Recent News On BIO-FUEL Programme In India

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NEWS Bulletin from Indian Society For Sustainable Agriculture And Rural Development ********************** 1. Draft National Bio-fuel Policy sent for approval 2. Bio-diesel industry seeks govt grants to fuel growth 3. A Hobbson Choice : Oil for Food or Oil for Fuel ? --------------------------- Draft National Bio-fuel Policy sent for approval http://www.financialexpress.com/news/Draft-National-Biofuel-Policy-sent-for-approval/267896/ ASHOK B

SHARMAPosted online: Friday , February 01, 2008 at 2040 hrs IST New Delhi, February 1: The draft National Bio-fuel Policy has been sent to the Group of Ministers (GoM) headed by the agriculture minister, Sharad Pawar for approval. After the approval by the GoM it would be approved by the Union Cabinet, said the Union minister for new and renewable energy sources, Vilas Muttemwar. Inaugurating a national seminar on Climate Change and Biodiesel-2008 orgainsed by the Bio-diesel Association of India in Capital on Friday, he said: "Apart from the proposed National Bio-fuel Policy, the GoM would resolve the inter-ministerial tussle on setting up of National Bio-fuel Mission and National Bio-fuel Development Board by the end of this month or early next month." Muttemwar said that

alternative clean energy technologies like Bio-fuels can bridge the gap between demand and supply of energy and reduce the import dependence for fossil oil. He said that energy security was necessary for the country in maintaining its sustained economic growth rate of 8% to 9% and therefore, the demand for energy was likely to increase four-fold. He said that the demand for motor spirit was expected to grow from 10 million tonne in 2006-07 to about 12.85 million tonne by 2011-12 and that for diesel from 52 million tonne to 66 million tonne. The domestic supply of crude oil cannot solve the problem as it met only 22% of the energy demand in the country, he said and added that clean and affordable energy was required for both urban and rural areas. The Union rural development minister, Raghuvansh Prasad Singh said that nuclear energy along with the bio-fuel programme was necessary to meet the needs of energy security, reduce fossil oil import dependence and combat climate change. He informed that bio-fuel crops like Jatropha can be cultivated in about 3 crore hectare of culturable wastelands in the country, which would create jobs for the rural people. He alleged that oil companies were against the bio-fuel programme. ----------------------------- Bio-diesel industry seeks govt grants to fuel growth http://www.financialexpress.com/news/Biodiesel-industry-seeks-govt-grants-to-fuel-growth/268167/ ASHOK B SHARMAPosted online: Saturday , February 02, 2008 at 0121 hrs IST New Delhi, Feb 1 The bio-diesel industry has demanded that the government give grants or subsidy for second generation

bio-fuel technologies like producing fuels from algae. They argued that such grants or subsidies were given in the US and the European Union. Japan also supported research and development in bio-fuel technology, they said. The industry also suggested "India should take the cue from countries like Germany to mandate blending of fuels". Bio-diesel should be categorised as "declared goods" with uniform rate of taxation across the country, exemption from Value-Added Tax (VAT) and sales tax on bio-diesel component used in blending and income tax exemption under section 80-1B are among other demands made by the Bio-diesel Association of India (BDAI) in a memorandum to the government. The BDAI president Sandeep Chaturvedi also urged the oil companies to set up infrastructure for distribution and retailing of bio-diesel. The automobile manufacturers should be encouraged to give warranty for facilitating higher blends

of bio-diesel beyond 5%. The BDAI has also urged the government to formulate a scheme for subsidising loans to farmers for growing bio-fuel crops. It demanded that the government give an initial grant of Rs 10 crore for setting up a centre of excellence to boost the bio-diesel sector and encourage its research capability. It suggested "30% subsidy of the input cost be given to farmers and for corporates undertaking fuel crop cultivation the subsidy should be extended without upper limit. Corporates having tie-ups with farmers should arrange for carbon credit and part of it should be shared with farmers based on mutual agreement. Government should allow alternative feedstock in case of low availability of Jatropha orlow oil yeilds of Jatropha". The bio-diesel industry urged the ministry for new and renewable energy sources to set up a multi-stakeholder committee to review and announce minimum purchase price of bio-diesel. The minimum purchase price for oil

companies should be exclusive of all applicable taxes on bio-diesel. The bio-diesel industry suggested a formula based price mechanism linked with import price of raw materials and exchange of Indian rupee vis-à-vis US dollar. The BDAI said that the Centre should circulate a model land lease agreement to state governments and identify wastelands and degraded forest lands for cultivation of fuel crops.Local village governments (panchayats) should be involved and the revenue from lease rentals should be shared with them. It suggested 30-year lease agreement ------------------------ A Hobbson Choice : Oil for Food or Oil for Fuel

