How biofuels can double farm incomes
A total of ₹1 lakh crore worth of biofuel will be purchased every year by oil marketing firms in the future for blending. This money will be ploughed back to the rural economy
India currently consumes only one-third of the global average consumption of energy. As we move towards more robust energy consumption figures, the country faces the unique challenge of fusing together disparate needs: A ballooning appetite while cutting dependence on imports; greening the grid while ensuring affordability; and replacing old forms of energy production while boosting employment, and the human and economic capital of the people. Then there’s the fact that the energy sector is closely intertwined with issues related to climate change.
Needless to say, a vigorous ideation needs to undergird such energy transitions. The question is particularly cardinal for the sector I am in charge of: Petroleum and natural gas. We import about 84% of our oil and 56% of our gas for domestic use — and this in itself tends to negate the deliverables — delineated above — that we aspire to achieve.
In this context, biofuels have become a tool for achieving these delicate balance of outcomes. In the past few years, progress made in the use of ethanol, compressed biogas and biodiesel — all different forms of biofuel — will have a direct positive impact on both farm incomes (and the prosperity of agricultural communities), even as it cuts down our import dependence for energy.
Currently, the aim is to achieve 10% ethanol blending in petrol by 2022 and 20% blending by 2030 — something that will cut down carbon emissions in vehicles.
In 2019, in a first for the Republic Day parade, the Indian Air Force flew aircraft in a Vic formation, with the lead plane using a mix of traditional fuel and biofuel, symbolising the government’s determination to seek alternative sources of fuel. The primary raw material for ethanol production in India is sugarcane and its by-products, accounting for more than 90% of fuel ethanol supplies under the ethanol blended petrol (EBP) programme of the ministry. This programme injects liquidity into the stressed sugar sector and provides an alternative revenue stream to farmers. This programme also encourages diversion of sugarcane for ethanol production, which results in a decrease in the sugar glut in the country.
Ethanol supplies have improved from 380 million litres in 2013-14 to 1.89 billion litres in 2019. Offers of about 3.5 billion litres from both sugar/molasses and grain-based distilleries are expected this year. In addition to sugarcane, ethanol is also produced from damaged food grains, B-heavy molasses and sugarcane juice. This translates into a sum of nearly ₹35,000 crore in the past six years — money that has flown back to farmers through sugar mills and distilleries as oil marketing companies (OMCs) provide off-take guarantee at fixed prices. This arrangement also improves the health of the payment cycle to farmers since OMCs settle their ethanol dues to distilleries in 21 days instead of the months that the farmers had to wait for their payment from sugar mills.
The recent decision to utilise surplus rice available with the Food Corporation of India and maize as an additional source of feedstock for ethanol production, starting this year, means farmers will now have an alternative market for their produce.
With regards biodiesel, the National Policy on Biofuels in 2018 targets 5% blending of biodiesel in diesel by 2030. The policy encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, used cooking oil and short-gestation crops. These crops can be easily cultivated in various states on land that is barren or not fit for edible crops, thus boosting farm incomes. Biodiesel procured by OMCs for blending high speed diesel has increased from 11.9 million litres in 2015-16 to 105.5 million litres last year.
The Sustainable Alternative Towards Affordable Transportation (SATAT) scheme launched in October 2018 aims to establish an ecosystem for production of compressed biogas (CBG) from various waste biomass sources in the country. Under SATAT, 5000 CBG plants with a total production capacity of 15 million metric tonne per annum (MMTPA), which is equivalent to 54 MMSCMD of gas by 2023, has been planned. This initiative offers a potential for investment of about ₹1.75 lakh crore, generating about 75,000 direct employment opportunities.
Many of the proposed plants will use crop residue such as paddy straw and biomass as feedstock for production of CBG, especially in Haryana, Punjab and Uttar Pradesh. The SATAT scheme will not only stanch greenhouse gas emissions, but will reduce burning of agricultural residue, which results in significant air pollution in cities like Delhi, generate employment in rural and waste management sectors, and boost income for farmers from their unutilised organic waste. One of the byproducts of CBG plants is biomanure, which can be used in farming.
The components of a biofuel supply chain create a circular rural economy that results in substantial environmental, socio-economic and health benefits for communities. A total of ₹1 lakh crore worth of biofuel will be purchased by OMCs every year in the near future for blending. This money will be ploughed back to the rural economy, thus doubling farmers’ incomes. Keeping in mind international climate commitments and domestic requirements, Prime Minister Narendra Modi’s emphasis has been on energy availability, accessibility and affordability; efficiency in energy use; energy sustainability; and energy security for mitigating global uncertainties. The quest, therefore, has been to shift the perception and the functioning of my ministry from one focused on international trade to one that strengthens the human development indices of the poorest standing in the queue.
Dharmendra Pradhan is Cabinet minister for petroleum and natural gas and steel
The views expressed are personal