Bio Fuel / Bio Diesel


"Biofuels" are transportation fuels like ethanol and biodiesel that are made from biomass materials. These fuels are usually blended with the petroleum fuels — gasoline and diesel fuel, but they can also be used on their own. Using ethanol or biodiesel means we don't burn quite as much fossil fuel. Ethanol and biodiesel are usually more expensive than the fossil fuels that they replace, but they are also cleaner-burning fuels, producing fewer air pollutants.


Ethanol is an alcohol fuel made from the sugars found in grains, such as:

  • Corn
  • Sorghum
  • Barley

Other sources of sugars to produce ethanol include:

  • Potato skins
  • Rice
  • Sugar cane
  • Sugar beets
  • Yard clippings
  • Bark
  • Switchgrass

Scientists are working on cheaper ways to make ethanol by using all parts of plants and trees rather than just the grain. Farmers are experimenting with "woody crops," mostly small poplar trees and switchgrass, to see if they can be grown cheaply and abundantly.


Biodiesel is a fuel made from vegetable oils, fats, or greases — such as recycled restaurant grease. Biodiesel fuel can be used in diesel engines without changing them. It is the fastest growing alternative fuel in the United States. Biodiesel, a renewable fuel, is safe, biodegradable, and produces lower levels of most air pollutants than petroleum-based products.


Technology For Production Of Ethanol

The technology for manufacture of ethanol (dehydrated/Anhydrous Alcohol) involves special processing of alcohol/rectified spirit. There are three commercial routes for the manufacture of dehydrated Ethanol from rectified spirit/ alcohol. These are as follows

  • Azeotropic Distillation Technology
  • Molecular Sieve Technology
  • Membrane Technology

Azeotropic Distillation Technology

The technology for ethanol production from rectified spirit using azeotropic distillation is well established in India as a number of plants exist in the country based on this technology. This technology involves a distillation system employing benzene as the third component has been in use in India since World War II.

The initial capital cost (project cost) for this technology is lower than the molecular sieve technology but the cost of production is higher because of higher energy consumption and higher consumption of benzene or other similar third component such as cyclohexane. It is essential to mention here that the third component may cause air pollution as well as water pollution especially components such as benzene are known to be highly carcinogenic.

Molecular Sieve Technology

This is the most commercially popular, financially viable and environmentally friendly technology, which has emerged, in the late 1980s. This is a clean technology in which the water is removed by molecular sieves and dehydrated alcohol/ethanol is obtained. The dehydration process using this technology can be carried out either in liquid phase or vapour phase. For smaller plants and for removing less water content liquid phase technology is adequate and is often used. Smaller plants using this liquid phase have been set up in the past. However, for larger plants where ethanol is being used for blending with petrol, the globally preferred technology is based on vapour phase dehydration of ethanol.

In this technology, although, the capital cost is higher than azeotropic distillation, the cost of production is lower. Another major advantage is that it does not cause any pollution especially water pollution, as is the case with azeotropic distillation technology, in which case, benzene and other toxic chemicals pose a health hazard.

Membrane technology Membrane technology has not been successful at commercial scale as the cost of membrane is high and its life is reported to be very short. This leads to high cost of production. However, technologies using newer type of membranes which will have a relatively longer life, and therefore lower cost of production, are reported to be under development in developed countries. This technology does not have a proven track record yet.

Raw Materials/Substrates

Alcohol can be manufactured from a large number of raw materials, which fall into three main categories

  • Sugar based
  • Starch based
  • Cellulose based

Sugar Based

In this category the main crops are sugar cane (sugar cane juice & molasses), sugar beet (beet juice and molasses), sweet sorghum, Starch Based

All types of grain including wheat, rice, corn (maize), barley, malt, millet etc. are included in this. In addition, tubers such as potatoes, cassava (tapioca) etc. are also starch based.

Cellulose Based

This category includes agro-waste, agro- residues, bagasse, rice husk, straw, groundnut shells, wood chips, sawdust, organic municipal waste etc.

Scheme Applicable

S. No. Financing Schemes Interest Rate (%) p.a. Maximum repayment period  (Years) Max. Moratorium(years) Minimum promoters Contribution(% ) Term loan from IREDA Remark
1. a) Ethanol production through Biomass / Sugar juice / Molasses



2 30 Upto 70% of Project cost IREDA loan is available only for plants of oil extraction & trans-esterification process.
  b) Bio-Diesel Production



2 30 Upto 70% of Project cost IREDA loan is available only for plants of oil extraction & trans-esterification process.

Source: MNRE & IREDA 

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