Madhya Pradesh Launches Biofuel Scheme to Boost Sustainability

In a significant move towards a sustainable future, the Madhya Pradesh government has officially launched its 'Scheme for Implementation of Biofuel Projects in Madhya Pradesh,' under the Madhya Pradesh Renewable Energy Policy, 2025.

This initiative is aimed at transforming the state into a national leader in biofuel production, capitalising on its agricultural strengths and vast biomass resources. The scheme seeks to reduce dependency on fossil fuels, enhance energy security, mitigate greenhouse gas emissions, and stimulate rural employment, all while fostering socio-economic development across the region.

The newly introduced scheme outlines an extensive definition of ‘biofuels’ that covers a wide range of renewable energy sources. These include briquettes and pellets made from biomass, bio-CNG (Compressed Biogas/CBG) produced from agricultural and municipal waste, biodiesel derived from non-edible oils, biomass-based power and cogeneration projects, and innovative 'drop-in' fuels that can be used with existing vehicle engines.

The scheme also promotes the generation of electricity, heating, cooling, and steam from renewable sources; clean cooking initiatives; biomass-to-green hydrogen pathways; and CO₂ capture plants for biogenic CO₂ production. Importantly, first-generation bioethanol, produced from sugar- or starch-based crops, is excluded from this policy, as a separate framework for its promotion already exists.

Acknowledging Madhya Pradesh’s agrarian strength, the scheme adopts a comprehensive approach that spans all aspects of biofuel production, from feedstock cultivation and advanced production technologies to distribution and utilisation. A significant focus is placed on establishing a reliable supply chain for ‘renewable resources’ needed for biofuel production, particularly ensuring the consistent availability of feedstock. With this approach, the scheme aims to position Madhya Pradesh at the forefront of biofuel innovation, contributing to India’s broader energy security goals and climate change mitigation strategies.

To stimulate investment in biofuel production, the scheme offers a compelling package of financial incentives and regulatory support. These benefits are available for biofuel manufacturing and biomass supply chain units with investments exceeding ₹10 crore (with certain exceptions for specific project types). The Basic Investment Promotion Assistance (BIPA) offers up to INR 200 crore in support, distributed over seven years. Additionally, the scheme provides funding for infrastructure development, including power, water, and road projects, and for green industrialisation initiatives such as waste management systems. Intellectual property rights, including patents and trademarks, as well as quality certifications, will also be supported.

Moreover, biofuel projects will be exempt from electricity duties and energy development cess for a period of ten years, with potential waivers on cross-subsidy charges and additional power surcharges, subject to regulatory approval. A 50 percent reimbursement on stamp duty for land purchases is another key incentive. For large-scale projects with investments exceeding INR 500 crore, customised incentive packages under the state’s Industrial Promotion Policy 2025 are available.

Ensuring a steady supply of biomass is central to the scheme’s success. To facilitate this, the government will provide upfront subsidies for essential farm equipment required for biomass collection. The Agriculture Department will lead training and support for biomass aggregators at the block development level, fostering the formation of Farmer Producer Organisations (FPOs) and cooperatives to streamline the supply chain. The Forest Department will also play a vital role by making biomass available from forest areas and exploring the cultivation of suitable biomass on degraded forest lands. District-level committees, chaired by the Collector and comprising representatives from various departments, will be responsible for facilitating biomass availability at market prices.

The integration of waste streams into the biofuel ecosystem is another important aspect of the scheme. Urban solid waste-based projects will benefit from existing facilities under the Department of Urban Development and Housing. The Animal Husbandry Department will assist in the establishment of bio-CNG plants by enabling long-term contracts for land and cow dung from animal shelters and private gaushalas. Additionally, mechanisms will be developed to collect waste from agricultural produce markets to feed into CBG production. An IT-based portal and mobile application, developed by the NRE Department, will link farmers, aggregators, and biofuel projects, ensuring efficient logistics and fostering long-term contracts.

Prospective biofuel developers will need to register their projects through the Commissioner of the NRE Department. The registration process requires submission of detailed project reports, biomass assessment reports, and land-related documents, along with other relevant information. To prevent conflicts and ensure sustainable biomass availability, the scheme typically allows only one bioenergy project per block, although the catchment area may be expanded based on project capacity and biomass requirements, as determined by the district-level committee. Additionally, all biofuel projects must comply with environmental laws and regulations, including zero-liquid discharge and adherence to national biofuel standards.

To oversee the implementation of this ambitious scheme, a high-powered committee, chaired by the Chief Secretary, will be responsible for coordinating interdepartmental efforts, reviewing progress, and addressing any challenges that arise. This will ensure the smooth execution of the project, paving the way for a greener and more energy-secure Madhya Pradesh.

With this, the Madhya Pradesh government is not only aiming to meet its local energy needs but is also playing a critical role in supporting India’s broader objectives of sustainable energy development and carbon neutrality.

If successfully implemented, this scheme could set a benchmark for other agrarian states in India and even globally, showcasing the potential of biofuels to transform economies, reduce environmental impact, and contribute to climate change mitigation.