Global Climate Change and Biofuels Policy: Indian Perspectives

Abstract

In the past few decades, unparalleled efforts have been made to reduce the dependence on fossil fuels, aiming to reduce air pollution and lessen the climate change effect. Fossil fuel burning in the energy sector is the significant contributor to GHG, global warming and climate change. These scenarios have motivated scientists and policy makers to look for eco-friendly energy supply options with enhanced energy efficiency. Globally, biofuels, considered as a substitute for fossil fuels, have become top priority due to its eco-friendly nature, and many energy policy initiatives have taken place, especially in biofuel production and its use, and various advances in technology are in progress. The biofuel policies are instrumental in improving energy security by reducing foreign oil imports by promoting renewable energy resource. The government is also focusing on advances in research and industrial development on biofuel and biomass-based economy. New policy initiatives have ample opportunities for biofuel production from agricultural residues, industrial waste, and other wastes, which exist as unused or surplus. The sustainable production of biofuel and its use as a substitute for fossil fuels and related policy initiatives would help in the mitigation of climate change.

6.1 Introduction

The discovery and use of fossil sources like coal for energy have revolutionized the wheel as a means of transportation in the history of humanity. It continuously satisfies the need for energy of the entire world in various forms for the past few centuries. Fossils fuels were the driving force of the industrial revolution, and the modern world greatly owes its technological and mechanical progress to it. However, irrational use and burning in power generation and automotive transport have led to severe implications for the environment, especially emission of CO₂ which plays a key role in global warming and concomitant climate change (IPCC 2014; Prasad et al. 2014; Aradhey 2018; Malav et al. 2017; Kumar et al. 2016). Power generation, industries and transport sectors are primarily responsible for increasing atmospheric CO₂ emissions. Global CO₂ emission on account of combustion of fossil fuels was reported to be 32.3 Gt CO₂ in 2016. The reported increase in CO₂ emission is due to the upswing in economic activity both in the emerging and developed economies (IEA 2018).

Biofuels are fuels, primarily produced from biomass, and used as liquid fuels, i.e. bioethanol, biomethanol, biodiesel and gaseous fuels such as biohydrogen and methane (Demirbas 2008). Liquid biofuels from biomass deliver unique environmental benefits and strategic economic returns and can be considered as the eco-friendly and clean energy alternative to fossil fuels (Puppan 2002; Prasad et al. 2019b). The leading promoter for producing biofuels is global warming triggered by the continual burning of fossil fuels. Use of biofuels in compression ignition engines adding oxygen to fuel results in complete fuel combustion, supposed to cause less air pollution, and they are also biodegradable and nontoxic and has negligible sulphur content (Vasudevan and Boyi 2010; Prasad et al. 2014). The most significant difference between biofuels and petroleum feedstocks is oxygen content. Biofuels have oxygen levels from 10% to 45% while petroleum has essentially none, making the chemical properties of biofuels very different from petroleum. Ethanol when blended with petrol lowers stoichiometric air-fuel ratio that improves engine performance due to the complete fuel combustion process. Thus, it significantly reduces the emissions of CO, UHC and emission of GHG, compared to regular gasoline fuel (Prasad et al. 2014).

In absolute terms, crude oil remains a highly political energy item of trade with challenging variable pricing, and many of the long-range price estimates and crude oil market forecasting have failed miserably. Further, the uneven geographical distribution of fossil fuels and natural resources warrant countries to import crude oil from the Middle East to meet their energy needs. India relies heavily on conventional fuels to meet its 95% transportation fuel needs through petroleum products and is continually dependent on crude oil imports. Import dependency on petroleum has been steadily high at above 75% and has virtually hit 80% in the year 2014–15 (United Nations 2016). Heavy dependence on imported crude oil and its variable prices is a significant challenge in ensuring energy security. In India, the yearly energy demands upward gradually at a rate of 4.8% and is anticipated to become the world’s third-largest energy end user by 2030 (IEA 2010). Ironically, India has the world’s fifth largest coal reserves and still facing severe challenges to meet the growing domestic energy demand, typically due to swift urbanization and population growth, industrial relocations and expansions. On World Biofuel Day (10th August), the Prime Minister of India raised a hope that India can save about Rs. 12,000 crores in foreign exchange in the next 4 years due to ethanol blending of petrol. The Union Road Transport Minister has also been harping on the value of alternative fuels (Down To Earth 2003).

