7/25/2019 Inputs to Structured Debate

1/9

Oil Scenario India

India continues to rely on imports for a considerable amount of its energy use. Continued

economic growth, increasing urbanization, rise in consumer spending levels and with improving

road infrastructure, new vehicle registration is expected to push total registered motor vehicle

population to 210 million mar by end of current fiscal !201"#1$%. &s vehicle ownership

expands, so will the demand for gasoline and petroleum products rise in tandem. 'he everincreasing demand of fossil fuels not only burdens India(s exche)uer but also deteriorates the

environment. *elieving India to be endowed with significant potential for generating energy

through renewable resources, the +oI is promoting and encouraging production and use of a%

ethanol derived from sugar molasses#uice for blending with gasoline and b% biodiesel derived

from inedible oils and oil waste for blending with diesel.

Indias Bio-fuel Policy

India too the initiative on bio-fuels with the aim of reducing the countrys dependence on oil

imports and improving energy security. In 2001, India began a " ethanol blending pilotprogram, and in 200/, formulated a National Biodiesel Mission (NBM)with a goal of 20

percent biodiesel blends by 20112012. ie many other countries around the world, India has

endured setbacs in its bio-fuel program due to supply shortages, sharp fluctuations in oil prices,

and global concerns about food security. In ecember 2003, in order to strengthen and formalize

the country(s commitment to promoting a sustainable bio-fuels industry, India adopted the

National Policy on Biofuels (NPB).

7/25/2019 Inputs to Structured Debate

2/9

Key Highlights of National Policy On Biofuels (NPB)

erive biofuel from non-feed stoc that would be grown on degraded soils or wastelands not

otherwise suited to agriculture, thus avoiding a possible conflict of fuel versus food security.

4trengthen India(s energy security by encouraging use of renewable energy resources to

supplement motor transport fuels. &n indicative 20-percent target for blending of biofuel

for both biodiesel and bioethanol is proposed by end of 12th i!e-"ear 5lan !fiscal

2012#1/ through fiscal 201$#16%.

7inimum 4upport 5rice !745% mechanism for inedible oilseeds to provide fair price to

oilseed growers but subect to periodic revision.

8thanol produced from other non-food feedstoc(s besides molasses lie cellulosic and lingo-

cellulosic materials and including petrochemical route, may be allowed to be procured

subect to meeting the relevant *ureau of Indian 4tandards !*I4% standards !Cabinet

ecisions%.

9n ecember 10, 201:, the +oI announced a price fixing scheme for fuel ethanolprocurement or parastatal oil mareting companies !97Cs%. 'he program fixes landed-

ethanol prices at 97C depots from I;< :=."0 to I;< :3."0 per liter, a three to five percent

increase over the previous price.

9n >anuary 1$, 201", the ?nion Cabinet decided to suitably amend 5ara ".11 and ".12 of the

national biofuel policy for facilitating consumers of diesel in procuring bio-diesel directly

from private bio-diesel manufacturers, their authorized dealers and oint ventures !>@s% of

97Cs authorized by the 7inistry of 5etroleum and ;atural +as !7o5;+%, +oI.

'he price of biodiesel will now be maret determined.

If necessary, +oI proposes to consider creating a ;ational *iofuel Aund for providing

financial incentives, including subsidies and grants, for new and second generation feedstocs, advanced incentives, including subsidies and grants, for new and second generation

feed stocs, advanced generation feedstoc.

'hrust for innovation, !multi-institutional, indigenous and time bound% research and

development on biofuel feedstoc !utilization of indigenous biomass feedstoc included%

production including second generation biofuels.

7eet the energy needs of vast rural population by stimulating rural development and creating

employment opportunities and addressing global concerns about containment of carbon

emissions through use of environment friendly biofuels.

*ring biofuel +oI so as to ensure their unrestricted interstate and intrastate movement.

8xcept for a concessional excise duty of 1$ percent on bioethanol, no other central taxes and

duties are proposed to be levied on biodiesel and bioethanol.

*iofuel technologies and proects would be allowed 100 percent foreign e)uity through

automatic approval to attract foreign direct investment !AI%, provided the biofuel is for

domestic use only, and not for export. 5lantations of inedible oil bearing plants would not be

open for AI participation.

7/25/2019 Inputs to Structured Debate

3/9

4etting up of ;ational *iofuel 4teering Committee !;*4C% under 5rime 7inister to provide

policy guidelines.

Demand of Biodiesel!thanol "ith Pro#osed

Blending $argets

!thanolBiodiesel Su##ly

!thanol%

8thanol in India is primarily produced by the fermentation of molasses. 4ince sugarcane

production in India is cyclical, ethanol production also varies accordingly and therefore does not

assure optimum supply levels needed to meet the demand at any given time.

