aims to blend 20% ethanol into petrol by 2025–26.

Benefits of Biofuels:

• Can be used in existing internal combustion engine vehicles (ICEVs)
  
• Lower lifecycle emissions compared to petrol and diesel
  
• Stimulate rural economy by utilizing agricultural waste
  
• Reduce stubble burning by using crop residues like rice straw
  

Types of Biofuels:

Type	Source	Use Case
1G Ethanol	Sugarcane, corn	Petrol blending
2G Ethanol	Rice straw, agri waste	Cleaner, non-food-based fuel
Biodiesel	Used cooking oil, animal fats	Diesel vehicle alternative
Bio-CNG	Organic municipal/agri waste	Public transport, logistics

Real-world Impact:

By February 2025, India has reached nearly 17.98% ethanol blending, and new 2G ethanol plants are being commissioned across the country.

Khaitan Bio Energy

Khaitan Bio Energy is among the pioneers producing 2G ethanol from rice straw, using zero-liquid discharge (ZLD) technology and valorizing byproducts like silica and lignin. Their work directly contributes to reducing stubble burning and achieving India’s blending goals—while empowering farmers with new income streams.

Electric Vehicles (EVs) – Quiet, Efficient, and Rapidly Scaling

EVs have gained tremendous momentum globally and in India. With government subsidies, improved infrastructure, and rising consumer interest, EVs are transitioning from niche to mainstream.

Advantages of EVs:

• Zero tailpipe emissions
  
• Lower maintenance and running costs
  
• Growing charging infrastructure
  
• Quiet and smooth driving experience
  

Challenges:

• High upfront cost (though decreasing)
  
• Battery range anxiety
  
• Charging station availability in rural areas
  
• Recycling and sourcing of rare earth minerals
  

Government Support in 2025:

• FAME II Scheme continues to offer incentives for two-, three-, and four-wheelers.
  
• State governments offer tax exemptions, registration fee waivers, and subsidies.
  
• Many cities are shifting public buses and taxis to electric fleets.
  

Trends in 2025:

• Electric two-wheelers and rickshaws dominate the urban mobility space.
  
• Battery-as-a-service and swapping models are expanding in metro areas.
  
• Companies like Tata Motors, Ola Electric, Ather, and MG have launched newer, more affordable EV models.
  

Hydrogen – The Future Fuel?

Hydrogen, especially green hydrogen produced using renewable electricity, is gaining interest for hard-to-decarbonize sectors like heavy-duty transport, shipping, and aviation.

Why Hydrogen?

• High energy density and long driving range
  
• Can fuel large vehicles like buses, trucks, and trains
  
• Emission-free when used in fuel cells (only water as a byproduct)
  

India’s Hydrogen Push:

In 2023, the government launched the National Green Hydrogen Mission, aiming to make India a global hub for hydrogen production and exports. By 2025:

• Pilot projects are running hydrogen buses in cities like Delhi and Pune.
  
• Green hydrogen is being used in some industrial and rail transport applications.
  
• Investments are flowing into electrolyzer manufacturing and hydrogen infrastructure.
  

Challenges Ahead:

• High production and storage cost
  
• Lack of fueling infrastructure
  
• Competition with other clean energy sources
  

 Comparing the Three Pillars of Green Mobility

Feature	Biofuels	EVs	Hydrogen
Fuel Source	Organic materials/agri waste	Electricity (ideally renewable)	Electrolyzed water (green)
Emissions	Low lifecycle emissions	Zero tailpipe	Zero tailpipe
Infrastructure	Existing ICE vehicles usable	Requires charging network	Needs hydrogen refueling
Scalability in 2025	High (with support)	Growing fast in cities	Early-stage (pilots ongoing)
Ideal For	Rural mobility, farming, logistics, Daily road transportation	Urban transport, personal use	Heavy vehicles, rail, industry

The Role of Policy and Innovation

The future of green mobility doesn’t rely on a single solution. A multi-tech approach is key—using the best fuel or vehicle type for the right application.

Governments must continue to:

• Provide incentives for clean vehicle adoption
  
• Invest in renewable energy and infrastructure
  
• Encourage R&D in storage, fuel cells, and recycling
  
• Support startups and biofuel plants like Khaitan Bio Energy
  

Private sector innovation, from battery management to biomass processing, is also essential. Collaboration between EV makers, fuel producers, and smart grid developers can accelerate the transition.

What Can Individuals and Businesses Do?