As concerns grow over variable pricing, uncertain climate change and the imminent depletion of non-renewable resources, different factors in society have placed increasing emphasis on the search for new, sustainable and renewable energy sources (Prasad et al. 2012, 2019a). As a result of this endeavour, policy makers focus increasingly on advancing liquid biofuels as an energy source for transportation. The Government of India has initiated several programmes and adopted a series of policies on biofuels due to its potential contributions towards a wide range of uses to achieve a reduction in air pollution, lowering greenhouse gas (GHG) emissions and climate change mitigation. This would also help to achieve sustainable development goals like energy security, foreign exchange savings, health and well-being, environmental safety and socio-economic issues related to rural areas (Faaij and Domac 2006; Basavaraj et al. 2012; Prasad et al. 2018).

6.2 Ethical Principles and Biofuels Policy

Scarcity of finite fossil fuels, changing climate, increasing demand for transportation fuel and mandatory biofuel blending policy have positioned biofuel as a significant energy source in the global arena. Scientific studies have been focused on sustainable production of biofuels which can lessen the impacts of climate change (Prasad et al. 2019a). Nevertheless, the increased focus on biofuel production has brought to the forefront the ethical dimensions of biofuel production. Buyx and Tait (2011) have distilled the following ethical principles from the prevailing ethical values. These principles shall guide “biofuel policy making” and also objectively analyse the sustainability of biofuel technologies.

• Environmentally sound and sustainable biofuel production should not purge the “existential rights” of citizens.

• Biofuel production in addition to contributing a “net decrease of GHG emissions” should adopt fair trade policies that also as the connotation of equity and benefit sharing.

Biofuel development policy making should entertain following queries so as to build a sustainable and ecological valuable biofuel policy. They include:

• Is there a danger that the costs of the development be out of proportion to the benefits, linked to other major (public) spending priorities?

• Are there any competing energy resources that might be even better, for example, at decreasing GHG emissions while still meeting all the expected ethical principles?

• Is there an alternative and better use of the lignocellulosic biomass feedstock in question?

• Has due attention been paid to the voices of those directly affected by the implementation of technology?

Careful reflection of these questions should be an integral part of a comprehensive, comparative analysis of all several future energy and climate change abatement options, including the comparison of energy portfolios with a different mix of technologies. A biofuel policy must incorporate ethical principles which focus not only on people’s rights and environmental security but also imbibe the virtues of sharing of benefits and net negative emissions of GHG (Buyx and Tait 2011).

6.3 Biofuel Policy and Programme in India

Biofuel policies in India began over a decade ago to promote energy security and self-sufficiency and reduce foreign oil imports. A large number of initiatives and programs have been taken by the Government of India to support research and development in the biofuels sector and also encourage the biomass-based economy in India. Policy frameworks are in place with important visions to develop ease of doing business, set up start-ups, SMEs (small and medium enterprises) and large enterprises for the production of biofuels and chemicals from agro-residues and industrial waste, mostly which are available as surplus.

6.3.1 National Biofuel Mission

In India, the “National Biofuel Mission” was started in 2003 with the establishment of the Planning Commission, now called NITI Aayog, Government of India (GoI). The mission aim was to develop various policies and projects to accelerate the growth and advances in biofuel crop cultivation, biofuels production and its use and also replace or moderate the reliance on imported crude oil. The Government of India decided to launch the Ethanol Blended Petrol (EBP) Programme in January 2003. Soon the effort led to compulsory blending in states. The Ministry of Petroleum and Natural Gas (GoI) has made 5% ethanol blending compulsory in petrol in nine states and five union territories (Planning Commission 2003). In the second phase of the Ethanol Blended Petrol Programme (EBPP) in 2006, the blending mandate was further extended to cover 20 states and 8 union territories. However, there were shortcomings as a result of which the established targets could not be achieved. As a result, the commencement of large-scale production units and the implementation of modern technologies to achieve the target were sought after. In September 2007, the Cabinet Committee on Economic Affairs (CCEA) recommended 5% ethanol blending across the country except for Jammu and Kashmir, the North East and island territories (Prasad et al. 2007).

6.3.2 National Biofuel Policy 2009

The “National Policy on Biofuels” was passed on 24 December 2009 by the “Ministry of New and Renewable Energy” (MNRE), Government of India. The policy had set an indicative target of 20% blending of both ethanol and biodiesel by 2017. However, it was achieved partly because of the insufficiency of a fair amount of ethanol. India’s “National Biofuel Policy” continues to focus on the use of non-food items, including molasses for bioethanol production and non-edible oils for biodiesel production (Aradhey 2010). The National Policy on Biofuels 2009 has the National Registry on Feedstock Availability and also a periodical analysis of biodiesel-blending targets. The Government of India contemplated to create a “National Biofuel Fund” (NBF) so as to meet the objectives of the national policy and to provide financial support and other possible incentives to innovate and materialize the practical applications of “second-generation biofuel production technologies.” Further, the biofuel technologies and projects were allowed 100% foreign equity by automatic approval plans to bring foreign direct investment (FDI) on condition that biofuel is for domestic use only and not for export (USDA GAIN reports 2017).

