Biofuels In India The Big Energy Opportunity Everyone Missed

TITLE: Biofuels in India: The Big Energy Opportunity Everyone Missed | Govindraj Ethiraj | The Core Report CHANNEL: The Core DATE: 2026-04-18 URL: https://www.youtube.com/watch?v=0IBeMEFLdTs

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We are in the midst of an energy crisis. So, there is a problem, and that’s because we are importing most of our fuels. So, tell us about where biofuels come in. So, at a very core, biofuels have probably a potential to take care of 17% of India’s energy demand at the current level. And significantly large percentage of these biofuels could come from agricultural residue as feedstock. You said this is also a substitute for coal going forward. So, where are you seeing that being applied right now? Two areas. One is power generation, and second is industrial steam generation. And that includes the logistics of it. So, just yeah, the scale of the problem is also the ensuring that all of this reaches the power plant. It’s not too far away. Let me build this back in terms of what kind of infrastructure would you require? 50 million metric tons of biomass would come from approximately 25 million acres of farmland. 25 million acres of farmland in the Indian context would have approximately 10 million farmers. So, you’re essentially talking about 50,000 villages, you know, being in a position to supply this. So, you need to create an ecosystem of collection, storage, densification, and supply. Coal took 150 years to create a supply chain which is reliable. We wanting to create this supply chain in 3 to 5 years time.

My guest today is Suhas Baxi of Biofuels Circle. Suhas, thank you so much for joining me. Hi. Pleasure, absolute. So, you know, we are in a interesting and difficult situation right now in the country. We are in the midst of an energy crisis. It’s not just us, but most of the world. Asia is more affected because of gas. India seems to be managing on the crude oil side, but gas is clearly a challenge. Gas supplies to, for example, commercial use has been curtailed. People on retail also are finding it difficult. So, there is a problem, and that’s because we are importing most of our fuels. Crude oil is more than 85, 90%, gas is more than 50% for whether it’s natural gas going into pipe natural gas or LPG which comes from refineries. So, there is a gap between what we want to fuel our energy needs and what is available. So, tell us about where biofuels come in and where are we in India today in terms of how they are solving or about to solve some of our problems at least.

Right. So, at a very core, biofuels have probably a potential to take care of 17% of India’s energy demand at the current level. And significantly large percentage of these biofuels could come from agricultural residue as feedstock. So, if we are in a position to harness 100% of our agricultural residue feedstock, then we may be in a position to take care of around 18% of our energy needs. Unfortunately, the infrastructure required for harnessing this is just being built up. So, I would say at the moment, biofuels is an important part of industrial fuel mix, but it’s not really made a dent in domestic as well as commercial applications. There is a pathway available for doing that. And my guess would be maybe around 1% to 2% of our energy demand currently is fueled by biofuels, but there is a potential to get to around 18%. And the current energy crisis that we see around the world, I think sets the stage for people to start believing that this is a long-term infrastructural solution possible for our energy.

So, let’s pick up a few specific examples, and you talked about current output being about 1% of total energy needs. What would be the specific kind of biofuel, and how is it being processed and pushed into our energy flow system?

So, if you look at the fuel mix, you can broadly divide them into solid, liquids, and gases. Solids have been fundamentally driving the industrial usage. Coal has been a big factor in India’s industrial as well as power economy. So, replacing coal with solid biofuels is one part of the transition journey. The second is liquids which essentially have a big role to play in automotive fuels and aviation fuels. So, ability to create additives which can be mixed. So, for example, ethanol has been one of those journeys where you say 20% of the petrol gets replaced by ethanol and you have an ability to have a mix of fossil and biofuel. So, how do you transition from an additive to 100% biofuel is a journey that one can have in liquid biofuels where automotive is one of the major consumers. And third is gaseous where it is both automotive and domestic where CBG would play a big role. So, the way I see right now is that solids are at a maturity stage where applications are proven, technology is available, and transition is purely a commercial decision. As far as liquids and gases are concerned, one needs to set up a much larger ecosystem both on the production side and the consumption side. You need to be in a position to make sure that your vehicles are able to use biofuels, that your burners are able to burn biogases.

