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Is spiked petrol a good idea?

Business Standard  |  New Delhi 

Any policy on blending ethanol with petrol has to keep in mind the costs involved in ethanol production - excessive use of scarce water to grow sugarcane and the effluents discharged in the process.

Rakesh BhartiaRakesh Bhartia
CEO, India Glycols

Apart from reducing feedstock for the chemicals industry, there are environment costs of the bio-fuel policy that are quite significant

The government has reiterated its intent to blend gasoline with an ethanol content of 5 per cent. In the past decade, the government made several efforts to implement an ethanol programme but it has never been successful. In fact, its recent announcement is a pull-back from its intent to increase the blend to 10 per cent with effect from October 2008. It is time that policy makers realised that a bio-ethanol programme can never be successful in India for varied and obvious reasons. The search for clean energy should be directed towards areas where success can be attained.

India is a growing economy with an ever-increasing need for energy and food. The primary objective of an energy policy is to ensure energy security — the economic and environmental aspects are secondary in nature. Thus, sustainability of an energy source is a crucial element. Unfortunately, at present, the only source of ethanol in India is molasses, a by-product obtained during the manufacture of sugar. Sugar production is extremely volatile in India, hence the availability of molasses and thus ethanol is inconsistent. Under these circumstances, India can never have a sustainable ethanol programme.

A consistent availability of sugarcane for the production of sugar as well as ethanol would require a revamp of the government’s policies pertaining to sugarcane pricing and the sugar industry. Moreover, India is the largest consumer of sugar in the world. Thus, to ensure adequate availability of sugar, the government would need to tread cautiously in encouraging production of ethanol directly from sugarcane juice.

The “National Policy on Bio-fuels”, which was announced by the government recently, lays down the criterion for bio-fuel development in India. With regard to ethanol, the Policy categorically states: “The sugar and distillery industry will be further encouraged to augment production of ethanol to meet the blending requirements prescribed from time to time, while ensuring that this does not in any way create supply constraints in production of sugar or availability of ethanol for industrial use.” Thus, the Policy rightfully acknowledges that it would not be desirable to appropriate sugarcane for manufacture of ethanol. Also, it would not be desirable to appropriate ethanol for fuel blend and starve an existing industrial sector, which already plays a key role in the manufacture of environment-friendly chemicals, adds value to ethanol and generates employment.

A cardinal mistake is to believe we can emulate Brazil’s success in the sphere of bio-ethanol. It is important to understand the unique strengths that Brazil has — vast tracts of arable and fertile land that were once vacant and are now being used for production of bio-fuels. In Brazil, 60 per cent of sugarcane juice is directly converted into ethanol without compromising the availability of sugar. Also, large land holdings and contract farming allow mechanised cultivation and better agricultural practices. In India, the yields are much lower and fragmented land holdings discourage mechanisation. More important, sugarcane is a water-intensive crop, and since water is a scarce resource in India, it would be highly imprudent to put it to such use. Interestingly, Brazil reduced the ethanol blend from 25 per cent to 20 per cent in 2009, and demand for ethanol fell sharply from 2 billion to 1 billion litres per month due to lack of availability of adequate ethanol.

Also, the advocates of ethanol tend to conceal the fact that manufacture of ethanol causes lots of pollution, by way of discharge of large volumes of effluent (1 litre of ethanol discharges 12 litres of effluent). It also contains a very high concentration of organic materials that are extremely harmful to the distillery’s hinterland. Management of distillery effluent is a major area of concern for the environment ministry. Therefore, the ethanol programme needs to take a consolidated view of its purported benefits, and its end result would not be as favourable to the environment.

The cornerstones of a successful bio-fuel programme are: Sustained availability, right price, generation of rural employment, usage of waste lands and waste bio-mass, and avoidance of cannibalisation of feedstock for existing users.

As a bio-fuel, ethanol fails miserably to meet any of these criteria and, thus, this initiative deserves to be consigned back to the drawing boards for a rethink before its implementation.