India’s National Biodiesel Policy is driven by the fact that energy is a critical input for the socio-economic improvement of our country. The energy strategy aims at efficiency and security to give access while being environment friendly and achieve the optimum mix of basic resources for energy production. In the past, the National Biodiesel Mission (NBM) identified jatropha (Jatropha curcas) as the most suitable inedible oilseed to help achieve a proposed biodiesel blend of 20% with conventional diesel by 2017. However, using jatropha proved untenable due to a host of agronomic and economic constraints.

6.3.3 India’s National Policy on Biofuels (2018)

Worldwide, biofuels have grabbed the attention in the last few decades, and it is crucial to carry on with the pace of developments in the biofuels field. In order to promote biofuels in India, the central government came out with the National Policy on Biofuels 2018 to reduce import dependency on petroleum and natural gas and to move towards renewable clean energy and mitigating climate change. As per the government’s targets, biofuels would contribute 10 gigawatts (GW) of power by 2022. The policy seeks to achieve 20% blending of ethanol with gasoline and 5% blending of biodiesel with diesel by 2030.

The National Policy on Biofuel 2018 seeks to not only help farmers economically dispose of their surplus stock but also reduce India’s oil import dependence. Biofuels in India is of strategic significance as it augurs well with the ongoing initiatives of the Government of India such as “Make in India,” “Skill Development” and “Swachh Bharat Abhiyan” and offers excellent opportunity to integrate with the driving targets of “doubling of farmers’ income,” “import reduction,” “employment generation” and “waste to wealth creation.” The biofuels programme in India has been primarily impacted due to the non-availability of domestic feedstock for biofuel generation which needs utmost attention so as to upscale biofuel production (PIB 2018).

6.3.3.1 Salient Features of National Policy on Biofuels

• 1. The National Policy on Biofuels (2018) describes biofuels as Basic biofuels viz. 1G (first-generation) bioethanol and biodiesel; and Advanced biofuels -2G (second-generation) ethanol, municipal solid waste (MSW) to drop-in fuels, 3G (third-generation) biofuels and bio-CNG, to enable the extension of relevant financial and fiscal incentives under each category.

• 2. The policy increases the scope of raw material for ethanol production by allowing the use of sugarcane juice; sugar-containing feedstocks like sugar beet and sweet sorghum; starch-containing feedstocks like corn and cassava; damaged food grains like wheat, rice and rotten potatoes unfit for human consumption for ethanol production.

• 3. The new biofuel policy allows the use of surplus food grains for ethanol production for blending with petrol/gasoline with the approval of the National Biofuel Coordination Committee.

• 4. With a thrust on advanced biofuels, the policy indicates a viability gap funding scheme for 2G ethanol biorefineries of Rs. 5000 crores in 6 years in addition to additional tax incentives, a higher purchase price as compared to 1G biofuels.

• 5. The policy supports setting up of supply chain mechanisms for biodiesel making from non-edible oilseeds, waste cooking oil and short gestation crops.

• 6. Roles and responsibilities of all the concerned authorities for biofuels have been captured in the policy document to synergize efforts.

6.3.3.2 Expected Benefits

• Reduce import dependency: One crore litre of E10 (ethanol mix) saves Rs. 28 crores of foreign currency exchange at current rates. The ethanol supply year (2017–18) is expected to mark a supply of around 150 crore litres of ethanol which results in savings of over Rs. 4000 crores of foreign exchange.

• Cleaner environment: One crore liter of E10 saves around 20,000 tons of CO₂ emissions. For the ethanol supply year (2017–18), there are secondary emissions of CO₂ to the tune of 30 lakh tons. Conversion of agricultural residue to biofuels would help reduce crop burning to reduce greenhouse gas emissions.

• Health benefits: Consumption of repeatedly heated cooking oil (RHCO), particularly in deep frying, is a potential health hazard and can lead to multiple diseases. Used cooking oil is a potential source for making biodiesel. Its use is environmentally safe and prevents the diversion of used cooking oil to small restaurants/roadside vendors.

• MSW management: India generates 62 million tons of waste every year. There are technologies available which can convert MSW to drop-in fuels. It is estimated that 1 ton of MSW has the potential to produce around 20% of drop-in fuels.