For the current size of our production of food grains, we produce something like 700 million metric tons of agri residue every year. And we have uses of it. So, a large part of it does go as fodder, but even after that, you’ve got upward of 200 million metric tons which is scattered around the fields. So, how do you create the first mile ecosystem for getting it collected from the farmer, storing it, densifying it? I think the biggest enemy of biomass and solid bio residue is distance. So, how do you create compacted biomass so that it can travel longer distance? Briquettes are one version of it. It could be briquettes, it could be bales, it could be any other form of compacting. But making that happen close to the point of source of biomass is the infrastructure development. So, I would lay the challenges in three steps. Create infrastructure for mobilizing biomass from rural areas into industrial processes. Have sufficiently large capacity of processing and biofuel manufacturing units. And then on the consumer side, have an ability to ingest that in whatever are your applications. And one has to act on each one of these three sides to get to that 18% potential realization which could be a very big step.

The compacting needs to happen at two stages. One on the field itself. Because just imagine a situation where the farmer has harvested, and there’s a standing stubble. You have to make sure that the standing stubble is cut. It is organized in form of bales. So, the baling of biomass is the first stage of compacting. So, it’s like a small factory on the field for a couple of days period. For scaling up, you need to make investment in the aggregation machinery. And second, you need to make investment at a scale where this entire activity is finished between two crop seasons. So, if you have rabi and kharif both, then the farmer is harvesting for kharif and then getting prepared for sowing for rabi. He has a 15 to 30 days window in which he will make that field available for him to complete the activity in that period of time.

How remunerative is it for farmers to do this as opposed to just chucking it away? Is it remunerative? The answer is yes, it can be remunerative. For whom is it remunerative? Whoever is willing to create this value. Where is the value creation? Is in creating bales on the field. That’s an activity which will require investment in machinery, organizing labor force, and orchestrating an activity of producing bales on the field. Can a farmer do it? Of course, the farmer can do it. Can a small cooperative or a collective in village units do it? Of course. Can a small business in the rural area do it? Of course. Can a larger company do it through a partnership and alliance with these forces? And I think that’s the way to scale.

This in your experience is working more in states like Maharashtra? Wherever you create infrastructure, it works in all those states. So, it works in Punjab, it works in UP, it works in Maharashtra, it works in Gujarat, it works in AP. The challenge is are you able to organize it in such an efficient and effective fashion that you are able to complete the job in 15 to 30 days period. So, this is an industrial level logistics management exercise.

What else is working against it? I would say lack of infrastructure is probably currently the only thing which is working against it. There is no lack of willingness. Combination of public and private. Public infrastructure may be required in creating storages. Distance is the largest enemy of biomass. You need to compact it and create large-scale storages in rural areas. Are you going to be in a position to dedicate lands for these storages? How do you make it easy for sourcing and making the land available for temporary storages? That’s the part of public infrastructure. And private infrastructure would essentially be are you organized to make sure that farm by farm, village by village you have a schedule for cleaning all farms which gets effectively implemented in let’s say 30 days time.

The source will always be solid. The solid will either get converted back to solid in a solid to solid transformation in fuel, solid to liquid transformation and solid to gaseous transformation. These are three pathways for it. Solid to solid transformation requires very little investment because you’re essentially densifying it. These are relatively low-tech industrial enterprises. Solid to liquid transformation and solid to gaseous transformation is a matter of significantly large investment. You can’t really make biomass travel 500 km and then convert it to gas. You’d have to make it travel 50 km and make it into gas. So, the size of an individual unit will be relatively smaller. But somebody who is developing it will have to create hundreds of plants across the country. More than 150 plants are now commissioned. And almost 500 plants are in the process of getting commissioned.

The solid part. You said this is also a substitute for coal going forward. Two areas. One is power generation and second is industrial steam generation. Industrial steam generation would be like, if you look at everything in this room right from paint on the walls to the fabric that we are wearing all of it has used industrial heating in the process of making it. And that requires steam. Steam requires a boiler. Boiler requires a fuel. And almost every company around the country in an industrial area has a boiler. How do I replace the coal that is used there with biomass? This is one transition. The second is power generation. 60% of our power generation capacity is still thermal. Government has mandated that between 5 to 20% of coal needs to be replaced by solid biomass in form of pellets. So, power generation companies are getting ready to accept mixing of coal with biomasses. We use something like 1,000 million metric tons of coal across the country. If 5% of it is converted to biomass, you’re talking about 50 million metric tons of biomass. This 50 million metric tons of biomass would use 1/5 of the biomass which is available as 200 million tons extra biomass. Government’s thinking was 2027. I probably see it happening like 2030.