? http://www.mynews.in/fullstory.aspx?storyid=2028 ASHOK B SHARMA Oil is central to the economy. Be it the oil for food or oil for fuel. In both the cases the country is dependant on imports. We import about 70% of petroleum products to meet our energy needs. Our import of petroleum products in the first six months of the current fiscal (2007-08) increased to $ 31399.22 million from $ 29003.64 million in the same period last fiscal. Our import of vegetable oils for solely meeting the needs of cooking is on a rising trend. The import of vegetable oils in the period November 2006 to

October 2007 has shot up to 4,213,724 tonne as compared to 3,780,112 tonne in the same period in the previous year. We also import about 600,000 tonne non-edible oils annually for manufacture of soap, cosmetics and other items. The figures show the extent our import dependency for oil. This does not augur well. It is high time to think of achieving at least near self-sufficiency in either one of the sector of the oil economy. For all considerations, oil for food should be given the top priority. In this sector, the country has the potential to achieve self-sufficiency, provided

appropriate policy support and incentives are given. The Technology Mission on Oilseeds could bring the country to a level of near self-sufficiency which was aborted by policy of import liberalization in 1990s and we are now heavily paying for this wrong policy. The import of fossil oil for energy is definitely more in dollar terms. But in the case of edible oil imports it is the issue of food security. While energy security is important, food security is vital. While there are a number of options available for ensuring energy security, the options for ensuring food security is very narrow, particularly with the decline in area under cultivation. However, the

government has failed to distinguish between food and energy security in the right perspectives. The government has now embarked on a massive programme for ensuring energy security through largescale cultivation of Jatropha for producing bio-fuels. However, there are some right thinking persons in the government who have a different view. The government’s energy adviser,

Surya P Sethi views that food and water security concerns are as critical as energy security. Criticising the exaggerated claims of the proponents of bio-energy about availability of waste and marginal lands, availability of plant varieties and germplasm that need practically no water for growth, yield levels, costs and most importantly the benign nature of bio-energy, Sethi says that these claims are however not based on rigorous research. According to him if 60 million hectares of land is used for energy plantation like Jatropha Carcus and other crops), the commercial bio-energy produced would meet only 29% to 35% of country's energy needs even 25 years from today. Data on annual bio-diesel yields from Jatropha ranges from a low of 0.3 tonne to one tonne per hectare. Based on available data wood plantations provide the best use of such lands for commercially grown bio-energy as it would yield some 9 times the energy compared to bio-diesel from equivalent land mass. The annual yields of bio-energy from wood plantations are estimated at a low of 5 tonne to a high of 20 tonne per hectare, he says. According to Sethi, ethanol based on sugarcane or alternate crops could match wood but the crops would require intensive cultivation, water, fertilizer and arable lands. Suggesting another alternative Sethi says, “To put this in perspective, just 2.25 million hectare land under solar cells with 15% conversion efficiency could yield the same energy as 60 million hectare of wood plantation. Only 7 to 8 million hectare land under solar cells can give India energy independence even 25 years from today.” As an alternative for ensuring energy security, Sethi suggests setting up solar panels on totally arid lands, including desserts, mountain tops and roof tops. Sethi say that about 31% of India’s primary energy needs are met from bio-energy produced on non-commercial basis from agricultural and forest waste, wood chips, animal waste and

bio-fuels. Bio-fuels have been used for centuries by the tribals. Non-commercial energy will constitute at least 10% to 1 2% of India’s primary energy mix even in 2031-32 and remain as the third important energy source for next 25 years after coal and fossil oil. Sethi is of the view that production of bio-energy in a localised and decentralised manner consistent with current patterns is indeed sustainable. He

raised questions about the proposed large-scale commercial cultivation of bio-fuel crops, particularly relating to sustainability and viability, impact on eco-systems, socio-economic settings and local lifestyles, livelihood of indigenous people, food and water security. He criticized the US direct subsidy of $ 3.4 billion for corn-based ethanol. “The consumers have paid $ 3.6 billion extra for energy they received from 4.9 billion gallons of ethanol in 2006. The entire world has suffered the

consequences of this $ 7 billion billion subsidy by way of lower availability and consequent higher prices for grains and pulses. Europe and Canada have done the same for subsidy on rapeseed,” he says. “How green is the so-called green energy,” questions Sethi and said that there were growing body of evidences to show “green”

fuels were not always green. Studies at Berkley and Academy of Sciences have conclusively shown that greenhouse gas (GHG) reductions through use of doped gasoline using corn-based ethanol (E85) will be less than 0.2% in 2017 when ethanol production is expected to peak in US. The total lifecycle emission of 5 major pollutants (carbon dioxide, volatile organic compounds, PM10, Sox and Nox) are higher with E85 compared to gasoline. E85 also produces much higher concentration of ground level ozone, which is a serious health hazard.