• Infrastructural investment in rural areas: It is expected that one 100 klpd biorefinery will require around Rs. 800 crores capital investments. At present, oil marketing companies (OMCs) are in the process of setting up 12 second-generation (2G) biorefineries with an investment of nearly Rs.10,000 crores. Further, addition of 2G biorefineries across the country will spur infrastructural investment in rural areas.

• Employment generation: One 100 klpd 2G biorefinery can contribute 1200 jobs in plant operations, village level entrepreneurs and supply chain management.

• Additional income to farmers: By adopting 2G technologies, agricultural waste/crop residues which otherwise are burnt by the farmers can be used to produce ethanol and can fetch a price for these wastes if a market is developed for the same. Also, farmers are not certain of getting the relative price for their produce during the surplus production phase. Thus conversion of surplus grains and agricultural biomass can help in price stabilization.

6.3.4 The Draft Auto Policy 2018

According to the draft National Auto Policy, February 2018, from the Ministry of Heavy Industries and Public Enterprises, the Government of India seeks to promote clean, safe, efficient and comfortable mobility for every person with a focus on emission control, environmental protection and affordability. The new policy includes:

• “A 10-year strategy (until 2028) for emission standards;

• Adopting reductions in CO ₂ through the Corporate Average Fuel Economy (CAFE) regulations;

• Introducing criteria for vehicle length and CO ₂ emissions to classify vehicles for taxation;

• Defining a list of target technologies in the areas of green mobility, emission control, and safety with components and equipment that will be eligible for import duty reductions;

• Finalizing a green mobility roadmap including emission and fuel consumption standards, along with incentives and related infrastructure investments;

• Conducting a detailed study on the requirements of people, infrastructure for green vehicles to manage the quantity, density and mix of mobility infrastructure requirements, and

• Including standards for green vehicle infrastructure regarding power supply, connectors, and refueling.”

Moreover, the growing concern about environmental pollution through carbon emission has led the Government of India transport policy to target Euro III and IV vehicle norms (Aradhey 2013). Intending to conserve natural resources as well as to reduce pollution, the Government of India has also decided to implement Bharat Stage VI or BS VI emission norms in Delhi NCR from 1 April 2018. In the rest of the country, these will be implemented from 1 April 2020. Also, these standards permit to increase ethanol blending in petrol and biodiesel in diesel, which will assist in natural resources conservation and reduction in import of crude oil (The Economic Times 2018).

6.4 India’s Dependence on Fossil Fuel Energy Imports

Although energy consumption per capita in India is estimated to be one-third of the global average, strong growth prospects in the world’s fastest-growing economy will drive demand for energy across different sectors. Hence, access to sufficient and reliable energy sources becomes vital, mainly when one-quarter of the people lack access to electrical energy and reliance on coal, crude oil and natural gas continues to rise. Fossil fuels supply about three-quarters of India’s energy demand, and India is the third-biggest importer of crude oil after China and the USA and remains to rely frequently on imports (mostly from Russia and Algeria).

In the last 5 years, import volumes of petroleum and petroleum products have risen by 25% to 307 billion litres. However, the associated cost fell by $155 billion in the Indian fiscal year 2013–2014 to $81 billion until the fiscal year 2016–2017. It grew by more than 25% in the last fiscal year to $101 billion (Fig. 6.1). India’s total installed power capacity is just under 344 thousand megawatts, of which significant portions are produced from coal (57%), followed by renewables (20%), hydroelectricity (13.2%), natural gas (7.2%), nuclear source (1.9%) and diesel (0.24%). Among renewable energy sources, 49.3% is contributed by wind energy, 31.3% by solar energy, 12.8% by bioenergy and the rest is from small hydropower generation (Aradhey 2017, 2018).

Fig. 6.1

India: crude oil import, petroleum products and consumption. (Source: Petroleum Planning and Analysis Cell, Gov. of India (GOI), timescale in the Indian fiscal year)

In the economy of any country, crude oil prices play a crucial role. Changes in crude oil price indirectly impact the local currency owing to its effects on fiscal deficit and current account deficit. However, crude oil prices are dependent on several factors, the impact being political situation in and around major oil-producing countries. As far as India is concerned, crude oil price rise has a significant impact on various segments of the Indian economy; falling price is undoubtedly a blessing for the economy as it helps macro-economic management of inflation, fiscal deficit and current account deficit. In the long run, the only sustainable technology and viable policy to deal with high international oil prices are to rationalize the tax burden on oil products over time, pass on some increase in oil prices to consumers and protect especially those who are below the poverty line.

