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Increasing Capacity of Biofuels in India

Prime Minister Narendra Modi has set a target of reducing oil imports to 67% of the requirement by 2022, and to 50% by 2030. India will need an alternate, cheaper, equally efficient source of energy to substitute conventional coal, oil and natural gas. It already exists, in abundance, in our country: biofuels.

The total diesel market in India is approximately 25 billion gallons per year, of which 80% is imported, into which less than 250 million gallons per year of biodiesel is currently blended. India’s oil industry should be mandated to procure and blend a higher percentage of biofuels. In Brazil – a world leader in biofuels — the current laws require 27% blended gasoline. In India, the ethanol blending percentage in petrol is around only 2% and substantially falling short of the targeted 5%. Biofuels other than ethanol constitute a negligible percentage of biofuels used for blending.

However, this dismal situation has begun to change. Recently, the Uttar Pradesh government cleared six biofuel investment proposals worth almost `17 billion. These private projects are proposed to be set up in five districts: Sitapur, Hapur, Meerut, Bareilly and Muzaffarnagar. The Sitapur project itself will spread across 20 acres and costing `15.5 billion. The company will use bagasse, a sugarcane by-product extracted during the production of sugar, to generate biofuel.

US-based company Aemetis Inc’s Universal Biofuels India subsidiary has been awarded a biodiesel supply contract with three Indian government-owned oil marketing companies. The contract provides for continuous deliveries of biodiesel to a variety of blending locations in an aggregate amount of more than $23 million during 2019. Biodiesel shipments are scheduled to begin this month.

Indian researchers have produced biodiesel from a microalgae species, using dairy wastewater as natural feedstock for the algae. The physicochemical properties of the biodiesel produced were analysed and compared with the petro-diesel. The results demonstrated that the engine performance parameters and emission parameters of the biodiesel were better than the conventional petro-diesel with a significant reduction in the emission of carbon dioxide.

In August last year, SpiceJet created history by becoming the first Indian airline to operate a flight powered by biofuel. The 45-minute flight of the 75-seater aircraft took off from Dehradun’s Jolly Grant airport and successfully landed in Delhi with 25 people on board. One of the two engines of the plane was running on a blend of 25% bio-jet fuel and 75% aviation turbine fuel. The mixture helped reduced carbon emissions by 15%.

Government initiatives to propagate biofuel

Last year, the Central Government announced its intention of rolling out 5,000 compressed biofuel plants in a phased manner, with 250 plants by 2020, 1,000 plants by 2022 and 5,000 plants by 2025, with a total investment of around `1.7 trillion. To achieve this, it has formulated a National Biofuels Policy, wh ich includes several decisions that encourage investment in the biofuel industry:

• Increasing the blending of biodiesel to up to 5% of the diesel market, which is equal to more than 1.2 billion gallons per year.
• Allowing blending of ethanol produced from damaged food grains, rotten potatoes, corn, cassava, sugarcane, sugar beet and sweet sorghum, with petrol, in a move to reduce oil imports.
• Use of surplus food grains for production of ethanol for blending with petrol with the approval of National Biofuel Coordination Committee.
• Viability gap funding scheme for secondgeneration ethanol biorefineries of Rs5000 crore in six years in addition to additional tax incentives and higher purchase price as compared to first-generation biofuels.

What is needed

In the initial years of the business, industrial undertakings incur significant expenditure for setting up waste-to-biofuel plants in terms of machinery and technology, as well as in training manpower and research. Such costs can dissuade those interested in investing in this revolutionary industry. The first few years may also not be profitable in the nascent period.

To nix these worries, the government should exempt goods imported for the setting up of such plants from paying taxes. Undertakings producing biofuels should be granted 100% deduction from profits for ten consecutive years starting from the year in which the business is commenced. Such incentives will help increase the feasibility and financial viability of such projects.

According to government estimates, annually, 62MMT of Municipal Solid Waste is generated in India. There is technology available which can convert MSW to biofuels. If there is a policy framework with appropriate budgetary support to convert municipal and agrarian waste into fuel, India can easily meet its biofuel blending targets. Accordingly, the Budget should incentivise investment in ‘waste to biofuel’ plants. A clear timeline should be set for the introduction of GST in petroleum sector so that taxation of bio-fuel may be integrated with the taxation of petrol/diesel and bring in greater efficiencies in manufacturing, storing and transportation of bio-fuel.

What are biofuels?

Biofuel is a renewable source of energy derived from biomass: agricultural, commercial, domestic, and/or industrial wastes (if the waste has a biological origin).

Conventional/non-renewable source of energy such as coal and natural gas are essential biomass that has been compressed and transmuted to a source of energy over millions of years; biofuel consists of the same biomass, which is converted to a readily usable form of energy by a wasteto- energy plant. Bioethanol, biogas and biodiesel are the three main biofuels, and can be blended with, or used in place of their nonrenewable equivalents.

First-generation biofuels include bioethanol and biodiesel, secondgeneration biofuels include that produced from municipal solid waste, while third-generation biofuels include bio-CNG.

Why biofuels?

• They are produced from biodegradable matter and are themselves biodegradable, nontoxic and produce fewer pollutants when burnt completely.
• Biofuels can be used in their pure form, as well as when blended with petrol or diesel.
• They can also be distributed through existing fuel pumps. New infrastructure does not need to be set up.
• The lack of sulphur in 100% biodiesel extends the life of catalytic converters in engines, and the lubricating property of the biodiesel may lengthen the lifetime of engines.
• They drastically cut down on carbon emissions, and are environment-friendly. One litre of bio-ethanol saves around 20,000 tonnes of carbon dioxide emissions.
• Biofuels can consume agricultural waste; setting up bio-fuel plants in the agrarian hubs like Punjab, Haryana and Uttar Pradesh around Delhi, will help prevent crop residue burning and reduce the air pollution which blankets the city every year.
• Since this agricultural waste is purchased from farmers, it will increase farmer income at no extra cost to farmers.
• Biofuels will bring down India’s oil import bill as they can easily be blended with petroleum products and used seamlessly.

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