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Mandatory Ethanol Blending in India is a Dumb Idea pandering to Vested Interests (sugar industry)

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The Government on India is proposing to introduce mandatory blending of ethanol in transport fuels to the extend of 5%.This means that the major transport fuel providers like IOC,BPCL and other will have to ensure that 5% of the petrol they sell will be mixed with 5% ethanol.The US is the biggest user of mandatory blending which has recently come under harsh criticism.The reasons given for supporting blending is that it reduces the requirements of fossil fuels which leads to lower carbon emissions,improves energy security and reduces pollution.However none of these advantages are seen in real life.In fact it has the massively negative consequence of increasing food prices which leads to the starvation of the poor globally.The Corn Industry in the USA has become a major lobbying force which makes the US government persist with the policy resulting in sharp increase in corn prices to the detriment of consumers.

India’s Economic Advisory Council too has questioned the wisdom of ethanol blending saying the proposal would work only if there was adequate supply of ethanol.The sugar industry says there is enough ethanol while the advisory council says its not.The facts seem to suggest that the shortfall will be around 40-50% leading to huge windfall gains for the Sugar Industry.My view is that the government should wait for advancements in third generation biofuels before subsidizing and supporting blending of ethanol in transport fuels.Already algae based biofuel startups like Solazyme are making good progress in commercializing fuels from materials which do not endanger global food security.

Biofuels from Crops – Bad Solution to Climate Change

Biofuels from Crops can never be  a meaningful answer to the problems of Climate Change and Global Warming due to the fact that

  1. A large part of the world’s 6 billion population lives in hunger
  2. Water and Land needed for Crops are becoming a Scarce Resource as per capita consumption and population both rise
  3. Inevitable Increase in Crop Prices increases the Raw Material prices
  4. Growing Demand for Biofuels lead to deforestation perversely contributing to Global Warming

USA Renewable Fuels Standards (RFS)

The Energy Policy Act of 2005 (EPAct 2005, P.L. 110-58), established the first-ever Renewable Fuels Standard (RFS) in federal law, requiring increasing volumes of ethanol and biodiesel to be blended with the U.S. fuel supply between 2006 and 2012.The Energy Independence and Security Act of 2007 (P.L. 110-140, H.R. 6) amended and increased the RFS, requiring 9 billion gallons of renewable fuel use in 2008, stepping up to 36 billion gallons by 2022.The US (EPA) has approved the sale of 15% ethanol fuel blends (E-15), an action that US energy officials immediately criticized as a bad policy meant to curry favour with voters.

Note USA is a huge food surplus country with massive quantities of corn being produced every year which makes it feasible for it to implement a dumb policy,however India does not possess such agricultural riches to implement mandatory blending of biofuels.

C Rangarajan questions the rationale behind Ethanol Blending Plan

The Prime Minister’s Economic Advisory Council has questioned the rationale behind mandatory doping of 5% ethanol in petrol, saying there is “a mismatch” between the objectives cited for pushing the programme and the empirical evidence supporting them. The council, headed by former Reserve Bank of India governor C Rangarajan , has asked the government to reconsider the programme or at least not make it binding for now.

The ministry had argued that mixing of ethanol in petrol was an environment-friendly initiative, which would save the country foreign exchange, provide energy security and benefit the sugar industry. Experts, however, said the proposal would work only if there was adequate supply of ethanol, opinion on which is divided. The chemicals and alcohol industry says there is not enough ethanol for everyone and it would be forced to import if ethanol was diverted for blending. Tamil Nadu has already banned supply to the ethanol blending programme and Bihar is understood to have “unofficially” discouraged it.

A government constituted panel, headed by Planning Commission member Saumitra Chaudhuri, has also questioned ethanol availability. Chaudhuri is also a member of the Economic Advisory Council. However, five of the eight members of the Chaudhuri panel had opposed sectoral allocation of ethanol, including to the ethanol blending programme. The council has also opposed direct ethanol manufacture from sugarcane on account of food security concerns. Ethanol is currently produced as a byproduct of sugar manufacturing.


Abhishek Shah

One Response so far | Have Your Say!

  1. Skywise

    Is this ethanol supposed to be produced from sugar or from waste streams resulting from the sugar refining process. If it is the latter, it would not seem to compete with food sources. Brazil is known to be far more successful than the USA at producing ethanol *efficiently* — meaning without consuming more petroleum inputs during production than the finished ethanol can displace — because of their ability to use feedstock from the sugar industry. Wouldn’t this work in India as well, even if not on the same scale as in Brazil?