6.5 The Transport Sector and Commitment of Government of India to Reduce GHG Emissions

Continued economic growth coupled with urbanization and the fast lifestyle of Indian people pushes them to go in favour of road transport. The total registered vehicles have recorded a trend growth rate of 9.8% during the last 10 years (2005–2015), and as on 31 March 2015, there were 210 million registered vehicles in India (Transport Year Book 2013–2014 and 2014–2015). The Indian transport sector is the largest and the fastest-growing consumer of petroleum, with 39% of petroleum products consumed (TERI 2013). Transportation is the fastest growing and a significant contributor to GHG emissions. Growth in fuel use is higher for the transport sector than any other end-use sector. The primary drivers of global transport energy growth are land transport, mostly light-duty vehicles, such as cars, as well as freight transport. Transport sector accounted for nearly 23% of global CO₂ emissions in 2010 and 27% of end-use energy emissions with urban transport accounting for around 40% of end-use fuel consumption. CO₂ persists in the environment for over a century, with long-term warming effects (IPCC 2014).

According to the Fifth Assessment Report of IPCC, human-induced activity has caused an imbalance in the natural phenomenon of the greenhouse effect and related processes. Retention of excess heat by the increasing concentration of GHGs over the years (Table 6.1) traps more heat, resulting in changes in climatic processes as evidenced by an increase in temperatures, changes in rainfall patterns, rising sea levels, increased ocean acidity, and melting of glaciers IPCC 2014; Blasing 2016). The IPCC (2014) report reveals that total anthropogenic GHG emissions have continued to grow, with more significant increases towards the end of 2010. Despite the large number of mitigation policies, annual GHG emissions rose by 1.0 Gt carbon dioxide equivalent (Gt CO₂eq) (2.2%) per year from 2000 to 2010 compared to 0.4 Gt CO₂eq (1.3%) per year from 1970 to 2000, with highest recorded emission of 49 (±4.5) Gt CO₂eq/year in 2010 (IPCC 2014). India’s greenhouse gas (GHG) emissions rose by an alarming 4.7% in 2016, compared to the previous year, the report released by the Netherlands Environmental Assessment Agency. The USA saw a decline of 2% and even China reported a decrease of 0.3%. The good news is that a global carbon dioxide emission has remained flat in the past 2 years registering only marginal increases.

Table 6.1 Recent tropospheric greenhouse gas (GHG) concentrations

India is the sixth largest greenhouse gas emitter, contributing almost 3% of the world’s total emissions. India’s per capita CO₂ emission is projected to increase to 1.6 tons by 2030. India’s huge population, however, aggravates the net emissions into the atmosphere (Francis et al. 2005). Experts say India is expected to be hit severely by global warming. It is already one of the most disaster-prone nations in the world, and many of its 1.2 billion people live in regions vulnerable to hazards such as floods, cyclones, and droughts. Significant GHG reduction is necessary in order to achieve the prescribed levels (Prasad et al. 2019b).

The GOI is committed to reducing GHG by 20–25% by 2020 and 33–35% by 2030 over 2005 levels. Moving towards green mobility and low carbon economy, a dedicated transport sector will likely support GHG reduction goals (Aradhey 2018). Through upgradation of fuel efficiency standards, the GHG emissions can be reduced. Additionally, there is a proposal to upgrade the vehicles from current Bharat Stage (BS)-IV standard to BS-VI fuel compatible by 2020. The new fuel engine standards are likely to reduce harmful emissions and increase fuel efficiency. The GOI was committed to rolling out BS-VI norms by 2023, but it revised the deadline to 2020.

6.6 Biofuel Consumption, Production, Trades, and Projections

Over the next few decades, the most certain increase in demand for biofuels is going to concentrate on displacing liquid fuels for transportation, particularly ethanol which currently supplies over 95% of the biofuels for transport (Fulton et al. 2004). At present, ethanol production is mostly based on sugarcane and maize sources. At the same time, these crops likely have the most significant impact on food supply and demand systems. That is particularly true, if the production occurs on prime agricultural lands as is likely given the need to decrease transport costs of both the feedstocks and fuel products to and from larger, centralized ethanol production facilities.

As regards the global biofuels scenario, the production increased only by 3.5% (2017) and the USA has contributed significantly for the total production. While the growth of global production of ethanol was 3.3%, the growth rate of biodiesel production was 4% (Fig. 6.2). The USA is the world’s largest producer of ethanol, and in 2017, the US production was about 16 billion gallons. The USA and Brazil together contribute 85% of the global ethanol production (Fig. 6.3). The vast majority of US ethanol is produced from corn, while Brazil primarily uses sugarcane (Renewable Fuels Association 2018).

