At a time when energy experts around the world are debating the “food versus fuel” debate, British Petroleum President (global biofuels) Philip G New tells Sudheer Pal Singh that the solution lies in uncovering the web of market and regulatory problems.
What are the major challenges that the global and Indian biofuel industries face?
The major challenges are to deliver a global industry which is both sustainable and economic; how to be able to introduce new technologies which have the potential to transform the industry; and to work with the agriculture sector to make sure that we bring the interests of energy and nutrition together.
What are the problems that confront the existing market regulatory mechanisms and how can that be set right?
In developmental economics, we are often told that one of the major challenges in the biofuels industry is the failure of market mechanism which has stopped people from investing and producing food as efficiently as possible.
My only point is that rather than making a simplistic assumption that the introduction of biofuels has caused the food versus fuel controversies, biofuels have the potential to be part of some solution to these problems.
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As compared to conventional fuels, how much savings in greenhouse gas emission can a biofuel crop provide?
The greenhouse gas contribution of a biofuel depends on how it is produced and what it is made from. So, if you make biofuel from the right thing and if you produce it in the right way, then you can get 80-90 per cent improvement in greenhouse gases. This is what we call “biofuels done well”.
An example of this is Brazil where sugarcane is producing 80-90 per cent green house gas savings.
Have the higher global crude oil prices contributed to the boost in the demand for biofuels?
Higher fossil fuel prices clearly must allow greater opportunities for alternative energy sources to flourish without requiring massive government subsidies and incentives.
What kind of investments you are looking forward to make in the Indian market?
We are looking at a global portfolio investment. The exact amount of money that we are going to invest in India will be determined by the kind of opportunities that we see and specifically, the capacity of India to demonstrate and provide the right policy framework to support a sustainable biofuels industry in the future.
There is potential for a very significant investment in future. Today our investments in India are tens of millions of dollars and it will be much higher in the future but it requires significant clarity around how the policy will emerge.
What kind of policy changes do you expect or recommend?
A national policy with very clear targets, where there are mandates with introduction of biofuels and an understanding of the mechanisms to ensure compliance.
It’s an essential first step to ensure that the market exists. After that, incentives to support innovation, clarity around environmental concerns and sustainability obligations of the industry should be exposed.