It is vital to understand India’s energy requirements. With about 14% growth in 2007 in the manufacturing sector, 14% in 2006 in service sector and a change driven agriculture sector; Indian economy depends immensely on energy to sustain this progressive growth.

Current Energy Usage:

Current Energy Usage of India

This shows India is mainly coal dependent economy. Our heavy reliance on coal is also increasing environmental damage. Our crude oil situation too is not so optimistic as well. The international crude petroleum prices are rising and the current rates are in the range of $50-70. With India importing approximately 70% of its annual crude oil requirement (about 110 million tons), the annual expenditure goes up to a whopping amount of Rs.1600 billion! India’s domestic production is only about 32 million tons. This has huge impact on our foreign exchange reserves. Thus, any alternatives to deal with the current expensive and environmentally damaging energy situation can be an inspiring becoming. Many believe that the recommendations by some ministers of 10% ethanol blend becoming compulsory throughout the country can make a huge difference to India’s economy.

Brazil is already reaching the point where it may become energy independent due to the success of its ethanol program started three decades ago. They already have developed fuel flexible cars and have cars running on E85 and even 100%. It is believed that with India’s fuel bills rising, this step comes forward at a very appropriate time. Considering that India is one of the world’s top 10 oil-consuming countries. This step would actually save 80 million litres of petrol a year! Ethanol has 35% Oxygen which helps in complete fuel combustion, reducing all harmful emissions and is thus, the best tool to fight pollution. Apart from being an additive to petrol, Ethanol finds its use in the industrial sector, pharmaceutical sector as well as liquor sector.

In fact, Indian sugar output has been increasing; this is where India can bank on the opportunity to induce sugar producers towards diverting molasses for production of Ethanol and also generate rural employment. Government can provide tax based incentives to the producers of Ethanol to boost its production. It could also allocate amounts towards production of renewable energy sources from the huge oil budgets. Such incentives could encourage the producers to divert molasses for Ethanol production rather than selling them to breweries and distilleries. Though, sugar industry has its own risks due to its cyclical nature and might go through ups and downs. Hence, it is important that the Government should encourage research in Ethanol production. Ethanol can be made from fermentation of sugar, sugarcane as well as sorghum, corn, potatoes, wheat, beet etc. Mostly in India, sugarcane is used but since it is water intensive, other alternatives for the same should be promoted.

Switching over to renewable resources could definitely reduce are dependence on oil imports.

Concerns

No doubt that Ethanol offers other advantage of reducing greenhouse gas emissions. But there are many concerns associated with mass production of crops for extracting biofuels. Ethanol Blended Petrol (EBP) was first launched in 2001 in India. But, this programme calls for some areas of attention as mentioned in a UN report on Sustainable Bio-Energy. These concerns are pertaining to the impact ethanol production can have on food, water and land security in our country. Considering the fact that sugarcane is what is mainly being used for ethanol production in India and that its water intensive, it might not be possible to divert water resources to be diverted from food to cash crops. India’s agriculture is dependent on the monsoon and failure of monsoons between 2003-2005 affected sugarcane crop and as a result the EBP programme. It is important to keep all these aspects in mind in our policy making. India’s liquor industry has majority control over molasses based ethanol production which would be inadequate to cover our energy needs. Also, since 2002 we have been importing ethanol, mainly from Brazil (2005). This raises questions about how we plan to meet the requisite levels without taking this into account and what are the alternatives that we would take up in case of shortage in supply. Because as per the UN report on Sustainability of Bio- Energy as well as National Sugar Institute & USAID there are definite possibilities of such a situation to arise.

It is being advised that these questions be taken into account by policy makers in order to prepare for shortfalls through perhaps diversifying the sources of ethanol production. Any drastic move can affect prices of land, sugar etc. too apart from the before mentioned concerns.

India is only at the nascent stage of its bio-fuels industry and can benefit through the experience of countries like Brazil and United States in formulating its policies. India needs a well structure policy that can take into account all climatic, demographic, agricultural and local factors in order to take care of the energy dependence of our country as well as generate rural employment without comprising on our water, food and land security.

Sources:

Times of India

Ethanol India

Institute for Defence Studies and Analysis

Yale Global Online