Fig. 6.2

World biofuels production by region and type (million tonnes oil equivalent). (Sources: Includes data from F.O. Lichts; Strategie grains; US-EIA (March 2018))

Fig. 6.3

Global ethanol production by Country/Region and Year. (Sources: www.afdc.energy.gov/data)

With respect to biodiesel production, the USA and Brazil were among the biggest biodiesel producers in the world, totalling 6.0 and 4.3 billion litres, respectively, and Germany is ranked third with a production volume of around 3.5 billion litres in 2017 (Fig. 6.4). After the adoption of the Energy Policy Act, 2005, which provided tax incentives for certain types of energy, biodiesel production in the USA begins to expand. Currently, volumetric ethanol excise tax credit is one of the chief financial supports for biofuels production in the USA. The USA exported around 85 million gallons of its biodiesel products in 2010. Comparatively, Argentina accounted for over half of the world’s total exports.

Fig. 6.4

Global biodiesel producers worldwide in 2017. (Sources: www.afdc.energy.gov/data)

Currently, in India, almost 330 distilleries are producing more than 4.6 billion litres rectified spirits (alcohol) annually. Of this total, about 165 distilleries can distil over 2.2 billion litres of ethanol (denatured and undenatured) used as fuel, industrial chemicals, and beverage. India’s EBP was based more on sugarcane molasses, not directly from sugarcane juice, corn, or any other potential domestic raw material sources available in the country. However, the current biofuel policy for 2018 has increased the scope for including other raw materials, in addition to encouraging optimal capacity utilization of grain-based distilleries (Aradhey 2018).

India’s total ethanol consumption will outgrow production for the fourth consecutive year due to an uptick in fuel ethanol purchases by industry and a consistent rise in demand from the industrial and potable sectors (Fig. 6.5). The ethanol consumption demand growth (8% annual, 5 year average) is rather stiff compared to production growth although both have risen, but in response to different demand drivers: the rise in fuel prices have contributed to growth in ethanol consumption and a strong recovery in sugarcane production this year has contributed to production growth.

Fig. 6.5

India: Ethanol production, Supply, and Consumption. (Source: Aradhey 2018, FAS/USDA Data)

Total ethanol consumption is expected to reach a record high of 3.1 billion litres in 2018. (India achieved its highest ethanol market penetration at 3.3% (national-level blend) in 2016). The GOI mandatory use of ‘indigenous ethanol only’ for fuel under the EBP is expected to rise from 675 million litres in 2017 to a record 1.25 billion litres this year; this is 85% above last year and marginally above the 1.1 billion litres blended in 2016. The remaining 1.9 billion litres will be the industrial and potable alcohol sectors (which are exempted from GST). Since the quantity of ethanol demanded at higher prices may be less, the industrial uses and the potable sector will need to augment some of its supply from grain-based distilleries, partly from raw material imports or by directly importing the finished products.

An estimated 2.55 billion litres (record) of ethanol will be produced in 2018, 52% above last year. An anticipated rise in sugarcane production in 2018 and consequent increase in availability of molasses will bring an additional 875 million litres of ethanol into the supply chain compared to last year’s supply. Hypothetically, if all the ethanol produced in 2018 is made available for EBP, then it will meet a 6.5% blend target. However, demand rationing from potable and industrial sectors will limit the national blend average to 3.2%. Industry sources indicated that the OMCs might be able to procure upwards of 1.3 billion litres in 2018. With around 166 refineries, the production capacity of combined plants in the last 10 years has risen by 800 million litres to 2.3 billion litres in 2018. The capacity utilization in 2018 will be 111% after 2 years of successive underutilization on supply concerns.

In 2018, India will continue to be a net importer of ethanol (all end uses) despite the rise in its domestic production. The USA has become the near-sole supplier of India’s imports, and exports will rise on growing demand from African nations and neighbouring countries. The preceding statement assumes current market conditions, and the subsequent narrative is based on prevailing market trends. Imports are allowed only for the non-fuel purpose subject to actual user condition. They backfill supply gaps in ethanol demand for industrial chemicals, which usually gets smaller during bumper sugarcane harvests and surplus sugar production thereby leaving additional feedstock (molasses) for fuel ethanol production. The supply deficit will be slightly narrower in 2018 due to a substantial rise in domestic production, but imports will continue to augment increasing demand not met through local supplies. As a result, ethanol imports in 2018 are 640 million litres (mostly denatured), second highest in a decade. The share of US ethanol in the total import basket has grown by 22% in the last 5 years to 96% in 2017. China, South Korea, Pakistan and Bhutan filled in the remaining 4% market share.

