India will soon announce a new policy to promote biofuels as part of efforts by the world's third-largest emitter of greenhouse gases to cut imports of fossil fuels like oil, gas and coal, a government minister said on Thursday.
The government aims to develop a biofuel economy worth 1 trillion rupees ($15.6 billion) in the next two years, Oil Minister Dharmendra Pradhan told a conference on renewable energy on Thursday.
India's top three state-owned oil companies have pledged a combined $2 billion to carry out research to develop biofuel technologies and the government has pledged to guarantee a return on their investments, Pradhan said.
"The roadmap to lower crude oil imports is connected to biofuel," Pradhan said. India, the world's third-biggest oil consumer, aims to cut its crude imports by 10 percent by 2022.
New Delhi also plans to lower its carbon footprint by raising the use of natural gas in its energy mix to 15 percent in the next three to four years, up from 6.5 percent currently.
The government has already asked state oil companies to set up ethanol plants at 12 locations over the coming year.
Energy consumption in India is expected to grow as the government aims for economic growth of 8-9 percent this fiscal year through March 2018, against around 7 percent in 2016/17.
Indian Oil Corp, the country's top refiner, plans to enhance the capacity of its biofuel refineries to 100 tonnes a day from about 12 tonnes a day in the next two years, Chairman Sanjiv Singh told reporters at the conference.
IOC runs three biofuel plants with an investment of about 30 billion rupees and is looking to increase the number of such plants, Singh said.
India needs private investment in the sector and once the cost of production comes down, the country could see some private sector participation, Singh said.
Separately, transport minister Nitin Gadkari said Prime Minister Narendra Modi's cabinet could soon consider allowing the use of alternative fuel methanol in shipping.