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Article in The Financial Express
Authored by Dr.Jayaprakash Narayan

National Coordinator of
VOTEINDIA movement

Bio-fuels: the wave of the future
September 23, 2005

In the global shift to lower dependence on oil, India must use its natural edge

The devastation caused by Hurricane Katrina has brought back into sharp focus the world’s energy vulnerability. Oil prices shot beyond $70 a barrel in recent weeks. Demand matches the refining capacity, at about 82.5 million barrels a day. And global spare capacity is at a 20-year low, about one to two million barrels a day. The US National Commission on Energy Policy assesses that if only 4% of world supply is disrupted by natural calamities such as Katrina, crude prices could shoot up to $160 a barrel. If a massive terrorist attack destroys vital oil infrastructure in Opec countries, the consequences will be horrendous.
The past two decades have witnessed robust growth, particularly in the emerging economies. At the same time, this very rapid growth has led to unprecedented surge in oil demand and made the global economy precariously balanced.

The world has become dangerously addicted to oil, due to its fungibility and easy use. Predictably, the motor car has become the preferred mode of transport. In the US, automobile majors have taken to advertising sale of cars on credit at zero down payment, zero interest and zero repayment in the first year! We, in India, have followed this model, with yearly vehicle production slated to reach 10 million by 2007. Thanks to poor public transport, the current car ownership of eight per 1,000 is slated to go up considerably over the next two decades.

Indian oil demand is now rising at 10% every year. In 2004, of the total 114 million tonnes of oil requirement, 75% was imported at a cost of $26 billion. And yet, in the foreseeable future, we need a fungible source like oil to meet a variety of energy needs. What can we do to reduce dependence on imported oil?

We have to identify and mass-produce renewable fuels. Fuel cell technology based on hydrogen still lies in the future. Many renewable sources, such as solar, tidal or wind power, suffer the great disadvantages of high cost, inadequate technology and inability to store and use flexibly. For years, Nobel laureate and physicist, George Porter, and others have ably argued that the sun is the most reliable energy source and green plants the most cost-effective energy factories, harnessing sunlight through photosynthesis. Through genetic engineering, the efficiency of photosynthesis can be doubled from the current 2%. If that happens, we can have cheap, plentiful, renewable fungible bio-fuels to meet all our energy needs.

That may be a futurologist’s dream. But happily, even today we have the technology and means to mass-produce oil substitutes for our transportation needs. While India’s land mass is only 2.5% of the world’s, we are blessed with about 12% of the total agricultural land. Production of ethanol through fermentation of sugars, bio-diesels from plants like jatropha and, eventually, full conversion of all biomass into ethanol and other fuels through genetically engineered enzymes are our three best options. Full biomass conversion on a commercial scale will be possible within three to five years, but ethanol from plant sugars and bio-diesel from oils are already commercially viable.
Brazil, India, Malaysia and Indonesia are best placed to harness these renewable fuels, thanks to rich soils, plentiful sunlight and year-long cropping. Brazil is already the pioneer, producing 14 billion litres of ethanol from sugarcane, or the equivalent of two lakh barrels of gasoline a day. Brazilian law requires all motor vehicles to use fuel blended with 22% ethanol, while 20% of all vehicles use only ethanol. What is more, the cost of ethanol is very low, at $25 a barrel equivalent of gasoline. The Brazilian programme created nearly a million new jobs and cut oil import bills by a cumulative $60 billion (at 2000 prices) over the past three decades. This amount is more than 10 times the total investment in the programme and over 50 times the initial subsidies given. Guaranteed purchase by the state-owned oil company, Petrobras, low-interest loans for agro-industrial ethanol firms and price stabilisation of ethanol, at 59% of the government-set gasoline price at the pump, were the key policy initiatives which helped the boom. Nearly 25% of gasoline has thus been substituted by ethanol, produced on only 5% of the agricultural land.

The committee on development of bio-fuel, in its 2003 report, noted our present distiller capacity of 29,000 kl of ethanol was sufficient for a 5% blend until the 12th Plan. The committee also recommended raising jatropha plantations over 11.2 m ha of degraded and hedge lands, under-stocked forests and cultivable fallows. India can easily move towards a 20% ethanol blend with gasoline, and a 20% bio-diesel blend with diesel, over the next decade.

To encourage such a shift, the right policies and investments should be in place. That means tax incentives, subsidies to agriculture for bio-fuels, processing capacity, infrastructure, investment in technology and distilleries, buyback arrangements, guaranteed offtake of ethanol and bio-diesel, removal of restrictions on molasses’ movement and bio-fuel manufacturing, and R&D. The benefits are many—energy security, lower costs of fuel, reduction of overall carbon dioxide and particulate emissions, revitalisation of agriculture, protection of top soil and sustainable growth.

Few choices in today’s world offer such win-win solutions. The world is shifting gears to reduce dependence on imported oil. India has a priceless opportunity, given our natural advantages. It is time to act.



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