Understanding the Biofuel market in India

In an interview with Cleantech Hero, Kishan Karunakaran, CEO and Founder of Buyofuel, explains biofuel production, market trends, and how Buyofuel contributes to India’s energy transition. The discussion throws light on the value chain, industry adoption, and regulatory impacts.

1. Can you briefly explain the complete value chain of one or two popular biofuels’ production and usage?

• Value Chain for Biomass Briquettes

Biomass briquettes are produced from residues like sawdust, rice husk, groundnut shells, and bagasse, which are collected and processed. The raw material is dried, pulverized, and compacted into briquettes using high-pressure techniques or binding agents. These briquettes are then distributed to industries via wholesalers or platforms like Buyofuel. They serve as a cost-effective and sustainable alternative to coal and wood, finding use in sectors like cement, textiles, food processing, and power generation.

• Value Chain for Biodiesel

Biodiesel production begins with sourcing feedstocks such as Used Cooking Oil (UCO), animal tallow, and palm stearin. Through transesterification, these oils are converted into biodiesel, with glycerin as a byproduct. The biodiesel is then stored in tanks and distributed through depots or suppliers. It is used in diesel engines across transportation, agricultural machinery, and generators, offering an eco-friendly alternative to conventional diesel.

Both value chains highlight the role of efficient sourcing, processing, and distribution in delivering sustainable energy solutions, with platforms like Buyofuel playing a crucial role in connecting suppliers and end-users.

2. What is the current status of biofuels usage in India?

Industries like manufacturing, textiles, and power generation are adopting biomass briquettes and pellets as sustainable alternatives to coal. Agricultural operations are also transitioning to biodiesel for tractors and pump sets. The usage of biofuels in India is steadily growing, driven by government initiatives and rising energy demand. The National Bio-Energy Mission and Biofuel Policy have set ambitious targets, such as achieving 20% ethanol blending in petrol (E20) by 2025 and increasing biodiesel usage in diesel. Ethanol production from sugarcane molasses and grains is expanding, while biodiesel, primarily derived. Despite this, India’s focus on circular economy practices, waste-to-energy projects, and policy support is positioning biofuels as a critical component of the nation’s energy transition and decarbonization goals.

3. Which industries are inclining towards using biofuels for their energy requirements, and for what applications?

Key sectors adopting biofuels include manufacturing, using biomass briquettes and pellets in boilers and kilns, and textiles for steam generation in dyeing processes. Transport relies on biodiesel to power trucks, buses, and fleets, while power generation uses briquettes and biodiesel for renewable energy in thermal plants. In agriculture, biodiesel powers pump sets and tractors efficiently. This shift is driven by rising energy costs and government mandates like India’s National Bio-Energy Mission and Biofuel Policy, promoting sustainable alternatives to fossil fuels.

4. What are some of the unique features of your platform?

Buyofuel’s platform aggregates an extensive range of biofuels, each tailored to meet the diverse energy needs of industrial sectors. Transparency lies at the heart of Buyofuel’s value proposition. Buyers have access to real-time updates on order execution, quality certifications, and logistical tracking, enhancing supply chain confidence. BuyoTrace, our blockchain-based tracking tool, provides end-to-end traceability, allowing clients to verify the quality, origin, and environmental impact of each order. Our platform also enables real-time emissions tracking, a vital feature for industries striving to meet stringent sustainability targets. By substituting fossil fuels with biofuels, our clients monitor the environmental impact of their fuel choices directly on the platform, enhancing both ESG reporting and regulatory compliance. Additionally, our curated marketplace connects vetted buyers and sellers, creating a reliable and efficient trading ecosystem. Together, these features empower stakeholders to achieve their sustainability goals while ensuring a seamless, high-quality, and transparent trading experience.

