National Policy on Bio fuel, 2018

Context:

There has been a proposal to frame a policy to promote the use of bio fuels for civil aviation

What are Bio fuels?

Bio fuels are liquid or gaseous fuels produced from biomass resources and used in place of, or in addition to, diesel, petrol or other fossil fuels for transport, stationary, portable and other applications.

Why we need Bio fuels?

1. India’s Energy Security: India’s energy security would remain vulnerable until alternative fuels to substitute petro-based fuels are developed.
2. High Demand: Petro-based oil meets about 95% of the requirement for transportation fuels, and the demand has been steadily rising. The domestic crude oil is able to meet only about 23% of the demand
3. Socio-Economic Development: Energy is a critical input for socio-economic development.
4. Availability: Conventional or fossil fuel resources are limited, non-renewable, polluting.
5. Resources: India is endowed with abundant renewable energy resources.
6. Price:The crude oil price has been fluctuating in the world market leading to instability in an economy.

Background:

• 1948- Power Alcohol Act: The main objective was to use ethanol from molasses to blend with petrol to bring down the price of sugar, trim wastage of molasses and reduce dependence on petrol imports.
• 2000- The Act was repealed in 2000
• 2003: The Government of India launched the Ethanol Blended Petrol Programme (EBPP) in nine States and four Union Territories promoting the use of ethanol for blending with gasoline and the use of biodiesel derived from non-edible oils for blending with diesel (5% blending).
• 2003-National Mission on Biodiesel was launched by the Government to achieve 20% biodiesel blends by 2011–2012. It identified Jatropha carcass as the most suitable tree-borne oilseed for biodiesel production.
• 2004-05: Due to ethanol shortage the blending mandate was made optional
• 2006: Bending and resumed in the second phase of EBPP. These ad-hoc policy changes continued till 2009
• 2009: Government launched National Policy on Biofuels formulated by the Ministry of New and Renewable Energy (MNRE), calling for blending at least 20% biofuels with diesel and petrol by 2017

Issues with Biofuel policies in Past

1. Policy did not address production of domestic feedstock for Biofuel such as (molasses a by-product of sugar production) is the main raw material for ethanol in India.
2. Because of supply shortages and global concerns over food security the Biofuel programs experienced setback.
3. Lack of Government support in terms of taxes and other infant farm industry incentives.
4. The supply chain infrastructure to take the biofuels to end consumers is inadequate

To address the issues, Government has enacted National Policy to Biofuel in 2018.

National Policy on Biofuel,2018

Goal: Achieve 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel is proposed by 2030.

Objectives:

1. Reinforcing ongoing ethanol/biodiesel supplies through increasing domestic production
2. Setting up Second Generation (2G) bio refineries
3. Development of new feedstock for biofuels
4. Development of new technologies for conversion to biofuels.
5. Creating suitable environment for biofuels and its integration with the main fuels.

Keyfeatures:

1. The Policy categorises biofuels as:
2. “Basic Biofuels” – First Generation (1G) bioethanol & biodiesel
3. “Advanced Biofuels” – Second Generation (2G) ethanol, Municipal Solid Waste (MSW) to drop-in fuels
4. Third Generation (3G) biofuels, bio-CNG etc.
5. 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.
6. The Policy allows use of surplus food grains for production of ethanol for blending with petrol with the approval of National Biofuel Coordination Committee.
7. Under the policy, a viability gap funding scheme for 2G ethanol Bio refineries of Rs.5000 crores in 6 years in addition to additional tax incentives, higher purchase price as compared to 1G biofuels will be provided
8. The Policy encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, Used Cooking Oil, short gestation crops.

Benefits:

1. Reduce Import Dependency
2. Cleaner Environment
3. Health benefits
4. Municipal Solid Waste Management
5. Infrastructural Investment in Rural Areas
6. Employment Generation
7. Additional Income to Farmers
8. provide cheaper alternatives to consumers

Issues/Challenges with Implementation of Policy:

• Other biofuels, such as jatropha, have often proven to be commercially unviable.
• Achieving 20% blend rate would require India to divert an extra one-tenth of its net sown area towards sugarcane.
• Any such land requirement is likely to put a stress on other crops and has the potential to increase food prices.

Criticisms of the policy:

1. Efforts taken to achieve Biofuel production could lead to food security and strain water resources.
2. According to critics, the policy is overly ambitious. Given the constraints in technology and current abysmally low status of blending (2%), the targets of the 2018 policy are too ambitious to be fulfilled
3. The policy is totally silent on octane (which is blended with petrol) which has direct consequences of air quality and pollution.
4. The policy advocates the use of untested technologies like the production of 2G ethanol. Relying technology which is commercially untested is not a viable option.
5. According to critics, the ways in which companies are selected to develop and boost Biofuel in India is not transparent.

Recent government initiatives:

• Government plans to set up 12 modern biofuel refineries across the country. It has set a target to save Rs. 12,000 crores in the next four years by the use of ethanol.
• The government has also been planning to formulate a separate policy for the use of biofuel in the aviation sector

International best practice: BRAZIL

• Since 1976, the Brazilian government made it mandatory to blend anhydrous ethanol with gasoline, fluctuating between 10% and 25%. However, in 2017, it raised blending of ethanol to gasoline to 27%.
• In 2010, Environment Protection Agency (EPA) designated Brazilian sugarcane ethanol as an advanced Biofuel due to its 61% reduction of total life cycle greenhouse gas emissions. Brazil has advanced Agri-Industrial technology which has contributed to its success in Biofuel generation.
• Brazil uses modern equipment and cheap sugar cane as feedstock, the residual cane-waste (bagasse) is used to produce heat and power, which results in a very competitive price and also in a high energy balance (output energy/input energy).

Steps to be taken

1. The government examine the feasibility of importing ethanol in the interim, thereby creating consistency of supply, and providing relief from the pollution created by fossil fuel burning. Facilitating import of ethanol will make up for the inconsistency in the availability of domestic ethanol
2. There should be focus on 1G mechanism of ethanol blending instead of 2G ethanol blending.
3. Bio-fuel policy must be strongly backed by sufficient technology and production scale in order to be financially feasible and implementable.
4. It is important to boost the supply chain infrastructure. Private investments in building supply chain should be encouraged
5. 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.