For Individuals:

• Choose an EV or FFV (flex-fuel vehicle) for your next purchase.
  
• Support brands that prioritize sustainability.
  
• Spread awareness and demand clean transport options.
  

For Businesses:

• Electrify your vehicle fleet where feasible.
  
• Partner with 2G biofuel producers for low-emission logistics.
  
• Use renewable energy in warehousing and transport hubs.
  

Conclusion: A United Path Toward Cleaner Roads

The transportation sector is undergoing a massive transformation in 2025. While electric vehicles are capturing urban markets and green hydrogen is shaping up for the long haul, biofuels like those produced by Khaitan Bio Energy are proving essential for bridging the gap—especially in agriculture and rural India.

Each solution has a unique role to play. Together, they form the foundation of green mobility—a path that ensures cleaner air, economic growth, and energy security for the generations to come.

India’s green future is not a dream—it’s in motion. The road ahead is electric, bio-powered, and hydrogen-fueled.

India’s drive to blend 20 percent ethanol into petrol by 2025–26 and thereby achieving green future represents a critical step toward reducing oil imports, cutting greenhouse gas emissions, and supporting rural incomes. Initially, sugarcane and surplus rice were the primary feedstocks for ethanol production—so-called first-generation (1G) biofuels. However, mounting evidence shows that reliance on these food crops is neither sustainable nor scalable. From falling sugarcane yields and water scarcity to concerns over diverting staple grains, it’s clear that India must look beyond sugar and rice. Second-generation (2G) ethanol—made from agricultural residues like rice straw—offers a far more sustainable path. Companies such as Khaitan Bio Energy are leading this transition, demonstrating how innovative technologies can convert farm waste into clean fuel while protecting food security and the environment.

Why Sugar-Based Ethanol Is Losing Steam

For over a decade, India’s ethanol blending program for green future depended heavily on sugarcane, using both molasses and cane juice. Yet recent trends have exposed serious constraints:

• Declining Yields: Poor monsoon rains, disease outbreaks (e.g., red rot), and soil exhaustion have cut sugarcane output from 315.4 lakh tonnes in 2023–24 to 257.4 lakh tonnes in 2024–25.
  
• Water Intensity: Producing one litre of sugarcane ethanol can require up to 2,860 litres of water—unsustainable in water-stressed regions like Maharashtra and Uttar Pradesh.
  
• Price Sensitivity: Global sugar price fluctuations directly affect ethanol economics. When sugar prices rise, mills divert less cane to ethanol, threatening blending targets.
  
• Geographical Limits: Sugarcane cultivation and associated distilleries are concentrated in a few states, creating transport bottlenecks and uneven blending infrastructure across India.
  

Together, these factors mean sugar-based ethanol alone cannot meet India’s growing fuel-blending targets without jeopardizing water resources, crop incomes, and the reliability of ethanol supply.

The Rice Diversion Dilemma

To diversify, the government approved the use of Food Corporation of India (FCI) rice for ethanol. In May 2025, an additional 2.8 million tonnes of FCI rice were sanctioned—bringing total rice allocation to 5.2 million tonnes for the 2024–25 ethanol supply year Down To Earth. While this move helped boost ethanol output—enough to produce roughly 2.45 billion litres—diverting rice poses serious risks:

Food Security

Rice is a staple food for a large part of India’s population. Diverting millions of tonnes of it toward ethanol production could threaten food availability, especially in years when harvests are lower than usual. This diversion could lead to price hikes, making rice less affordable for many, and increasing the risk of food insecurity in vulnerable communities.

Supply Chain Strain

Increased demand for rice to produce ethanol puts pressure on India’s well-established food procurement and distribution systems. These systems are vital for delivering subsidized food to millions of people. Using large quantities of rice for fuel could disrupt these networks, causing logistical bottlenecks and reducing the efficiency of food delivery mechanisms.

Policy Backlash

The use of food grains like rice for fuel has triggered concern among both the public and policymakers. It raises ethical and strategic questions about prioritizing fuel over food. This ongoing debate highlights the urgent need for more sustainable and non-food-based alternatives, such as second-generation ethanol from agricultural waste like rice straw for a green future.

The rice-for-fuel strategy is a stopgap at best. Long-term energy security demands feedstocks that spare the country’s precious food reserves.

