India turned rice and maize into fuel by treating them as commodities with a guaranteed buyer, a price fixed in advance, a market where they trade, and warehouses that banks lend against. Oil companies must blend ethanol; they publish what they will pay for it by feedstock before each year begins; maize trades and is stored like any other grain; and the Food Corporation of India sells surplus rice to distilleries at a notified price. The result was hundreds of new distilleries and 20% blending reached ahead of schedule.

Biomass for power has the first of those four things and part of the second. Coal plants must co-fire biomass, and there is a benchmark price. It has none of the others. This piece sets out what made grain work as an ethanol commodity, how other countries made biomass a commodity, and what India would need to do the same for straw. It follows this blog’s pieces on straw-collection machinery and the 2026-27 ethanol tender.

How rice and maize became ethanol commodities

For the supply year from November 2026, the oil companies are buying about 1,100 crore litres of ethanol at prices set per feedstock in the tender: Rs 57.97 a litre from C-heavy molasses, Rs 60.32 from surplus FCI rice, Rs 64.00 from damaged grain and Rs 68.86 from maize, down from Rs 71.86 last year after the maize incentive was cut. A distiller knows before the year starts what each feedstock will earn.

The grain itself is priced too. FCI sold 6.35 million tonnes of rice worth about Rs 14,597 crore to distilleries between June 2025 and June 2026 at a notified price of Rs 2,250 and then Rs 2,320 a quintal, about 40% below its own cost of about Rs 3,889; from November 2026 the price is Rs 2,390. Maize is bought in open markets, has a history of futures trading on Indian commodity exchanges, and is stored in registered warehouses. And interest subvention on loans built 499 distilleries, as this blog has reported. Each of these is a lever the government chose to pull.

How biomass became a commodity elsewhere

Wood pellets are the clearest case. Europe first standardised them: the ISO 17225 series sets one set of grades and tests for solid biofuels, and the ENplus scheme adds stricter A1, A2 and B classes. Once a tonne of pellets meant the same thing from any supplier, a price could be published: Argus assesses pellets delivered into north-west Europe, and the European Energy Exchange launched wood-pellet futures in 2017, settled on that index, with the first trade in January 2018. Euronext lists a contract on ENplus A1 pellets. Trade in solid biofuels grew from about 56 to 300 petajoules between 2000 and 2010, with pellets from 8.5 to 120, according to research from Utrecht University.

Japan made a farm residue into a commodity through certification. Since April 2024, palm kernel shells burnt in power plants that receive its feed-in tariff must be certified sustainable under recognised schemes, which has turned a palm-oil by-product from Indonesia and Malaysia into a graded, documented import. The European Union’s waste law excludes straw used for energy from the definition of waste and sets a test for when a residue is a by-product, which matters because waste needs permits to move and cannot easily be traded.

What India has, and what it lacks

The benchmark pellet price the power ministry set in November 2023, Rs 2.27 per 1,000 kcal for non-torrefied pellets in the northern region outside the NCR, works out to about Rs 6,356–9,080 a tonne across the specification’s calorific range of 2,800–4,000 kcal per kg, before GST and transport. CEEW estimates that pellets delivered 50 km cost about Rs 4,000–5,000 a tonne to make and move. So the price is not obviously too low. What is missing is everything that lets a price become a market: grades, an index, storage and finance.

The warehouse gap is the most telling. The Warehousing Development and Regulatory Authority has notified 218 farm commodities for negotiable warehouse receipts, against which banks lend. Its 2025 notification, read in the Gazette of India (CG-DL-E-04092025-265958), added rice bran, maize bran, several oil cakes, bamboo, raw jute and coconut with husk, and even urea and potash among non-farm goods. Biomass pellets, briquettes and baled straw are not among the 2024 and 2025 additions. A collector who bales straw in October cannot store it in a registered warehouse and borrow against it until a power plant needs it in March.

