"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. 

Rudolf Diesel, the inventor of the diesel engine, had demonstrated it at 1900 World Fair using groundnut oil. More than a century later, bio- fuels seem set for a comeback. While the use of bio-fuels is prevalent in Europe, it could soon pick up here as well. Organisations such as Indian Oil, Indian Railways and the Mahindra Group are conducting research in the field. If successful, bio-diesel could result in substantial reduction in petroleum imports.

Bio-diesel refers to those plant oils that can substitute diesel. Vegetable oils can be directly used as fuel, but they perform better after chemical treatment. The resulting fuel can then be blended with regular diesel in various concentrations. For instance , bio- diesel is sold in France in a 5% mixture with regular diesel while it is sold in Germany in pure form. According to DK Tuli, CEO of Indian oil technologies, as IOC subsidiary, apart from being renewable, mixing bio – diesel also results in fuel quality improvements such as a higher cetane number and reduced sulphur emission. Indian Oil is running a pilot plant for bio- diesel production. According to Mr Tuli, a 5% bio-diesel mix can be used with regular diesel without requiring any changes in the engine design. Engines have also been tested at concentrations of 10% and 20% . Bio-diesel can be obtained from virtually any plant oil.

Soybean oil is the preferred feedstock in the US, rapeseed and sunflower oil are used in Europe while Malaysia and Thailand use palm oil. Germany, France and Italy are large producers of bio-diesel. The total installed production capacity in EU is more than 2 million tonnes a year and the production exceeded one million tones in ’02. Use of edible oil to produce bio-diesel would be financially unviable in India. Hopes however rest on a wild plant, Jatropa, whose seeds are rich in oil. According to RP Sharma , professor at IIT- Chennai and former member of the Planning Commission Committee on bio – fuel , Jatropa is a hardy plant that can grow in near absence of water. Jatropa Plants have a productive life of up to 40 Years, but take two to three years to mature. The yield of coil could be as high as 3,000 kg/hectare. The cost of bio-diesel depends on two factors, the cost of processing the raw oil. According to Mr Sharma , the cost of processing should not exceed Rs 3-4 per kilogramme.

The economic feasibility therefore depends upon the availability of oil at a reasonable price. But since Jatropa has no commercial use, there is no cultivation as of now, and availability of seeds for oil production is a problem. However, a number of plantations are believed to be coming up in Rajasthan and Haryana. Indian Railways has signed an MoU with IOC for a 500 hectare Jatropa plantation . India’s first large-scale plant for manufacture of bio-diesel is at Gurgaon, outside Delhi, operated by  Harbinsons Biotech. The company is trying to sell the design in India and had set up the plant as a demonstrator.