Biodiesel Policies for India: Achieving Optimal Socio-Economic and Environmental Impact

Production of biodiesel from tree-borne oilseeds is often praised as a solution to many problems of rural development in India: employment generation on wastelands; afforestation of eroded land; soil conservation; a new source of energy, etc. Whether and to what extent these goals are achieved depends on the selected oilseed species, and, more importantly, the mode of production. We found many different ways of organising the biodiesel value chain that have emerged on the basis of varying local conditions and power relations among interest groups in five Indian states. Each mode has different socio-economic and environmental impacts, and there are manifold trade-offs. The article highlights the pros and cons of different modes of value chain organisation. It also discusses policies to improve their development effects. To choose the right policy-mix, policymakers need to be clear about their objectives and potential trade-offs. The article further emphasizes the need for better research before poor farmers are encouraged to plant oilseeds; and it discusses a number of supply and demand-side policies to accelerate the use of oilseeds for biodiesel in India.