Ethanol exports¹ in 2018 are expected to rise to 164 million litres (mostly undenatured), 16% above last year. After its peak export sales in 2013 (233 million litres), Indian exports of ethanol have declined by an average of 15% per year on tighter supply and strong local demand. That trend seems to have reversed itself in the last 2 years as export sales have recovered (close to the five-year average sales figure), as local supply is enough to match the consistent rise in demand from African nations and neighbouring countries. In 2017, Nigeria, Ghana, Angola, Nepal, and Kenya were the top five export destinations for Indian ethanol. However, India faces stiff competition from other major ethanol suppliers from the USA, South Africa, the UK and Canada.

The marketing of biodiesel is still nascent. Presently, India has an annual capacity to produce biodiesel around 650 million litres. Estimated annual biodiesel production upwards of 185 million litres in 2018, an additional 18 million litres above last year, consumption of biodiesel is growing steadily at 2–3%. However, producing close to 29% of the installed capacity, with most of the feedstock sourced from the food processing industry and restaurants. It is estimated that transport by road and rail account for roughly half of all biodiesel use, and the other half is consumed by off-road farm transport and various stationary applications. The national average blend rate for on-road transport and stationary applications are each estimated at one-seventh of one percent (0.14%) today or slightly higher than the estimated 0.04% blend rate 10 years ago (Table 6.2).

Table 6.2 India’s total biodiesel production, trades, and projections

Beginning 2014 and running through 2016, a little more than a quarter of total biodiesel production was exported before declining through 2018 as growing domestic demand left a little exportable surplus. Compared to average export sales of 39 million litres made from 2014 to 2016, the export forecast for 2018 is just 7.4 million litres (Table 6.2). However, during the same period, imports grew five-fold to 10 million litres in 2018, indicating small but steady growth. The EU, China, Malaysia, and Indonesia are significant suppliers of biodiesel to India while India’s major export destinations are the Malaysia and EU. Additionally, for sustainable biodiesel production to grow there is a need for a strong commercially viable strategy, as capacity utilization is less than 30%, due to multiple constraints, including limited feedstock availability, lack of integrated and dedicated supply chain, and restrictions on imports. The government of India and the private sector are working together in production and distribution. Financial institutions such as IREDA, NABARD, and SIDBI are supporting for biodiesel production infrastructure especially cultivation, extraction, processing, storage, and distribution. The Biodiesel Association of India, working as a coordinating body for supporting Research & Development and marketing of biodiesel in the country.

6.7 Global Climate Change and Biofuels

Climate change has been a major global concern in recent years. That has led to various initiatives, such as the UNFCCC and Kyoto Protocol (KP). The energy sector being a significant emitter of GHGs has also motivated the political progress towards improved energy supplies with enhanced efficiency as far as their eco-friendly nature is concerned (Prasad et al. 2014). According to Tilman et al. (2009), balancing needs and seeking solutions to energy, environment, and food security challenges, society cannot afford to miss out on greenhouse gas emission reductions and multiple benefits, when biofuels are done right. However, the world also cannot accept the undesirable impacts of biofuels done wrong. Biofuels done right can be produced in large quantities (NAE 2009). However, they must be derived from materials produced with much lower life-cycle greenhouse gas emissions than traditional fossil fuels and with slight or no competition with food production. The feedstocks materials that can be included in this category are (1) perennial plants grown on degraded lands/waste or abandoned from agricultural use, (2) crop residues, (3) sustainably harvested wood and forest residues, (4) double crops and mixed cropping systems, and (5) conversion of municipal and industrial wastes into liquid fuels (Puppan 2002; Kammen et al. 2007; Prasad et al. 2019a).

In its fourth climate change assessment report, biofuels were identified as a “key mitigation strategy” (IPCC 2007). However, the debate surrounding biomass in the food versus fuel competition, and growing concerns about land use, water, and replacement of forests has acted as incentives for the development and implementation of sustainability criteria and frameworks (IPCC 2011). Furthermore, the support for advanced biorefinery and next-generation biofuel options is driving biofuel to be more sustainable (IPCC 2014). Conversion of biomass feedstock to biofuels and its use as a supplement to petrol-fuels is more environmentally friendly than petrol-fuels alone (Prasad et al. 2019b). When we use ethanol instead of petroleum fuel, we help reduce atmospheric CO₂ by avoiding the emissions associated with the use of petrol; not releasing CO₂ stored in the fossil fuels and contributing a mechanism for CO₂ absorption by growing new biomass. Because of their adaptability with the natural carbon cycle, biofuels offer the most beneficial alternative for reducing greenhouse gases from the transportation sector (US DoE 1999).