Why 2G Ethanol from Rice Straw Makes Sense

Second-generation (2G) biofuels use non-food biomass—lignocellulosic residues such as rice straw, wheat straw, corn stover, and forestry waste. Rice straw stands out for several reasons:

• Abundant Raw Material: India generates an estimated 168 million tonnes of rice straw annually, with 39–47 million tonnes available as surplus Down To Earth.
  
• Stubble Burning Mitigation: Farmers routinely burn rice straw to clear fields, causing severe air pollution. Converting straw to ethanol reduces this practice and its health hazards.
  
• No Food Competition: Rice straw is a waste product, so its use for fuel does not compromise food availability.
  
• Rural Livelihoods: Purchasing straw for ethanol gives paddy farmers an extra income stream, boosting rural economies.
  

By tapping into rice straw, India can scale ethanol production without the drawbacks of sugarcane or rice grain feedstocks.

 Comparing Ethanol Feedstocks

Feedstock	Food vs. Fuel	Water Use	Annual Availability	Environmental Impact
Sugarcane Molasses	Low food impact	Very high	32 lakh tonnes ethanol	High water stress; fertilizer runoff; limited to certain states
FCI Rice Grain	High food impact	Moderate	5.2 million tonnes rice	Diverts staple grain; risk of food shortages
Rice Straw (2G)	No food impact	Low	~40 million tonnes	Reduces stubble burning; uses agricultural waste; low water footprint

Benefits and Challenges of 2G Ethanol

Benefits:

• Sustainability: Utilizes waste; avoids food-fuel conflicts.
  
• Emission Reductions: Cuts open-field burning and greenhouse gases.
  
• Economic Uplift: Creates new markets for farm residues; spurs bio-refinery jobs.
  

Challenges:

• Technology Complexity: Lignocellulosic biomass requires advanced pre-treatment and enzymes to release fermentable sugars.
  
• Higher Capital Costs: 2G bio-refineries need greater upfront investment than 1G plants.
  
• Logistics: Collecting, transporting, and storing bulky straw feedstocks demands robust supply chains.
  

The chart shows a balanced view of key advantages like environmental benefits, rural income support, and emissions reduction, along with notable challenges such as high setup cost, technological complexity, and supply chain issues.

Overcoming these issues requires targeted policy support, technology partnerships, and financing models that de-risk investment in 2G infrastructure.

 Khaitan Bio Energy’s Game-Changing Role

Khaitan Bio Energy has emerged as a pioneer in India’s 2G biofuel landscape focussing green future. It has patented technology to produce 2G Ethanol using biomass with zero discharge from the  biorefinery. The main features of the technology are:

• Integrated, Zero-Liquid-Discharge (ZLD) Design: Efficient water recycling and minimal effluent generation.
  
• Advanced Pretreatment: Energy-efficient reactors and enzymatic hydrolysis processes maximize sugar yield from tough rice straw fibers.
  
• Byproduct Valorization: Extracted silica and lignin are used for steam generation, enhancing plant economics and sustainability.
  
• Local Farmer Engagement: Contracts with paddy growers ensure a reliable straw supply, boosting rural incomes and reducing stubble burning.
  

By combining cutting-edge technology with circular-economy principles, Khaitan Bio Energy demonstrates how 2G ethanol can be both environmentally and commercially viable.

Policy and Investment Imperatives

To scale 2G ethanol from rice straw nationally, coordinated action is needed:

• Incentives for Feedstock Supply: Minimum purchase prices for straw and grants for collection infrastructure.
  
• Capital Subsidies: Loan guarantees and viability gap funding for 2G plant developers.
  
• Research & Development Support: Grants for process optimization and enzyme cost reduction.
  
• Blending Mandate Flexibility: Progressive blending targets that recognize the longer ramp-up for 2G capacity.
  

Such measures will encourage more private and public players to enter the 2G ethanol space, accelerating India’s green-fuel transition.

The Road Ahead

India’s ethanol blending journey must evolve from its 1G origins to embrace multi-feedstock strategies centered on sustainability. Rice straw–based 2G ethanol addresses the twin challenges of energy security and agricultural pollution. With innovators like Khaitan Bio Energy leading the charge—and with the right policy ecosystem—India can meet and exceed its 20 percent blending goal without compromising food supplies or natural resources.

The shift to 2G ethanol is not just a technological upgrade; it’s a systems change that empowers farmers, protects public health, and strengthens India’s energy sovereignty. By leveraging abundant agricultural residues, the country can chart a truly green and resilient energy future—one straw at a time.