The green theme of the Obama administration will soon be reflected on India as well.
The government-owned Indian Oil Corporation is tying up with US-based National Renewable Energy Laboratory for a pilot project to produce second generation biofuel.
This biofuel -- essentailly bio-ethanol -- would be produced from cellulosic biomass or degradable agricultural waste or wood.
"In the coming years, it is believed that cellulosic biomass will be the largest source of bio-ethanol," said a senior official of IOC.
"Next generation fuel is what the industry is betting on. Alternative methods, other than sugar cane, needs to be considered," the official added.
IOC would invest about Rs 20 crore (Rs 200 million) initially for the cellulosic biomass project.
Experts say biomass resources are abundant and bio-ethanol from cellulosic biomass appears to have near-term economic potential.
"Cellulosic ethanol offers enormous promise and we can have tonnes of it per year without competing for oil," Planning Commission member Kirit Parikh told Business Standard.
The NREL has also signed a memorandum of understanding with its Indian counterpart -- the ministry of new and renewable energy -- for production, utilisation, distribution and marketing of biofuels.
Under the agreement, the countries would cooperate in the areas of emerging technologies for second-generation biofuels and advanced technologies for first generation biofuels, among others.
Here thrust would be given to production and development of quality planting materials and high sugar containing varieties of sugarcane, sweet sorghum, sugar and cassava.
"Across the world, private oil companies are looking at India and identifying probable partners for a venture in next generation fuel. In fact, US universities and Indian companies are also collaborating," said an official from a bioprocesses and engineering company.
A shortfall in ethanol production has already thrown India's plans to blend ethanol with petrol. Sixteen months ago, the government made it mandatory to blend petrol with 5 per cent ethanol but the plan never stabilised and the October 2008 deadline to raise it to 10 per cent has been missed.
Blending of petrol with 5 per cent ethanol would have required 1,800 million litres of the spirit for three years, from November 2006. However, oil marketing firms managed to contract only 1,400 million litres of ethanol till February 2009.
Sources in the ministry say the government is looking at awarding a declared good status to biofuel and free it from all taxes to make it competitive.