Government Policies Every Biomass Fuel Buyer Should Know (October 2026)

Several government rules touch biomass fuel, but most of them do not apply to a factory boiler the way people assume. This guide lists the main Indian policies as of October 2026, who each one binds, and what it means for a plant manager who is deciding whether to buy white coal (biomass briquettes) or pellets. It is general information, not legal advice. Rules change, so check the official source before you act on any figure.

At a Glance

1. Biomass Co-Firing in Power Plants

The Ministry of Power's comprehensive policy dated 7 November 2025 sets a 5% biomass-pellet blend by weight for coal-based thermal power plants from FY 2025–26, with an additional 2% requirement for plants in the NCR. The detailed fuel, feedstock and implementation conditions are set out in the official policy. Check the current policy and plant-specific requirements before relying on these figures.

The obligation sits on the power plants, not on industrial boiler users. For a factory, the effect is indirect: power-plant demand competes for the same agro residue. Pellets can be offered to power plants against their own fuel specification. We do not describe any product as compliant with, or approved under, the mandate. Read more in our guide to the co-firing policy.

2. CAQM Rules: Delhi-NCR and Its Neighbours

The Commission for Air Quality Management (CAQM) sets fuel rules for industry in Delhi-NCR. Its approved-fuel list, issued as Direction No. 65 in June 2022, allows biomass-based fuels for industrial use in NCR districts outside the National Capital Territory of Delhi. That list applies to the NCR only; it is not a national approved-fuel list.

CAQM has also set rising targets for brick kilns in Punjab and non-NCR Haryana to co-fire paddy-straw pellets or briquettes: at least 20% from 1 November 2025, 30% from 1 November 2026, 40% from 1 November 2027 and 50% from 1 November 2028, as summarised from Direction No. 92. In December 2025 it asked Haryana, Uttar Pradesh, Rajasthan and Punjab to prepare plans to phase out coal in industries in non-NCR districts. If you operate in or sell to those states, read the current directions on the CAQM website, because dates and scope can change.

3. MNRE National Bioenergy Programme

The Ministry of New and Renewable Energy runs a National Bioenergy Programme. Its biomass component gives Central Financial Assistance to plants that manufacture briquettes and pellets, and to non-bagasse biomass cogeneration projects. Phase-I was notified for 1 April 2021 to 31 March 2026 with an outlay of ₹858 crore, of which ₹158 crore was for biomass. Applications run through the BioUrja portal. We could not confirm a Phase-II extension, so check the MNRE site for the current status.

This support is for manufacturers. It does not reduce the price a fuel buyer pays, and it is not a subsidy on fuel.

4. Carbon Credit Trading Scheme (CCTS)

India's carbon market sets greenhouse-gas emission-intensity targets for notified sectors. The first targets covered aluminium, cement, chlor-alkali, and pulp and paper in October 2025. A January 2026 notification added petroleum refining, petrochemicals, textiles and secondary aluminium. Obligated entities that beat their target earn tradeable certificates, and those that fall short must buy them. If your plant is in a notified sector, ask your energy or sustainability team whether you are an obligated entity.

Be careful with claims here. Switching to a renewable agro-residue fuel replaces fossil coal, but it does not by itself earn carbon credits, and we never describe biomass as carbon neutral. How biogenic carbon is counted follows the scheme's own rules. See our note on carbon credits and ESG reporting.

5. GST

As of October 2026, coal is taxed at 18% from 22 September 2025, when the ₹400 per tonne compensation cess ended. Biomass briquettes and solid bio-fuel pellets are listed at 5% under Notification 9/2025-Central Tax (Rate), Schedule I, S.No. 516. Confirm the rate for your product on the CBIC rate schedule or with your tax adviser before you invoice. More detail is in our GST guide.

6. BIS Standards

A Bureau of Indian Standards specification exists for these fuels: IS 18724:2024 for pellets and IS 18725:2024 for briquettes made from agro and herbaceous residues. BIS marking is voluntary, so many usable fuels are sold without it. Use the standard as a vocabulary and checklist for your own purchase limits, and ask for a batch lab report either way. See biomass pellet quality standards.

7. Your State Pollution Board

For most Gujarat factories the rule that matters most is your own consent from the Gujarat Pollution Control Board. Its conditions list permitted fuels, stack limits and monitoring. No fuel is pre-approved for every plant, and stack tests decide compliance. Ask the board whether a fuel change needs an amendment or only an intimation. Our GPCB fuel-change checklist walks through the order of steps.

What a Plant Manager Should Do

• Read your pollution-board consent and note the permitted fuels and stack limits.
• Check whether your sector or state has its own rule (CAQM states, CCTS sectors).
• Write the BBI specification into your purchase order: GCV 3800–4200 Kcal/kg, moisture below 10%, ash below 10% (typically 2–8%), sulphur below 0.1%.
• Ask for the batch lab report and run a 25 MT trial before you switch your main fuel.
• Compare fuels on cost per million Kcal with your own prices, using the fuel cost calculator.

Sources and Where to Verify

• Ministry of Power co-firing policy, news report, and the Ministry of Power and CEA notifications.
• Commission for Air Quality Management, for the current directions.
• Ministry of New and Renewable Energy and the BioUrja portal.
• ICAP summary of the CCTS compliance obligations, and the Bureau of Energy Efficiency notifications.
• CBIC GST rate schedule.

Policy moves quickly. Where a figure above matters to a decision, confirm it on the official site first.

Ask our team how these rules apply to your plant and your fuel.