Advanced conversion technologies including the use of biomass residues and long-lived plantations can lead to 80–90% reduction in GHG emissions compared to the fossil fuel use levels (IPCC 2011). Figure 6.6 shows a range in reductions of GHG emissions per vehicle-km (v-km) obtained from various studies. Larson (2006) assessed GHG emissions from transportation fuels, petroleum fuels, first-generation biofuels (sugar and starch-based ethanol, oilseed-based biodiesel), and selected second-generation biofuels derived from lignocellulosic biomass (ethanol and Fischer-Tropsch diesel) on a well-to-wheel basis.

Fig. 6.6

Well-to-wheels energy requirements and GHG emissions for conventional biofuel pathways compared with gasoline and diesel pathways, assuming 2010 vehicle technology. (Note: EtOH ethanol, SME soy methyl ester, RME rape methyl ester, PISI port injection spark ignition, DICI DPF direct injection compression ignition with diesel particulate filter. (Source: Larson 2006)

Many studies have been found that the application of 1st-generation biofuels results in emission reductions of 20–60% of CO₂eq relative to fossil fuels. Expected reductions for future commercialized 2nd generation biofuels are in the range of 70–90% of CO2eq relative to fossil fuels (FAO 2008). The broad range of emission reductions for the 1st-generation biofuels is due to several types of feedstock and conversion processes and to the different sites of production and consumption. Substituting biofuels for petroleum-based fuels was found to have the potential to reduce lifecycle GHG emissions directly associated with the fuel supply chain. Second generation biofuels (with lifecycle GHG emissions between 10 and 38 g CO₂eq/MJ) were reported to provide greater mitigation potential over first-generation biofuels (with lifecycle GHG emissions between 19 and 77 g CO₂eq/MJ) compared to 85–109 g CO₂eq/MJ for petroleum fuels (Larson 2006). Estimates of GHG emissions are variable for both biofuels and petroleum fuels, primarily due to assumptions about technological issues and where and how the feedstock is produced. Adopting a consistent 10% blending regimen for gasoline and a 5% biodiesel regimen for diesel could potentially reduce CO₂ emissions by 3–4%, creating a total abatement of 10–12 million tons of CO₂. A compelling blend regime could also deliver annual economic savings of $1.2–1.5 billion in a country like India (Wang et al. 2011).

6.8 Policy Initiative by Government of India to Combat Biofuel Trilemma

In India, National Policy on Biofuels 2009 and the recently approved the national policy on biofuel 2018 have a clear-cut guidelines to combat biofuel trilemma on food, energy, and environment. The Government of India is focusing on utilizing waste and degraded forest and non-forest lands only for the cultivation of shrubs and trees bearing non-edible oilseeds to produce biodiesel. In the country, bioethanol is produced mainly from molasses, a by-product of the sugar industry. In the future, it would be ensured that the next generation of technologies is based on non-food feedstocks. Therefore, the issue of fuel vs. food security is not relevant in the Indian context (MNRE 2010). The Government of India is also committed to reducing GHG by 33–35% by 2030 over 2005 levels and moving towards green biofuels and low carbon economy to combat harmful emissions and its impact on the environment by increasing fuel efficiency standards, upgrading vehicles from BS-IV standard to BS -VI fuel compatible norms by 2023. Looking forward to the IPCC AR6 cycle, key emerging concerns are likely to be (i) trade-offs between the use of land for bioenergy generation, food and fibre production and conservation of ecosystem integrity and (ii) the co-delivery of bioenergy based climate change mitigation (with or without CCS and the UN Sustainable Development Goals) (Smith and Porter 2018).

6.9 Conclusion

Biofuels production has increased significantly in the past few years to reduce fossil fuel dependence. The use and cautious biofuel production from renewable sources can help to satisfy not only the energy demand but also cut carbon emissions as committed by India through various multilateral agreements and at International fora. The biofuel production and multi-functional biofuel benefits can also help to sustain biofuel producers and boost rural employment and strengthen the bio-based economy in India. There is an urgent need to develop a strategy for efficient and resilient biofuel production system under changing climatic scenario. Hence, our effort should bring in a concrete change for the society and ensure the protection of natural resources and ecosystem.