Bamboo is the nearest case: the Numaligarh 2G ethanol plant

One biomass in India already has most of the pieces. Assam Bio Ethanol Pvt Ltd (ABEPL), a joint venture of Numaligarh Refinery Limited with Finland’s Fortum and Chempolis, has built a plant at Numaligarh in Golaghat that turns bamboo into second-generation ethanol, along with furfural and acetic acid. It produced fuel-grade ethanol in trials in September 2025 and was dedicated to the nation that month; in September 2026 it was reported to be in a stabilisation phase before commercial production. At full capacity it needs about 5 lakh tonnes of green bamboo a year to make about 49,000 tonnes of ethanol, roughly 124 litres per tonne of green bamboo, and the bamboo would come from about 12,500 hectares, implying about 40 tonnes per hectare a year.

The collection model is the interesting part. Rather than buying poles at the plant gate, ABEPL has set up a network of decentralised chipping units, run by local entrepreneurs within 30–40 km of the farms, which cut bamboo into chips of a standard size; it issued an expression of interest in October 2025 for trucking about 3.75 lakh tonnes of chips a year from those units. Farmers register on a digital platform and are paid directly, with no middleman, the company says: about 4,200 had registered across 16 districts of Assam and parts of Arunachal Pradesh, Nagaland and Meghalaya by February 2026, against a target of 30,000 within a 300 km radius over three years. With the Assam forest department it has set up three high-tech nurseries for tissue-cultured saplings and plans to distribute about 60 lakh saplings free; Assam’s rule allowing tea estates to use up to 5% of their land for other crops has led some to plant bamboo.

That is the ethanol model applied to a biomass: a guaranteed buyer, a first processing step close to the farm that turns a bulky residue into a standard product, registered suppliers paid directly, and a legal status and warehouse category that let the product be stored and moved. What it still lacks is a published price per tonne, and supply: the company said in February 2026 that the plant was in start-up because raw material was short. Straw could follow the same route, with chipping units replaced by baling and pelleting centres.

What would make straw a commodity

None of these steps needs a new subsidy. Most are notifications: a price before each kharif season, a BIS grade, a WDRA entry, a customs line. The ethanol programme shows that once a farm product has a buyer, a price, a grade and a warehouse, private capital follows. Straw already has the buyer. The Rajya Sabha’s Committee on Subordinate Legislation recommended in February 2025 that a benchmark price for paddy residue, modelled on the minimum support price, be set with the Commission for Air Quality Management and notified before each kharif season. That would be the first step; warehouse receipts would be the one that lets the market last beyond the harvest.

What would fix this

• The Ministry of Power should notify a per-tonne benchmark price for agro-residue pellets and briquettes each year before the kharif harvest, by region and grade, and publish what plants actually paid.
• BIS should publish grades for agro-residue pellets and briquettes aligned with ISO 17225, and the model co-firing contract should reference them.
• WDRA should notify biomass pellets, briquettes and baled straw as commodities for negotiable warehouse receipts, with storage norms for moisture and fire safety.
• DGFT and CBIC should create separate tariff lines for agro-residue pellets and briquettes, so that production and trade can be tracked.

These are proposals from this blog, not recommendations any agency has adopted.

What this piece could not establish

The benchmark pellet price is the November 2023 figure, valid for a year; no later revision was found, and the per-tonne range is this blog’s conversion at the specification’s calorific range. Only WDRA’s 2024 and 2025 additions were read in the gazette; its full list of notified commodities was not, so this piece does not claim no biomass item has ever been notified. Exchange trading volumes for wood-pellet futures were not found. Maize’s exchange trading in 2026 was not checked. Ethanol prices are tender prices, not what was actually allocated by feedstock this year, and every award in the 2026-27 tender is provisional pending Supreme Court cases. ABEPL’s sourcing figures are from February 2026 and its price per tonne of bamboo was not found; capacity is reported as 49,000 tonnes or 50,000 tonnes of ethanol a year, and feedstock as 5 lakh tonnes of green bamboo or about 3 lakh tonnes of dry bamboo. The public support found for its sourcing came from the Assam forest department’s nurseries; no announcement of a separate state bamboo board role was found.

Sources and caveats

About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.