At a time when other countries are cutting down ethanol admixing with vehicular fuel due to tightening supplies of alcohol, India, oddly enough, is doing the reverse. The Union government has forced the states to raise ethanol doping of petrol from 5 per cent to 10 per cent immediately and has set the target of hiking it further to 20 per cent by 2017, least realising that the sugar industry, which produces ethanol from its by-product molasses, will be unable to meet this requirement. In another ill-advised move, the Maharashtra government has reportedly begun offering fiscal sops for setting up distilleries to produce alcohol from grains, disregarding the growing concerns over food security and high food prices. Over a score of licences are said to have already been issued for grain-based distilleries which will be entitled to a government subsidy of Rs 10 for every litre of alcohol produced from foodgrains like jowar, bajra and broken rice. Though those investing in such distilleries are saying that they will use only damaged grains, unfit for human consumption, but they will be tempted to use even food and feed grade grains because of its price competitiveness. That will, obviously, constrain food supplies and fan food inflation.
What needs to be realised is that the availability of molasses is low and its prices high globally this year due to decline in the sugar output. The sugarcane crop in Brazil, the world leader in using ethanol as vehicular fuel, has been adversely affected by the devastating floods. This has forced the country to slash the mandatory level of ethanol admixing with gasoline from 25 per cent to 20 per cent. In India, the domestic availability of molasses-based ethanol has been falling short of the cumulative requirement of different user sectors, such as potable liquor and chemicals, for last several years. Even during the period of bumper production of sugarcane, sugar and molasses (2006-07 and 2007-08), ethanol producers had defaulted in honouring their supply contracts. This year, when the ethanol production is projected to be relatively low, oil marketing companies are unlikely to be able to procure enough ethanol for petrol doping.
Of course, promotion of green fuels is now imperative to address environmental concerns. The use of ethanol produced from an industrial by-product like molasses, therefore, cannot be objected to. But the use of grains for producing biofuel is unjustifiable in every respect. Even the national biofuel policy, approved by the Union Cabinet recently, envisaged production of biofuel solely from non-food feedstock to avoid any potential conflict between fuel and food security. Though this policy allows the use of degraded or waste lands for the production of such non-food feedstock, but even that stipulation is far from incontrovertible as it involves the use of land which is scarce even to meet the need for forestry, industrialisation and infrastructure development. It may, therefore, be worthwhile for the Union government to revisit its biofuel policy. The Maharashtra government, at the same time, needs to immediately scrap its scheme for subsidising ethanol production from grains. There are several other options for biofuel production, such as non-edible oilseeds borne by the wildly grown trees and conversion of algae into alcohol. Besides, the potential of hydrogen as a vehicular fuel needs to be gainfully exploited.