5. What types of fuels are transacted on your platform?

Buyofuel facilitates transactions across all types of biofuels, making us a comprehensive platform for bioenergy solutions. While we cater to a broad spectrum of biofuels, we take pride in leading the market in solid biofuels, including sawdust, wood chips, pellets, rice husk, and briquettes. Additionally, we are pioneers in introducing unconventional biomass like mango seeds, guava seeds, and mustard husk into the energy stream, unlocking new potential for sustainable energy sources. In the liquid biofuel segment, Buyofuel enables the seamless transaction of used cooking oil (UCO), palm stearin, and biodiesel, ensuring their efficient integration into the energy sector.

6. Who are the stakeholders that participate in the trading process on your platform?

On the consumer side, major industrial players participate as they increasingly co-fire biofuels to comply with regulatory mandates and meet sustainability goals. These industries span sectors like manufacturing, power generation, textiles, and transport, leveraging biofuels as a cost-effective and eco-friendly alternative to conventional fuels. On the supply side, biofuel manufacturers and suppliers play a crucial role in meeting the growing demand. They ensure a steady and diverse supply of biofuels, including biomass briquettes, pellets, biodiesel, and other innovative fuel types, enabling industries to transition smoothly toward sustainable energy practices. Our platform bridges the gap between these stakeholders, fostering a seamless and efficient trading ecosystem that supports market growth and accelerates the adoption of biofuels.

7. Can you share the average monthly transactions on your platform both in terms of volume and value?

On our platform, the average monthly transaction value is approximately ₹10 crore, with a transacted volume of around 10,000 metric tons (MT). This reflects the growing demand for biofuels and the platform’s ability to efficiently connect suppliers and consumers, enabling seamless trade across various types of biofuels.

8. What trends do you see shaping the biofuels market over the next five years?

The biofuels market is set for significant growth over the next five years, driven by policy support, technological advancements, and global sustainability goals. Governments are introducing stricter mandates like ethanol blending targets, carbon credit programs, and incentives to promote biofuels, while advanced biofuels derived from non-food feedstocks such as agricultural residues, algae, and municipal waste are gaining traction. Hard-to-abate sectors like aviation, shipping, and heavy transport are increasingly adopting Sustainable Aviation Fuel (SAF) and marine biofuels to achieve decarbonization goals.

Technological innovations are expanding feedstock options, with unconventional materials like crop residues, mango seeds, mustard husk, and UCO being used in energy production, supporting circular economy initiatives. Digital platforms, such as Buyofuel, are streamlining biofuel transactions by bridging buyers and suppliers, enhancing market efficiency and accessibility. Additionally, growing focus on carbon accounting and ESG compliance is driving industries to integrate biofuels into their emission reduction strategies. Rising international collaborations and investments are further accelerating the development of biofuel infrastructure, particularly in emerging markets. These trends will collectively position biofuels as a scalable, sustainable energy solution, playing a pivotal role in the global energy transition over the coming years.

9. How do you anticipate regulatory changes affecting the biofuel industry?

Regulatory changes are expected to significantly influence the biofuel industry, accelerating its growth and adoption. Policies such as blending mandates (e.g., ethanol in petrol, biodiesel in diesel) and incentives for biofuel production are creating a favorable environment for investment and innovation. Programs like India’s National Bio-Energy Mission and Biofuel Policy are pushing for increased use of renewable energy, aligning with global carbon reduction targets. Stricter emissions standards and carbon pricing mechanisms will further boost demand for biofuels as industries seek sustainable alternatives to fossil fuels. Regulations emphasizing waste-to-energy initiatives, such as using Used Cooking Oil (UCO) for biodiesel, are encouraging feedstock diversification. On the flip side, evolving international trade policies and certification requirements may pose compliance challenges but will ultimately strengthen the industry’s credibility.

10. What are your future growth plans?

Our future growth plans are focused on driving the adoption of biofuels and expanding our reach. This includes broadening our operations across multiple states in India to ensure seamless access to biofuels nationwide. Additionally, cross-border transactions are in the pipeline, enabling us to tap into international markets and strengthen the global biofuel trade. We also aim to foster collaborations with various sustainability initiatives, government bodies, and industries committed to transitioning to renewable energy. By working closely with stakeholders, we plan to create synergies that accelerate the adoption of biofuels, contribute to decarbonization efforts, and support a sustainable energy ecosystem.

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