On World Biofuel Day, celebrated on the 10th of August every year, Indian Prime Minister Narendra Modi inaugurated a second-generation (2G) ethanol refinery in the Indian state of Haryana.
The 2G ethanol plant, set up at the Indian Oil Corporation’s Panipat refinery in Haryana over 35 acres, can process two lakh tons of rice straw annually, generating approximately three crore liters of ethanol using indigenous technology.
The biorefinery will benefit more than one lakh farmers and create around 1,500 jobs for rural youth. In addition, the plant is expected to address the significant challenge of the pollution caused due to stubble burning by eliminating around 3 lakh tons of CO2 emissions annually, equivalent to replacing nearly 63,000 cars on the road every year. Furthermore, this second-generation biorefinery will save foreign exchange that would otherwise be incurred on fuel imports.
As per a report by the Association of Biotechnology Led Enterprises (ABLE), the biofuel economy in India is worth US$80 billion and is expected to reach $150 billion by 2025. However, it pales compared to the US bio-economy, which measures about US$ 1 trillion.
Ethanol blending is not new in India; ethanol-blended petrol was launched in January 2003. In 2006, the Government directed the Public Sector Oil Marketing Companies to sell 5% ethanol-blended petrol in 20 states and 4 UTs.
However, there was not much headway for many years due to multiple factors. In 2018, the government of India introduced the National Policy on Biofuel, which was further amended in 2022. The policy aims at 20% ethanol blending and 5% biodiesel blending by 2025. The policy and regular interventions have significantly improved the biofuel economy in India.
As per the Indian government Ministry of Petroleum and Natural Gas, during 2013-14, 38 crore liters of ethanol were purchased, which has increased more than ten times to 408 crore liters in Ethanol Supply Year (ESY) 2021-22. It was estimated more than Rs. 25,500 crores of ethanol was purchased in Ethanol Supply Year (ESY) 2021-22, a large sum of which was given to the sugarcane farmers.
Why Biofuel Economy is Important for India
While electric vehicles (EVs) are gaining popularity in India, they are not expected to completely replace internal combustion engine (ICE) vehicles for at least the next decade. Therefore, reducing emissions from ICE vehicles is still an important focus for the Indian government. The E20 plan, which involves blending 20% ethanol with gasoline, is a step towards reducing emissions from ICE vehicles.
As ethanol is plant-based, it has lower carbon emissions than gasoline, making it a cleaner fuel option. Additionally, ethanol use will contribute to India’s commitments to the United Nations Framework Convention on Climate Change (UNFCCC), which has stated that 50% of its energy requirements will be met from renewable energy by 2030.
The journey towards E20 is critical to reducing India’s import dependence. Once the E20 stabilizes, the ethanol supply can be stabilized on a pan-India basis. Flex-fuel can constantly be rolled out parallelly to address larger ethanol production volumes. The regulatory requirements for flex fuels like E25 to E85 are being put into place, and once they are met, they will be evaluated.
The potential impact of 20% ethanol blending on India’s GDP is significant. The effect of bio-economy would come from various sources, including foreign exchange savings due to reduced crude oil imports, increased income for farmers from biomass conversion, and reduced dependence on imported fossil fuels. Additionally, biofuels like ethanol can positively impact the environment by reducing greenhouse gas emissions and promoting sustainable agricultural practices.
In addition to ethanol, compressed biogas (CBG) is also a good form of biofuel for the transport sector, which has similar socio-economic and environmental benefits to ethanol. The Indian government has recognized the potential benefits of CBG and launched the Sustainable Alternative Towards Affordable Transportation (SATAT) scheme in October 2018. The scheme aims to establish an ecosystem for the production of CBG from various waste biomass sources in the country.
The scheme has brought significant advantages. It has improved the payment cycle for farmers since oil marketing companies settle their ethanol dues in 21 days instead of the months that the farmers had to wait for their payment from sugar mills. The scheme has also led to agricultural waste collection, which was burned earlier and caused pollution.
Role of Private Companies
While it is incumbent on the government side to put in policies and regulations to incentivize and promote the use of biofuels, such as tax credits or mandates requiring a certain percentage of biofuels to be blended with traditional fossil fuels, the government can also provide funding and support for research and development in the biofuel industry and for the construction and operation of biofuel production facilities.
On the other hand, the private sector can bring expertise and innovation to the table, investing in research and development of new technologies and products and establishing biofuel production facilities.
Pune-based Praj Industry dominates India’s 1G ethanol market and is the only player in 2G ethanol. Praj Industries is poised to exploit the rising demand for biofuels, including ethanol blending in diesel and flex-fuel engines.
With 16 well-equipped laboratories, they have a broad range of expertise to conduct research in microbiology, molecular biology, bioprocess technology, process engineering, and chemical sciences. Overall, having such an R&D center and facility can help the company to develop cutting-edge technologies, improve its processes, and deliver new and innovative products to the market.
Sustainable aviation fuel is another area gaining traction, and Praj Industry is investing in research and development in this field. It will be exciting to see how this technology progresses and how it can contribute to a more sustainable future.
Then there are startups like Buyofuel, which has created a technology-enabled platform for the biofuel market. The Coimbatore-based company connects raw materials suppliers with manufacturers, which helps suppliers get an excellent price for something considered waste. The manufacturers get the necessary resources for biofuel and can also get the marketplace to sell the green fuel to large-scale consumers.
These developments have tremendous potential for business and contributing to climate action and creating a better future for the next generation. Ultimately, the government and private sector partnership is crucial in advancing biofuels and other environmental-friendly solutions. Both entities have unique strengths and resources to contribute towards achieving the common goal of a more sustainable future.
It’s great to see that India is taking steps towards implementing cleaner fuels and reducing its greenhouse gas emissions. Using biofuels, such as ethanol blends, CBG, and others, can play a massive role in this transition.
While the biofuel economy in India is taking rapid strides and can significantly help reduce emissions, it cannot be seen as a silver bullet solution to climate change. India needs to continue exploring and investing in other renewable energy sources.