Bioenergy is particularly important for India’s rapidly growing energy market. It can strengthen energy security, reduce reliance on imported fossil fuels, create economic development and employment opportunities - especially in rural communities - and contribute to lowering greenhouse gas emissions. These benefits align closely with national energy and climate objectives, enabling India to leverage its domestic resources to support cleaner energy growth. India’s abundant agricultural residues and organic waste provide a strong resource base for modern bioenergy production.

India’s ethanol industry has emerged as one of the country’s most successful policy-driven energy stories. Backed by a suite of supply, demand, innovation and financing policies, India’s ethanol consumption has grown fourfold from less than 2 billion litres per year (BLPY) at the start of India’s National Policy of Biofuels in 2018 to more than 11 BLPY by 2025.

Biogas has a long history in India, with the compressed biogas (CBG) sector undergoing a promising growth spurt. The new eleven major national policies put in place since 2018 have been successful to attract significant investment interest, with around 170 functional plants by 2025 and a pipeline of almost 300 new ones under construction.

Interest is also growing in sustainable aviation fuels and innovative fuel pathways. As demand for low-emissions fuels in aviation is expected to grow, so too is demand for biojet. However, rapid deployment of new projects, as well as scaling up new fuel technology pathways, will be required to meet forthcoming demand driven by India’s sustainable aviation fuel mandate.

Liquid and gaseous biofuels are forecast to more than double in India if the right measures are implemented.  In the main case forecast, which reflects current policies, projects, feedstock availability and market conditions, these fuels are expected to grow by more than 50%, from 293 petajoules (PJ) in 2025 to 429 PJ by 2030, with ethanol and CBG accounting for the majority of this growth. In an accelerated case, which assumes all announced targets are met, there is sufficient supply of feedstocks for fuel producers, and infrastructure, supply chains, and project development continue to expand, supported by enhanced policies, these fuels are forecast to more than double, from 293 PJ in 2025 to 609 PJ by 2030. More than three-quarters of this growth is driven by biodiesel, if feedstock supply and production capacity rapidly scales up. This would correspond to a sixfold increase in liquid and gaseous biofuels over a decade since 2020.

There are challenges ahead, but they can be addressed with right policy support. In the accelerated case, ethanol is expected to continue expanding backed by a suite of strong policies while biodiesel accelerates growth if feedstock challenges are addressed and production capacity are supported. Biojet is expected to scale-up but will continue to require support across the entire value chain. CBG’s fast development pace needs to be accompanied by a comparable scale-up of the feedstock supply chain and the development of new markets for fermented organic manure produced in CBG plants.  

Drawing on international best-practices, the IEA recommends four priority actions that can help accelerate liquid and gaseous biofuel in India use by 2030:

1. Establish roadmaps, targets and policies and implement them robustly to support long-term demand. While India has made strong progress on ethanol and CBG, a comprehensive sustainable fuel roadmap, which includes all liquid and gaseous biofuels and leverages strategic policy experience gained from developing the Roadmap for Ethanol Blending in India, could provide long-term investment signals for other fuels, support scale-up and improve alignment across central and state governments on policy mechanisms for deployment.

2. Develop integrated supply chains and enabling infrastructure. India could strengthen coordination to build integrated supply chains that leverage shared feedstocks and existing infrastructure and create new markets for co-products. This includes strategic planning tools such as a national biomass inventory to guide feedstock availability and avoid competition, alongside forward-looking investments in feedstock aggregation, transport networks, and storage facilities.

3. Support innovation to close cost gaps for emerging fuels. While ethanol, biodiesel, and CBG are commercially mature, fuels such as SAF require further technology development. Targeted support—such as grants, concessional finance for pilot and demonstration projects, innovation challenges, and public-private and international partnerships—can accelerate scale-up, reduce costs, and tailor solutions to India’s specific needs.

4. Develop carbon accounting and sustainability frameworks. A robust and transparent framework for liquid and gaseous biofuels would enable easier certification, participation in voluntary green credit markets, and access to export opportunities. It would also help the government guide and reward best practices, ensuring fuels are produced sustainably, aligning with best practice in leading markets such as Brazil.