He says that Indian studies have confirmed that sugarcane-based ethanol has an overall negative energy balance when all energy inputs are considered. Sweet sorghum based ethanol, bio-diesel, cellulosic ethanol, agricultural and animal waste and wood plantations come out progressively greener. Sethi is also critical about the government’s proposed direct input subsidy and market intervention for promotion of bio-fuels in the country. In a recent paper - Sustainable Policy Framework for Bio-fuels – Sethi said "I with all the humility at my command, must state my fundamental objection to direct input subsidies and interventions by the government in markets through the proposed National Bio-Fuel Board." The new and renewable energy ministry has suggested setting up of a National Bio-fuel Development Board (NBDB) and formulation of a national bio-fuel policy. The NBDB would determine the minimum support prices (MSPs) for bio-fuel crops like jatropha, karanja seeds and oil-bearing materials. It also suggested that the government render financial support to

oil processors for a period of five years. On the other hand, the rural development ministry has demanded a gross budgetary support of Rs 1,340 crore (Rs 13,400 million) for five years to set up a national mission on bio-diesel and the launch of its first demonstration phase of jatropha cultivation in 4,00,000 hectares. Sethi’s remarks comes at a time when a group of ministers (GoM) headed by Union agriculture minister Sharad Pawar is deliberating on the demands made by two rival ministries. Sethi suggested that bio-energy be pursued as a domestically available energy and chemical feedstock option. This objective must not be diluted by a desire to meet other legitimate objectives like raising rural income and employment, creating another cash crop based on MSPs and promoting renewables. Even any climate dividend should be treated as a bonus. The government should not distort markets by mandating blending, restricting rights to direct marketing of bio-fuels, imposing ad-hoc and differential taxes and duties on inputs and restricting import or movement of bio-fuels. Any taxes that should be imposed should be on outputs rather than inputs. There should be only output-based incentives. R & D outlays should be allowed as a deduction from taxes due and this incentive should be made tradable, he said. According to Sethi "Green Energy" are not always green. The total lifecycle emission of 5 major pollutants (carbon dioxide, volatile organic compounds, PM10, Sox and Nox) are higher with corn-based ethanol (E85) compared to gasoline. However in India sugarcane-based ethanol has an overall negative energy balance when all energy inputs are considered. Sweet sorghum based ethanol, bio-diesel, cellolosic ethanol, farm and animal waste and wood plantations come out progressively greener, he said. The UNCTAD’s trade and development report-2007 has talked on similar lines. It has said that the increase in global demand for bio-fuels has pushed up the prices of agriculture commodities. But the farmers in the developing countries, including India, have not gained much. It has said that strong demand for bio-fuels was in response not

only to high crude petroleum prices but also to the growing concerns about global climate change. Global prices of sugar, corn and vegetable oils, in particular, shot up as these are used for production of bio-diesel. In 2006 sugar prices increased by 49.4%, maize prices by 24.4% and that of palm oil by 13.3% The UNCTAD report has raised concerns over the competing use of land for production of food, animal feedstock and bio-fuels. Corn cultivation in US for bio-fuel production has displaced soybean cultivation. The soybean prices rose sharply in mid-2006. The situation, in turn led to higher prices for animal feedstock and meat. The higher food

prices can have dramatic consequences for food-importing developing countries, the report said. The report also raised concerns that bio-fuel crop cultivation may cause deforestation, water scarcity and biodiversity loss. It, however, suggested that a possible solution may be the extraction of bio-oil from tropical plants like, Jatropha which can be grown on “degraded” lands and therefore not compete with food crops. Analysing the terms of trade, the report said that in 2006 there was significant gains for oil and mineral exporting countries. Most vulnerable have been the oil-importing countries which export few primary commodities. East Asia, South Asia and Africa suffered deterioration in the terms of trade. The global push to develop bio-fuels in a bid to reduce oil dependence could “offer a cure that is worse that the disease,” a recent report of the Organization for Economic Cooperation and Development (OECD) said. It further said that existing bio-fuel technologies have limited abilities to meet global energy needs without compromising food supplies and prices and the environment. “In theory there might be enough land available around the globe to feed an ever-increasing world population and produce sufficient biomass feedstock simultaneously,” the report said and added “but it is more likely that land-use constraints will limit the amount of new land that can be brought into production leading to a ‘food-versus-fuel’ debate.”Since land use is driven largely by profit motives, it says, diversions of cropland from food production will lead to food price increases over the next decade, the OECD report said.Biomass production will likely put increased environmental pressure on tropical regions, whose land is most suitable for such crops, the report said. “When such impacts as soil acidification, fertilizer use,

biodiversity loss and toxicity of agricultural pesticides are taken into account, the overall environmental impacts of ethanol and bio-diesel can very easily exceed those of petrol and mineral diesel,” it said.Moreover, the report questions whether developed nations have dramatically overestimated the extent to which bio-fuels can displace fossil fuels and warns that many of the more optimistic scenarios are highly unlikely to come to fruition.“In only a very few countries do bio-fuels have the potential to make a significant dent in dependence on imported oils,” the report said. Finally it is

important for the government to ponder whether to ensure oil for food security or go for use farmlands for massive production of bio-fuels. (The writer is the Agriculture Editor, The Financial Express, India. This article appeared in the Souvenier-2007 of Indian Vanaspati Producers’ Association)

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