The impact of Biofuel mandates in India

byRavi Kumar Pamu

ReviewThe report submitted last semester comprised the following:

• Review of literature on production of biofuels in India with special emphasis on how there has been a shift in cropping patterns: from food grains to commercial crops.

• The review of literature also showed that with a rising demand for biofuels, and shifts in agricultural production from foodgrains to commercial crops, there was a direct impact on price of essential commodities such as foodgrains.

In this phase,

• I have highlighted on why there is a need to develop biofuels and their necessity in the transport sector so that the rise in food prices can be minimized.

• Tried to establish the links between an economic study of biofuels to the broad field of chemistry.

Why understanding the impact of biofuel mandates is important even in the field of Chemistry

• Understanding global energy needs (global energy consumption till the last decade)

• Estimate future global energy needs

• Global Carbon Emissions

• Their impact on the environment and the future of our planet

• Extinction from date in years

40-80

207-590

100-2000

• 4th (172 metric tonnes, 8.27% of global imports)

• 3rd (595 mt, 7.6% of global production)

• 3rd (158 mt, 13.30% of global imports)

Global Carbon Budget

• As per IPCC the environmental ability to assimilate carbon without increasing the average global temperature by 2oC

• We have exhausted about 70% of the cumulative carbon emissions, and the risk of the temperature increasing two degrees is very high.

Effects of exceeding the Global Carbon Budget

• Global Carbon Budget

Possible solution

• As CHEMISTS there is a dire need for us to understand the magnitude of these numbers which has multiplied over the past and collective realistic efforts are required towards the future of our planet.

• Hence we must formulate a global energy policy that is based on renewable and sustainable energy sources

• Biofuels can prove to be one of the most important commodities that will reduce our dependence on oil and fossil fuel imports thus contributing to a safer environment.

Food versus Fuel Debate

• The rise of global food prices mainly can be attributed to the following factors

• Major Factors

• Increase in the global population

• unfavorable climatic contiditons

• Increase in the global crude oil prices

• Distorted global rice market (WTO rules)

• Diversion of food crops for the production of biofuels

• Change in the crop patterns

Food versus Fuel in India

• The rise of food prices in India mainly can be attributed to the following factors

• Major Factors

• Increase in Crude oil prices

• Increase in the price of crude oil or fossil fuel reserves which causes the rise in the transportation cost

• Increase in the price of fertilizers that arise as a direct consequent of hiked fuel price

Observations

• Steep rise in food prices is not due to biofuel production in India (Biofuel production and land patters in India)

• The major increase in food prices is attributed to the increase in the fuel price, which in turn has an impact on the production of fertilizers, which when are not available to agricultural farmers reduce the yield drastically.

Hike in oil prices also affects the transport sector due to high fuel costs (trends clearly observed in CPI index, formulated in the preliminary report).

• Hence the study concludes that Higher Global Crude Oil prices are primarily responsible for and contribute to rising prices of agricultural commodities.

Food prices hike in India

Hike in crude oil prices

1)Effects the GDP2)Effects transportation Sector3) Effects fertilizer production and reach

Hike in fuel prices

Proposition• From all the above observations there is clearly a need to formulate a plan to produce alternate fossil fuels/biofuels from crops different from food crops, using waste land or uncultivated forest land patterns. (Projected biofuel estimates)

• Encouraging second and third-generation biofuels (such as cellulosic ethanol and algae fuel, respectively) to ease the competition with food crops

• Providing rural employment through Jatropha cultivation

• Creating awareness on the importance and role of biofuels in the domestic energy sector

• Upgrading transport infrastructure to reduce dependence on fossil fuels and reduce food prices.

Proposition• Emphasis on new and improved technologies to produce biofuels

from non food feedstock.

• Developing technologies and establishing bioethanol plants near sugar industries as the molasses by product formed can be used to produce bioethanol.

• Encouraging farmers to undertake plantations that provide the feedstock for bio-diesel and bio-ethanol.

• Providing more concessions to the existing 16% on bioethanol excise duty. Biodiesel is completely excluded from excise duty. Central taxes and duties should be levied on bio-diesel and bio-ethanol.  

• The government must remove any custom and excise duty concessions provided on plant and machinery for production of bio-diesel or bio-ethanol, as well as for engines run on biofuels for transport, stationary and other applications, if these are not manufactured indigenously.

Conclusion

• The study concludes that Bio-Energy is one of the several energy options that can deliver a sustainable environment friendly energy option which can replace fossil fuels, reduce India’s dependence on oil imports, boosting economic growth and providing food security.

Bibliography• Energy in the age of Sustainability Hector D Abruna

• U.S Energy Information Administration (http://www/eia.gov/tools

• Key World Energy Statistics 2013, International Energy Agency

• INDIAN BIOFUEL SCENARIO: AN ASSESSMENT OF SCIENCE AND POLICY, VIJAI PRATAP SINGH

• Global Carbon Budget 2013; http://www.globalcarbonproject.org/carbonbudget/ http://www.globalcarbonproject.org/carbonbudget/13/data.htm

• Carbon Dioxide Information Analysis Center http://cdiac.ornl.gov/GCP/

Bibliography• Government of India, Ministry of New & Renewable Energy “National Policy on Biofuels” (http://mnre.gov.in/file-manager/UserFiles/biofuel_policy.pdf)

• An Assessment of the Biofuels Industry in India Joseph B. Gonsalves1

• International Energy Agency (IEA) www.iea.org

• Energy Future Coalition http://www.energyfuturecoalition.org/

• Biofuel related price transmission literature : A review by Teresa Serra, David Zilberman

Thank You