BIOFUELS: THE KEY TO INDIA S SUSTAINABLE ENERGY NEEDS

BIOFUELS: THE KEY TO INDIA S SUSTAINABLE ENERGY NEEDS Linoj Kumar* M P Ram Mohan* *Research Associate, The Energy and Resources Institute (TERI) Lodhi Road, New Delhi, India 110003 Tel: 91 11 24682100/11 Email: linoj@teri.res.in ABSTRACT A country of billion population and having seen a sustained and rapid economic expansion in the last decade India s energy demand will see a quantum 40 percent growth in the next ten years. India, like many other developing countries, is a net importer of energy. More than 25 percent of primary energy needs are being met through imports mainly in the form of crude oil and natural gas. Biofuels as a domestic and renewable energy source, can significantly reduce India s dependence on foreign oil, can minimize the environmental threat caused by the fossil fuels and it is the best ever alternate in securing the energy needs of the country. The other advantage is in meeting rural energisation and empowerment of village community through enhanced livelihood opportunities and thus controlling migration. There is a huge potential in India for the production of biofuels in terms of feed stock availability. Present accessibility of feedstocks in meeting the demand of biofuels has been examined along with recent developments in the biofuel sector of the country. Commercialisation of biofuels has to overcome various technological and policy challenges. Keeping this perspective in view biofuel technologies has been evaluated in terms of logistics of feed stock availability, existing processes, and policy framework. Obstacles for biofuel promotion are dealt in detail and a viable model for India is proposed. Research priorities that need to be promoted on an urgent basis to improve the economic competitiveness of biofuels has been identified and scrutinized. It is concluded that through a coherent and responsible policy and technological initiative, India could meet the every growing energy need through biofuels creating a positive impact on energy economy of the country. INTRODUCTION 1.1. Indian Energy scenario and Significance of Biofuels India ranks sixth in terms of energy demand accounting to 3.6% of total global energy demand. While the energy demand is expected to grow at 4.8% a year, a large part of India's population, mostly in the rural area, doesn't have even access to it (8, 16). India still has about 96, 000 villages to be electrified and only about 45% of 138 million households in 583,000 villages use electricity for lighting (8, 20). Most rural kitchens use biomass fuels in smoky kitchens. Inadequate access and poor quality of energy services continues to be a very critical dimension of rural poverty in India. Risø-R-1517(EN) 423

Further more, being the second most populous country with rapidly urbanizing economy, our dependence on oil import will increase enormously in the near future. In 2003-04, India, which is 70% import dependent for meeting its crude oil requirement, spent 18.36 billion dollars (Rs 84,236 cores) on importing more than 90 million tones of crude oil. It is predicted that if India continues at this rate, we would be consuming 5.6 million barrels of oil /day by 2030 out of which more than 94% will be met through oil imports (8). When we reach that level, we would become major importers in the global oil market and any fluctuation in price or any problems that affect continuous supply can hit our economy very badly. The greatest increase in energy demand occurs in the transportation sector where more than 95% of the demand is met by fossil fuels, which contributes to environmental impairment to a momentous level. In fact, increased environmental degradation do remind that our ways to meet energy demand should be designed as an element of sustainable development as well. For that reason, it is learnt from the present scenario that extreme dependence on petroleum as a primary energy source will entail considerable risks both from energy security and environmental point of view. Amount (Million tonnes) of Crude oil and Natural Gas 120 100 80 60 40 20 0 1990/91 1995/96 2000/01 2003/04 10 9 8 7 6 5 4 3 2 1 0 Amount of LPG (Million tonnes) Total Import of crude oil and petroleum products Total Consumption of Petroleum Products Indigenious Production of Natural Gas Indigenous Production of Crude oil Import of LPG Total Consumption of LPG Figure 1 Indian Oil and gas Scenario A trend in the last few years (Source: 6, 8, 21) Securing long term supply of energy sources requires not only that existing fuel resources be utilized as economically as possible but also that the energy sources used in this fuel system must be diversified. In the coming years, we have to be at a point in our development, where the nation is less dependant on fossil fuels for our energy generation. Keeping this point in view, biofuels are recognized as a major player for ensuring energy security in the future of our country. Recent developments have made these green fuels economically interesting in view of the resource potential and the possibility of improving environmental performance, along with employment generation and empowerment of the rural economy. However Development of biomass-based energy would ensure that new technologies and policies available to keep pace with society s need for this clean and viable alternatives. With regard to the fuel guzzling transportation sector, National Auto Fuel Policy, 2003, will be having a revolutionary impact on the social economic and Risø-R-1517(EN) 424

environmental sector of the country. The main objective is to substantially reduce the massive pollution problems rooted by the vehicular emissions. Broadly, the policy gives a roadmap for achieving various vehicular emission norms over a period of time and the corresponding fuel quality up gradation requirements. Though, policy does not recommend any particular fuel/ technology for achieving the desired emission norms, it proposes liquid fuels as the main auto fuels throughout the country and the use of CNG/LPG be encouraged in cities affected by higher pollution levels (7). But both CNG and LPG are in short supply domestically and over the next decade; India s demand for natural gas and LPG will outstrip the country s ability to produce it. Therefore the policy tells that commercialization of biofuel vehicle is one of the main ways to reduce energy dependence, financial strain on heavy foreign exchange and environmental issues. 1.2. Initiatives from Indian Government Keeping in mind these possibilities, Government of India has initiated various policies to give an effect to the early implementation of the biofuels program. These are; 1.2.1 Gasohol Programme The vision for development of the biofuels sector has already made headway in India. With a view to give boost to agriculture sector and reduce environmental pollution, Government of India have been examining for quite some time supply of ethanol-doped-petrol in the country. In order to ascertain financial and operational aspects of blending 5% ethanol with petrol Government had launched three pilot projects in different states during 2001 and these pilot projects have been supplying 5% ethanol-doped-petrol only to the retail outlets under their respective supply areas. While the Society for Indian Automobile Manufacturers (SIAM) has confirmed the acceptance for use of 5% ethanol-doped-petrol in vehicles. State Governments of major sugar producing States and the representatives of sugar/distillery industries have confirmed availability / capacity to produce ethanol. Government have set up an Expert Group to examine various options of blending ethanol with petrol including use of Ethyl Tertiary Butyl Ether (ETBE) in refineries. Considering the logistical and financial advantages, this Group has recommended blending of ethanol with petrol at supply locations (terminals / depots) of oil companies. In view of the above, Government have now resolved that with effect from 1-1-2003, 5% ethanol-doped-petrol will be supplied in the nine States and four Union Territories. 1.2.2 National Mission on Biodiesel The planning commission of India has proposed a National Mission on biodiesel, which is expected to lay a strong foundation of an integrated biofuels production capability in the country. The programme aims to produce enough seeds for the production of biodiesel in sufficient quantities to enable its blending with diesel to the extent of 20% (19). While there is a number of non-edible oil seed producing species in India scattered all over the country the seed collected is being used by the rural communities. It is not available for an organized Programme of biodiesel production. It is clear that any such Programme is based on additional plantation. As a part of national mission on biodiesel it is proposed to take up a demonstration project which will lay a foundation of a self sustaining Programme of plantation and Risø-R-1517(EN) 425

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