GK SoodGK Sood
Co-Chairman, Ethanol Promotion Sub-Committee, ISMA*

Doping makes petrol non-carcinogenic and also promotes energy security. In years of poor production, the chemicals industry can import substitutes

It is an acknowledged fact that transportation fuels are a major contributor to pollution. Methyl tertiary butyl ether (MTBE), an oxygenator blended in gasoline in order to improve combustion, is known to be carcinogenic and non-biodegradable. All across the world, MTBE is being replaced with ethanol, which is absolutely safe on both these counts. Moreover, greater use of ethanol, a renewable resource, in gasoline can also reduce dependence upon petroleum, and this will promote energy security. Therefore, the government has already mandated blending of minimum 5 per cent ethanol in gasoline and has announced the goal of 10 per cent blending, going forward.

The level of 5 per cent blending, incidentally, meets the amount of oxygenation required in gasoline blends to neutralise carbon monoxide emissions, hence it should not be compromised at all.

Moreover, blending of ethanol in gasoline also makes eminent economic sense for the government and oil marketing companies (OMCs). At the current price of ethanol and the ex-pump price of gasoline, every litre of ethanol blended in gasoline results in a saving of about Rs 11 for the OMCs. Thus, the ethanol blending programme can also mitigate the burden of “under-recoveries” suffered by the petroleum sector.

The principal raw material for production of ethanol in India is molasses, a by-product derived during sugar production. Several agricultural products and waste can also be used for distillation of ethanol, depending upon their availability. A growing ethanol industry will boost the demand for agricultural waste and agricultural products suitable for distillation and molasses, which will boost farmers’ income significantly.

The country has an alcohol production capacity of 3.65 billion litres per annum, of which fuel ethanol capacity is 1.69 billion. In a year of normal sugar production, molasses’ availability is sufficient for production of 2.4 billion litres of alcohol, leaving the balance capacity for utilisation of other raw materials. In a year of low production of sugar, like the current year, available molasses would yield 1.70 billion litres of alcohol. The production of alcohol from other inputs is currently estimated at about 300 million litres and is rising. Aggregate alcohol production during the current year is thus estimated at 2 billion litres.

No one should disagree that the first claim on domestic available alcohol should be for fuel ethanol, given the priority that the gasoline blending programme calls for. At 5 per cent level of blending in the states to which the current mandate extends, the demand for ethanol is 690 million litres. The next priority would be for potable use, the demand for which is an estimated 900 million litres, there being no substitute. The balance is available for users like the chemical industry.

The ethanol blending and potable sectors have no alternative to alcohol, unlike the chemical industry, which can and does often use petroleum-based chemicals as alternatives to alcohol, e.g. by-products arising from petroleum refining. As a matter of fact, the chemical industry does optimise its input costs, as any industry would do, by switching from alcohol to petroleum derivatives and vice versa, depending upon relative costs, and does not necessarily purchase alcohol in consistent quantities.

The alcohol industry treats all the three — petroleum companies, potable alcohol industry and chemical industry — as valuable customers. The national priority, however, lies in pursuing the gasoline blending programme in right earnest as vital issues of health and environment are involved. As a matter of fact, there is justification in extending the blending mandate to all parts of the country. In most years, the country produces enough alcohol for the chemical sector too. Nevertheless, this sector has access to import of alcohol, which is freely allowed. The subdued petroleum prices since mid-2008 have seen this sector shift to petrochemicals from alcohol. This sector has also imported significant quantities of alcohol in the years of low international prices for the commodity, particularly from Brazil.

We are absolutely certain that the government will not fail in its duty to the nation by dithering on its mandate of 5 per cent ethanol blending in gasoline on the false premise of lack of availability as, we believe, it considers that its responsibility on health and environment fronts are of paramount importance.

*Indian Sugar Mills Association

First Published: Wed, February 24 2010. 00:22 IST