Pramod Chaudhari explains that it is not too late for India to catch up with the rest of the world if policymakers strongly focus on the importance of alternative fuels including ethanol, as a stepping stone towards a bio-based economy.
India’s Energy Predicament-
Recently, the Cabinet Committee recommended blending of 10 per cent ethanol with petrol in India. While the earlier mandate of 5 per cent is yet to be implemented fully, one wonders if the recommendation of 10 per cent is far too ambitious. Way back in 2002, India was one of the first countries in the emerging economies (apart from Brazil) to endorse fuel ethanol as a blend of choice in petrol. The Bill was passed after due evaluation of the impact of 5 per cent blending with respect to availability of feedstock (in this case cane molasses, a by-product of sugar milling) and the impact on vehicles. The program ran for a year and half but was allowed to lapse in July 2004.
India’s tryst with alternative fuels can at best be described as uneven. As we have seen in many other countries which followed India and which have since then whizzed past to higher targets, the mainstay of the alternative energy policy has been the determination of the government to stay the course, even in adverse conditions.
The National Biofuels Policy presented by the Ministry of New & Renewable Energy (MNRE) in 2012 clearly spells out the importance of biofuels (ethanol, biodiesel and biomass based fuels) as a step towards mainstreaming alternative fuels in India’s quest for energy security. Also, in the current context of de-control of diesel and petrol prices, ethanol blending makes imminent sense. India needs to only look at successful trends around the world and calibrate its roadmap to an achievable, time bound and non-reversible biofuels policy. While every nation has varying concerns that demand individual resolutions, a few common axioms appear on the horizon. Take Thailand and Colombia. These are illustrations of developing economies which have stayed the course and reaped the benefits of a strong biofuels policy.
Both countries launched their biofuels program much after India. Today, both countries have a robust blending program in place. The policy implementation took into account pricing, availability as well as consumer education and vehicle manufacturers’ buy-in.
In both countries, the Ministries of Energy and Agriculture are responsible for the governance and promotion of energy crops, respectively. Tax incentives have been put in place to help promote ethanol as fuel blend as well as in the cultivation of energy crops.
The program is running successfully for the last seven years. Thailand is now on its way to phasing out Octane 91 Fuels and has also instituted special incentives for E20 compatible vehicles.
The recently announced ethanol blending program is heartening the pace of implementation is far too slow. While it was advised that the prices should be market determined, there seems a reluctance to follow it.
It is not too late for India to catch up with the rest of the world if policymakers strongly focus on the importance of alternative fuels including ethanol, as a stepping stone towards a bio-based economy.
Biofuels, the Ray of Hope:
The fuel ethanol industry has already taken on the mantle of producing ethanol from non-food agri-residues. Termed as Advanced Biofuels or Cellulosic Ethanol, the current technology utilizes the sugars trapped in biomass to be converted into biofuels.
While most organizations engaged in this process are either from US or, Europe, in India, the Department of Biotechnology has sponsored two Centers for research into 2nd Generation biofuels technology. One is Indian Oil Corporation and another is the ICT.
Actions to Usher in a Bio economy:
• Accord vital status to biofuels for ensuring India’s energy security
• Stick to declared timelines
• Use Indian expertise to fine-tune tried and tested solutions for implementation
• Fund and encourage research, especially for second generation ethanol production
• Ensure fiscal incentives for production and use of biofuels
• Create an independent biofuels mission in advisory bodies such as the National Action Plan for Climate Change (NAPCC)
• Clarity on not just the blending level mandated, but also on the detailed implementation procedures
• Regular monitoring of program implementation to ensure that progress is on track, and the targets set are realistic
• Accurate forecasting of ethanol availability at least one season ahead to develop a viable strategy for sustainable ethanol production
• Enhancing the effectiveness of the first generation ethanol program by ensuring availability of adequate feedstock
• Government support is essential in the initial stages to help the sector attain economies of scale and technical maturity, especially in second generation ethanol production which can utilize a vast surplus of agricultural residues and create additional income streams for farmers. Such support could be in the form of viability gap funding, significant accounting policies (tax exemption, accelerated depreciation etc.) or limited period subsidies
• A review of State-level policies could be undertaken to serve as best practices at the national level. The participation of State Governments is particularly essential to successfully implement biofuel programs in the country.
• Single window clearance for new biofuels / bio-energy projects would be highly desirable.
(The author is Co-Chairman, National Committee on Renewable Energy,
Confederation of Indian Industry and Executive Chairman, Praj Industries.)