What is the issue?
The Union Government's plans and proposals on the production and use of biofuel have given rise to some concerns.
What are the recent moves?
- Production - The government has an ambitious plan to triple the production of biofuels in four years.
- This is a positive move to reduce the excessive dependence on imports for meeting the energy needs.
- Policy - The recently-approved National Biofuel Policy 2018 pushes for a new biofuel strategy.
- It is aimed at raising ethanol doping of petrol to 10% by 2022 and 20% by 2030.
- This will be a rise from the present national average of around 2%.
- Also, biofuel blending of diesel, which is almost negligible now, is proposed to be stepped up to 5% by 2030.
- This is estimated to help save Rs 120 billion in import bill.
- The intended objective is to create Rs 1 trillion biofuel economy.
- Refineries - Oil marketing companies are already in the process of setting up 12 biofuel refineries.
- These units would deploy second-generation technology.
- It can make biofuels from even solid municipal and industrial trash.
- It also includes problematic agricultural wastes like paddy straw and crop stubbles.
- Notably, these are generally burnt in the fields itself, causing pollution.
- Government is offering subsidised credit, viability gap funding and relatively higher purchase prices for ethanol produced by these plants.
- The GST has been trimmed from 18% to 5% on ethanol and from 18% to 12% on biodiesel.
- Sugar industry - The sugar industry has already been permitted to produce ethanol.
- The mills are incentivised to set up biofuel refineries with liberal government assistance.
- The government has also fixed a higher procurement price for the ethanol drawn directly from cane juice.
- This is more than the price for that manufactured from the byproducts like molasses.
What are the concerns?
- Production - It is proposed to use various kinds of farm produce and not just agricultural wastes for this purpose.
- This can potentially distort the pattern of agricultural output in favour of energy crops.
- This is a trend that even the land-rich countries are finding hard to sustain.
- Ethanol - The liberties granted to ethanol manufacturers remain contentious.
- They are allowed to choose their feedstock from a range of crops and other farm materials.
- These include:
- sugarcane juice
- sugar containing crops such as beetroot and sweet sorghum
- starchy crops such as maize and cassava
- damaged food grains such as wheat, broken rice and potato
- Evidently, many of these are part of the human or animal food chains.
- Sugar industry - Ethanol drawn directly from cane juice could amount to a complete bypassing of sugar production.
- Also, farmers would be encouraged to produce more of this water-intensive crop.
- This could be at the cost of other crops that can be grown on the prime irrigated lands.
- Despite farmers' benefits, such moves may pose problems in the wider economic interests.
- Bio-diesel - For biodiesel, the new plan envisages utilisation of non-edible oilseeds and short-gestation oil-bearing crops.
- This disregards the fact these oils are used in the pharmaceutical, cosmetic and other industries.
- Given these, the well-intentioned biofuel plan does need some judicious alterations to address the concerns.
Source: Business Standard