Coal is considered to be higher in calorific value, better fuel. Biomass is between 70 to 80% of the calorific value of coal or the worst quality coal. You need to have fuel handling systems which are able to handle larger volumes of material. A lot of older generation boilers are not able to handle the mix. So, you need a refurbishment process across power plants in India.

50 million metric tons of biomass would come from approximately 25 million acres of farmland. 25 million acres of farmland in the Indian context would have approximately 10 million farmers. You generally have 2,000 farmers across every village. So, you’re essentially talking about 50,000 villages being in a position to supply this. So, you need to create an ecosystem of collection, storage, densification and supply starting from large number of villages touching lives of more than a million farmers. Coal took 150 years to create a supply chain which is reliable at scale. We are wanting to create this supply chain in 3 to 5 years time. We touch 800 villages. We’ve taken 3 years to reach a point of touching 800 villages. Even if we have an aggressive plan of doubling the contact points every year, next year I may be touching 1,500 then 3,000 and then 6,000. So for us to touch 50,000 villages we probably will take 5 to 6 years. But there will be other companies. From a biomass perspective or energy perspective should be treated like an Amul kind of moment in India.

The fuel side as you said ethanol is something now we’re all familiar with because it’s E20 we are all putting it into our cars. NTPC has last year bought close to half a million metric tons of biomass. From a macro point of view, ethanol is obviously much larger. The suppliers in that system are more institutional. Larger farmers and ethanol because it is right now coming from what I would call as traditional first generation sources which is sugar mills and everything else which is a byproduct of sugar in that chain. When it comes to other biofuels we are essentially talking about using waste which is farm waste. So thus the sources of supply are far more distributed.

Government has come up with a policy which is Satat which essentially aims to create 5,000 CBG plants across the country. Large number of licenses have been granted. Companies like Reliance have already been started on that path. More than 150 plants out of this 5,000 stated ambition have already started producing compressed biogas. Compressed biogas chemically is same as methane or the natural gas that we use in our gas stations or what gets put in our gas stoves through pipe natural gas. So chemically constitutionally it is same. It’s just that the source is different. Replaceability from natural gas which is coming out of LNG that we are importing to CBG is going to be relatively easy to carry out. Most of us will not even know that we are using compressed biogas and not natural gas. From a transition point of view at the user end this will be the easiest transition to achieve. It will not really require anybody to make any changes to the infrastructure on consumption side. On the producer side it does require a significantly larger investment and that is what companies like Reliance or Indian Oil or several other companies are now making.

You’ve got like any other digester anaerobic digestion which is happening where you put biomasses. Biomasses are consisting of carbon, hydrogen and several other elements. You digest, put it through a digester, gas gets created. Approximately 12 to 15% of the quantum of biomass that you put gets converted by mass balance into gas. And that gas is what is stripped from H2S and CO2 is stripped out and you get 98% pure methane which replaces gas. The reason I explained this and I said 15% is converted to gas is because the balance 85% is converted to what is called fermented organic manure. So it has an ability to go back to the soil and make carbon rich soil possible. For soil preparation making our soil far more nutrient over a period of time, increasing its ability to hold water, fermented organic manure going back into the soil is going to be of a long term benefit. So CBG plant coming up is actually going to be a nucleus of creating local circular economy every area where it comes up.

We felt that the gap in this ecosystem is not on the technology side or willingness to make investment in technology infrastructure. You will have an Indian Oil or a Reliance or several other large oil companies willing to invest in creating large CBG plants. You would have an NTPC willing to transition from coal. And you have technology companies like Thermax or Praj or several such companies who have technology which will feed it. The gap is why is it not going at the same pace at which let’s say solar took off or wind took off and we felt that this gap is supply chain. It’s easy to say that you have technology available and there is 235 million metric tons of biomass available. But how do you make sure that it reaches you every day like clockwork? That the quality that is delivered to you is what your digesters are able to accept. And that the prices at which it will be delivered is something which fits your long-term financial viability equation.

