India opened its first factory to produce ethanol from rice straw or stubble on Wednesday as part of measures to reduce its reliance on oil imports and meet its net-zero carbon goal.
Prime Minister Narendra Modi said the project will help cut pollution in India's capital New Delhi, which has been blanketed by smog from stubble burning in recent winters, as well as in the northern states of Haryana and Punjab.
India, one of the world's biggest emitters of greenhouse gases, has set a 2070 goal for net-zero carbon emissions and has expedited steps to switch to cleaner energy to cut projected emission by a billion tonnes by 2030.
Mr Modi said India, the world's third biggest oil importer, could not remain insulated from disruption in global markets, adding that the Panipat project would boost farmers' incomes.
A combination of oil prices rising well above $100 per barrel and a strong US dollar have piled pressure on countries that are dependent on crude imports to drive their economies.
Indian state-run oil firms have announced plans for 12 plants in several states to produce ethanol using farm waste.
Commercial production from the new 9 billion Indian rupees ($114 million) Indian Oil plant would begin in three months, India's oil minister Hardeep Singh Puri said.
He said India is the third country after Brazil and the US to produce ethanol from agricultural waste.
The plant will generate 100 kilolitres of ethanol a day, equivalent to about 100 tonnes. India has until now used ethanol produced from sugar for mixing with petrol.
Ethanol produced from the project will help cut annual carbon emissions by about 300,000 tonnes, equivalent to taking nearly 63,000 cars off India's roads a year, Sukla Mistry, head of refineries at Indian Oil, said.
India relies on foreign oil suppliers for about 85 per cent of demand, but in the last eight years, it has raised the percentage of ethanol in petrol to 10.16 per cent from 1.4 per cent.
The government aims to raise this mix to 20 per cent by 2025/2026.
India's fuel demand is rising rapidly as people opt to travel in their own vehicles to avoid a heatwave.
"We have saved foreign exchange outgo of 415bn rupees through blending of ethanol [with petrol] and reduced about 2.7 million tonnes of carbon dioxide emissions," Mr Puri said.
Apart from financial savings, the new plant will also help in disposing of rice crop-waste, which is a major source of air pollution when farmers burn stubble.
The new plant will use 200,000 tonnes of rice straw.