India has around //0 distilleries which can produce over : billion litres of rectified spirit

!alcohol% per year. 9f this total, about 1:/ distilleries have the capacity to distill over 2 billion

liters of conventional ethanol. India produces conventional bioethanol mostly from sugar

molasses and partly from grains. 5roduction of advanced bioethanol!2+% is in its research and

development stage.

7/25/2019 Inputs to Structured Debate

4/9

!thanol $rade%

India continues to be a net importer of ethanol. 4tarting 200/, when +oI laid its ambitious 8*5,

the trade balance for ethanol has been negative, but has tapered down in last five years in

response to rise in domestic production. uring CB 201:, India imported 106 million liters

!largest in last five years% of ethanol worth =6 million dollars mostly from ?nited 4tates !$$

million liters%. 8xports were limited to over 1= million litersD worth 1" million.

BIODI!S!&%

>atropha-based biodiesel production proects have not been as promising as expected due to

unavailability of sufficient feedstoc, insufficient yield !lac of high-yielding drought-tolerant

atropha cultivars% and revenue, despite state governments offering farmers a minimum purchase

price. Aurther, the cost of biodiesel production turned out to be 20 to "0 percent more expensive

than the set purchase price. Eence most of the biodiesel units operating in India have shifted to

alternative feed-stocs such as edible oil waste animal fat and inedible oils. Currently, India has

"-$ large capacity plants !10,000 to 2"0,000 7' per year% currently utilizing 2= percent of the

installed capacity to produce 12"-1:0 million liters of biodiesel from multiple feed-stocs such

as inedible vegetable oils, unusable edible oil waste !used-once%, and animal fats. 'he biodieselthus produced is purchased by small and medium enterprises, sold to experimental proects

carried out by automobiles and transport companies !state sponsored or private trial runs%, apart

from minor sales to unorganized consumers such as cellular communication towers, bric ilns,

progressive farmers, and to institutions that run diesel generators as source of power bac-up.

Production $echnologies

Biodiesel Production Process

7/25/2019 Inputs to Structured Debate

5/9

!thanol Production Process

7/25/2019 Inputs to Structured Debate

6/9

Key Im#lementation Issues ' hallenges

1) #hallenges in $thanol

'he maor reason for non-realization of the 8thanol *lending 5rogram !8*5% are the shortagein

supply of ethanol as per the 97Cs and lo% prices of ethanoldecided by the government as per

Indian 4ugar 7ills &ssociation !I47&%.

&upply &ide #hallenges'

'he net ethanol availability is estimated at 2 and * billion litres in 2020-21 and 200-1

respectively. In order to achieve the 20 percent blending target without compromising industrial,

potable and other needs, India must either increase its ethanol production by nearly three

times the present level, or must opt for massi!e imports of ethanol. Increasing ethanol

production to such levels would be extremely challenging, since the country(s sugarcane yield

has been stagnating at approximately $"-60 tonne#ha for the past several years. It also would not

be feasible to increase the area for cultivating sugarcane, as this would mean diverting land from

other staple food crops. &s sugarcane consumes approximately 20,000-/0,000 m/ of water per

hectare per crop, the overexploitation of groundwater for energy production would not be a

sustainable option. Fhile only molasses is used in India to produce ethanol, its direct production

from sugarcane uice would compete with sugar production for food maret.

Price'

7/25/2019 Inputs to Structured Debate

7/9

Eowever, in order to improve the availability of ethanol and eliminate uncertainty regarding

pricing, in ecember 201: the Indian government fixed price ranges for ethanol. epending on

the distance of the distillery from the 97C depot, ethanol prices range from atropha-based biodiesel production proects have not been as promising as expected due to

insufficient yield and revenue, despite state governments offering farmers a minimum purchase

price. 'he government is offering subsidy programs and tax concessions as part of its effort to

boost feedstoc production for biofuels. In >une 201", +oI made ey cabinet decisions on

biofuels, including granting mareting rights to private biodiesel manufacturers, provided they

meet the )uality standards of the 7inistry of 5etroleum and ;atural +as !7o5;+%. &n

exemption was proposed for *100 biodiesel !pure, unblended biodiesel% in order to explore its

use as a standalone fuel. 'he exemption gives private manufacturing mareting rights for *100

biodiesel and authorizes retailers to sell it directly to consumers. 'he new policy will alsodetermine the price of biodiesel. Fith the intention of further promoting biofuels, the

government is exploring the use of a five percent biodiesel blend by bul users such as railways

and defence establishments !+oI, 201"%. 'he ;*7 primarily focused on the expansion of

>atropha cultivation in two phases - demonstration phase and expansion phase, aiming to mae

the program self-sustainable by producing enough biodiesel to meet the 20 percent blending

target.

7/25/2019 Inputs to Structured Debate

8/9

d*antages of Biofuels

Disad*antages of Biofuels

7/25/2019 Inputs to Structured Debate

9/9

ommercial Bene+ts of ethanol Blended Petrol

'he substituted 1/" crore litres of petrol will save the country over