Economics of biofuels

Food and feed must be given priority

The government’s bid to raise the level of ethanol blending in petrol to 20 per cent (E20) by 2025, instead of 2030, needs a serious rethink. A report released last week by private policy analyst Arcus, in the presence of NITI Aayog representatives, rules out the availability of enough raw material to produce the required 13.5 billion litres of ethanol. The 2018 National Policy on Biofuels envisages using agricultural produce, such as sugarcane, rice, and maize, to make alcohol. These crops already have committed demand for food, feed, and other purposes. The scope of expanding the areas under them is limited because of scarcity of both land and water. While sugarcane and rice are water guzzlers, the output of maize is already insufficient to meet the demands of the poultry and starch sectors.

At present, the bulk of the ethanol is produced by the sugar industry, which has been permitted to utilise all products of sugarcane, including cane juice and finished sugar, for this purpose. Last year, around 3.6 million tonnes of sugar was converted into alcohol. This year, this quantity might increase to 4.5-5 million tonnes, regardless of the fact that 1,200-1,500 litres of water is spent to produce each kg of sugar. Many countries, notably Brazil, the world’s leading sugar and ethanol producer, are able to grow crops exclusively for biofuel production because they have abundant land. India is not so fortunate in this respect. Besides, the productivity of these crops in India is lower than the global averages and their use for food and feed has to be given priority. No doubt, last year, the Food Corporation of India gave about one million tonnes of subsidised rice to distilleries for ethanol production, but that was largely to prune its excessive inventories. Doing the same may not be feasible too often. Even now rice exports are subjected to various kinds of curbs because of a limited surplus. In any case, for a country like India, where malnutrition is rampant, and its ranking on the global hunger index is low, diverting food grains like rice and corn for ethanol production seems imprudent.
 

Another reason why the 20 per cent blending target needs to be revisited is that most of the existing vehicles are, typically, not made to run on high ethanol-doped fuels. They would require modifications, even if minor ones, for this purpose. Besides, the level of emission reduction achieved by replacing a small part of petrol with ethanol is reckoned by various studies to be too meagre to justify additional investment in engine modifications and creating fresh capacities to manufacture E20-compliant autos. The extra cost, according to a NITI Aayog report, would be Rs 3,000-5,000 for every four-wheeler and Rs 1,000-2,000 for a two-wheeler.
 

A more practical way to augment the supply of ethanol for mixing with petrol is to produce it by deploying second-generation (2G) technology, which enables converting farm wastes, including crop residues like stubbles, straws, and stalks, into alcohol. At least four such 2G ethanol plants are already coming up — in Panipat (Haryana), Bathinda (Punjab), Baragarh (Odisha), and Numaligarh (Assam). Setting up more such plants would provide ethanol for petrol-doping, besides mitigating the menace of crop residue burning, which adds to air pollution.