So we created this business which is based on combination of two things. One is create the infrastructure. Second is use technology to make sure participation happens. Participation should be as easy as for coming for this to the studio I called an Uber to reach my house at 9:45. Now I was sure it will come at 9:45. So there was a reliability of service. Can a farmer call a similar cleaning service? Where I say 11th of November is the harvest day, 12th of November is the cleaning day. I book it on my mobile app and I have on 12th of November somebody coming in carrying out the cleaning taking my kachra away. And paying you for it. So it takes care of my worries with respect to how to handle it. We now look at present in more than 800 villages across the country. We’ve got 2 lakh farmers connected to our ecosystem. Last year we moved 7 lakh metric tons of biomass. 7 lakh metric tons as compared to 235 million metric tons is a dot in the ocean. But 7 lakh metric tons as a point to say can it be done across 800 locations?

Two types of machines. One is tractors and second is purpose built machines for the purpose of doing the baling. Purpose built machines are not there and that’s our investment. However, given the timing of when the biomass needs to be collected it is always post harvest. So you’ve got lots of idle tractor capacity available in the rural areas. Your ability to tap into this idle tractor capacity, engage it either seasonally or annually to make sure that the tractor capacity gets utilized, the tractor driver earns an income which is in addition to what he’s currently earning is clearly the trigger.

10 kilometers to 15 kilometers is seen as the ideal distance for the first leg of transportation. So we set up a depot in an area where within 10 to 15 kilometers we have an access to 2000 farmers or 5000 acres of farm land. Selection of these clusters to make sure that approximately 10,000 metric tons of biomass can be aggregated in the season is a point of decision. So that is the smallest unit. We call this the biomass bank. At the biomass bank we create typically a 10 acre open area where large bales are stored and we have a depot which has all the machinery which is required for the crop available there. In this area we would engage approximately 50 tractor drivers. We require 40, we would engage 50. 10 out of these are engaged for a 365 days in a year kind of engagement and the balance are engaged for 60 days in a year engagement. So there is a seasonal engagement and there is an annual engagement. We onboard the 2000 farmers through Gram Sabhas. Creating educational campaigns as to why and how could they participate. We make sure that there is a calendar created with using a WhatsApp chatbot to make sure that they have a clear schedule available.

This is pre-season work which is completed. Come the season every evening the tractor driver would know what are his rights for tomorrow. Where does he go? Pick up the machine, which farmer does he go to, what work does he do, where does he deliver? So all the schedule is available to him on his mobile phone. The farmer knows what’s going to happen on his mobile phone. At the end of the day when the job is done you would have payment for your services coming into your mobile phone. This is done in the cluster of 10 villages which could be having 2000 farmers and this is what we run for 45 to 60 days in a year. Once the season is over then deliveries from there start. The 10 odd tractor drivers were engaged with us for the entire one year period are having daily loads to deliver to our customers in the area. Our customers in the area could be a CBG plant, could be a briquetting plant. Our assurance to them is you will get daily supplies, you will get good quality supplies. Reliability of commitment to their customers, this feedstock supplies ensured, quality is ensured and timing of deliveries ensured.

What made you think of this venture? Between 99, 2000 and 2006 I ran business of American software product company called Triple Point Technology. Triple Point Technology had software products for energy trading and risk management. Most of our customers were people in oil and gas industry, electricity industry. They used our software for the purpose of managing their physical and derivatives positions. That 6-year period allowed me very good insight into how the energy industry works. Why investments happen in oil assets, how does oil storage asset, why does somebody like Morgan Stanley have oil storage assets around the world? Some of these things which externally you don’t really see I could see in close quarters. When the question of why does bioenergy supply chain not work came as a question, I think for me the immediate answer was well, there is no infrastructure. Is anybody incentivized to create storage? Is anybody incentivized to look at it from a long-term point of view? So, ecosystem or a marketplace was absent.

I always felt that I would like to at some point in time start a business which is focused on core infrastructure or core business, but where technology makes provides an edge. And digital technology provides an edge. I always felt it’s going to be supply chain of a traditional brick-and-mortar industry. I discussed this early days of COVID with my friend Ashwin with whom I used to work in Triple Point and we said, “Why don’t we make a few PowerPoint presentations on what is possible and what can be done and make it to people who are who’s who in bioenergy segment.” So, we used our early days in COVID probably a little more creatively to say that look, there is a way to solve the problem and the way to solve the problem is create infrastructure and create a technology-driven platform. The friends to whom we made these presentations, they liked it and they were willing to not just encourage us, but to be our customers or to be our investors. And I think that allowed us to take a leap.