Not without costs

With the oil-marketing companies firming up the supply of over a billion litres of ethanol from sugar mills, the long-delayed move to introduce 5 per cent alcohol-doped petrol in 20 states seems finally to be coming to fruition. The total ethanol requirement under the programme is reckoned at about 1.7 billion litres for the first three years, and that seems well within the sugar mills' capacity to supply. The main hurdle, namely the pricing of bio-ethanol, seems to have been resolved through the tendering process, which has delivered a price of Rs 21.50 per litre. However, the price issue is likely to resurface at some point, and questions will be asked about the criteria for determining prices, and not necessarily about the price itself. Neither the prevailing crude prices nor the cost of production of bio-fuel can form the basis for computing ethanol prices because both these are variable benchmarks that keep fluctuating. Moreover, ethanol (and any other bio-fuel, for that matter) does not have the same energy value as petrol or diesel and, as such, does not give the same mileage as carbon fuel. For Indian ethanol producers in the sugar sector, this bio-fuel is an outcome of by-product utilisation. But that lends an element of uncertainty to ethanol availability, linking it to sugar production, which is highly cyclical in nature.

As the debate on these issues continues, other issues of a more fundamental nature have cropped up regarding the general international trend in favour of bio-fuels. The most significant among these relates to the indirect and hidden costs that societies will end up paying for promoting bio-fuels. Already sizable quantities of grains, especially maize, and vegetable oils, including soyabean and palm oils, have started getting diverted for bio-fuel production. These have tended to push up the global prices of food, animal feed-grains and edible oils. The higher feed costs have, in turn, pushed up the prices of livestock and poultry products.

What needs to be borne in mind is that the additional area to be used for producing plant-based bio-fuel will have to come from the diversion of acreage from the existing crops, or from the use of forest land, involving significant environmental costs. This will defeat, even if partially, the very purpose of switching over to green fuels. Already, Brazil, the leading player in bio-fuel, is clearing its Amazon bio-reserves to grow sugarcane for making ethanol. Malaysia and Indonesia are destroying some of their rainforest habitats to plant oil palm and other species. Not to be left behind, India has also begun raising large-scale plantations of jatropha. Some of these plantations, especially in the semi-arid tracts of Haryana, have failed to survive changes in the weather. It would therefore be advisable for the government to avoid blindly following other countries and ponder carefully over the available options for an ecologically sustainable and economically viable bio-fuel policy. Perhaps a crop that's versatile and requires less water, like sweet sorghum, which is a highly efficient converter of solar energy into carbon and hydrogen, may prove a better choice. But, considering the competing demands on land and water, India cannot opt for an energy security policy that relies heavily on land and water. Other technology-based solutions have to be explored.