Insights into Editorial: Policy on biofuels: Green push?
Recently, Union Cabinet approved a National policy on Biofuels that seeks to not only help farmers dispose of their surplus stock in an economic manner but also reduce India’s oil-import dependence.
National policy on Biofuels primarily tries to address supply-side issues that have discouraged the production of biofuels within the country. It allows for a wider variety of raw materials to be used as inputs to produce ethanol that is blended with petrol.
The Policy expands the scope of raw material for ethanol production by allowing use of Sugarcane Juice, Sugar containing materials like Sugar Beet, Sweet Sorghum, Starch containing materials like Corn, Cassava, Damaged food grains like wheat, broken rice, Rotten Potatoes, unfit for human consumption for ethanol production.
Expected Benefits of National Policy on Biofuels:
- Reduce Import Dependency: The ethanol supply year 2017-18 is likely to see a supply of around 150 crore litres of ethanol which will result in savings of over 4000 crore of forex.
- Cleaner Environment: For the ethanol supply year 2017-18, there will be lesser emissions of CO2 to the tune of 30 lakh ton. By reducing crop burning & conversion of agricultural residues/wastes to biofuels there will be further reduction in Green House Gas emissions.
- Health benefits: Prolonged reuse of Cooking Oil for preparing food, particularly in deep-frying is a potential health hazard and can lead to many diseases. Used Cooking Oil is a potential feedstock for biodiesel and its use for making biodiesel will prevent diversion of used cooking oil in the food industry.
- MSW Management: It is estimated that, annually 62 MMT of Municipal Solid Waste gets generated in India. There are technologies available which can convert waste/plastic, MSW to drop in fuels. One ton of such waste has the potential to provide around 20% of drop in fuels.
- Infrastructural Investment in Rural Areas: At present Oil Marketing Companies are in the process of setting up twelve 2nd Generation bio refineries with an investment of around Rs.10,000 crore. Further addition of 2G bio refineries across the Country will spur infrastructural investment in the rural areas.
- Employment Generation: One 100klpd 2G bio refinery can contribute 1200 jobs in Plant Operations, Village Level Entrepreneurs and Supply Chain Management.
- Additional Income to Farmers: By adopting 2nd Generation technologies, agricultural residues/waste which otherwise are burnt by the farmers can be converted to ethanol and can fetch a price for these waste. Also, farmers are at a risk of not getting appropriate price for their produce during the surplus production phase. Thus conversion of surplus grains and agricultural biomass can help in price stabilization.
Biofuel Policy Success will depend on the details:
At present, the technology available a large chunk of the biofuel will have to come from the sugar sector for now. Therefore, pricing is the key. As mentioned above, the government estimates that ethanol supply of around 150 crore litres in 2017-18 could save foreign exchange worth over ₹4,000 crore.
The production of biofuels from agricultural waste, it is hoped, will also help curb atmospheric pollution by giving farmers an incentive not to burn it, as is happening in large parts of northern India.
But policy should not get ahead of technological and financial feasibility and options should be realistically laid out for farmers.
There is also a need for caution in using surplus foodgrain to produce ethanol. Food for fuel has often been a controversial policy matter across the globe as many believe using grains for ethanol raises food inflation risk.
And while removing the shackles on raw material supply can have definite benefits, it cannot make a significant difference to biofuel production as long as the supply-chain infrastructure that is required to deliver biofuels to the final consumer remains inadequate.
To address this issue, the new policy envisages investment to the tune of ₹5,000 crore in building bio-refineries and offering other incentives over the next few years. The government should also take steps to remove policy barriers that have discouraged private investment in building supply chains.
The policy has also encouraged setting up of supply chain mechanisms for bio-diesel production from non-edible oilseeds, used cooking oil, and short gestation crops.
According to a Bloomberg New Energy Finance study Next-Generation Ethanol: What’s In It For India?, the increase in ethanol production alone has the potential to create over 700,000 jobs when targeting only the base potential. States with a combination of high agricultural activity and large fuel consumption like Maharasthra, Punjab and Uttar Pradesh would be the best positioned to exploit this opportunity.
We need measures which are available today and at affordable costs. This one measure of pushing for biofuel buses for public transport within a specific timeline like 2020, would help transform our public transport services, improve the health of our citizens, provide economic impetus and create jobs. Surely a win-win proposition at a fraction of the cost associated with the subsidy-driven push being planned for E-mobility.
When sustainability focused countries like Sweden and a developing country like Brazil have used ethanol in a big way to achieve their environmental and economic objectives, India must make efforts to scale up technology alternatives.
Biofuels in India are of strategic importance as it augers well with the ongoing initiatives of the Government such as Make in India, Swachh Bharat Abhiyan, Skill Development and offers great opportunity to integrate with the ambitious targets of doubling of Farmers Income, Import Reduction, Employment Generation, Waste to Wealth Creation.
Biofuels programme in India has been largely impacted due to the sustained and quantum non-availability of domestic feedstock for biofuel production which needs to be addressed.
Sustainability, with its multiple environmental, economic and social objectives, is now prominent in many national and international policies.
These are implemented in a classical incrementality approach. Using the example of biofuels to demonstrate the way that multiple objectives are developed in energy and environmental policy.
Biofuels are promoted as replacements for transport fuels, but biofuel policy is also geared towards socio-economic goals such as agricultural subsidy and strategic goals such as security of energy supply.
With a holistic approach, which includes the full potential of biofuels for vehicles, we will be able to achieve our dream of creating an environmentally and economically sustainable transport sector.