Introduction

The transport sector is one of the major emitters of greenhouse gases. According to the IEA there is a need for a four-fold reduction of the carbon intensity of transport. Hence, the transport sector needs a transformation - a revolution in technology, infrastructure, transport concepts and political framework in order to achieve the goal of at least 50 % CO2 emission reduction by 2050. The increasing energy use in the transport sector is adding also to the dependency of countries on oil imports. In the reference to the scenario of the IEA World Energy Outlook 2010, the transport sector is the largest contributor to oil demand growth in non- OECD countries, accounting for 61 % of global primary oil consumption in 2030 compared with 52 % in 2008 and 38 % in 1980. Despite the continuing improvements of the average vehicle fuel efficiency, the sheer increase in vehicles numbers and kilometers driven, in particular in upcoming economies, is expected to keep pushing up demand for oil in the transport sector. To reduce the greenhouse gas emissions from the transport sector and its dependence on imported oil to the levels as indicated above requires a true transition of the transport sector and its energy system. The main ingredients to realize such a transition are: - Reducing energy demand of vehicles. - Shifting towards less carbon-intensive and carbon-neutral energy carriers. - Shifting towards more energy -efficient or less carbon-intensive modes of transport. - Curbing the growth of the transport demand One of the solutions to the problem of increasing oil demand is to use Biofuels for transportation purposes. Global interest in biofuels has grown strongly since the steep climb in fossil fuel oil prices during 2004-06. Biofuels could provide countries with a means to invest in their own rural areas instead of exporting their capital to purchase fossil fuel. They would also contribute significantly to mitigating global warming. A massive new channel for investment in rural development through the fuel economy could be highly strategic for alleviating poverty and hunger in the developing world. However there are also risks. To be competitive with fossil fuel energy sources, biofuels industries must capture large economies of scale. They need a constant, reliable, massive flow of plant material (feedstock) to keep

processing facilities running at high capacity so that the unit costs of production per liter of biofuel are kept as low as possible. This large-scale requirement could provide impetus for a corresponding drive to large-scale farming, pushing the poor off their land and excluding them from the biofuels revolution. It could also lead to the replacement of food crop cultivation with biofuel crops on large areas of land, driving up food prices for those who can least afford it. The result would be more, not less poverty and hunger. The mostly used bio-fuels in India are Bio-ethanol and Bio-diesel, both of which can be used in existing vehicles. Bio-ethanol is currently blended with gasoline and Bio-diesel is blended with petroleum based diesel for use in conventional diesel fueled vehicles. The Bio-ethanol is produced from biomass such as sugar containing materials, like sugarcane, sugar beet, sweet sorghum etc., starch containing materials such as corn, cassava, algae etc., and cellulosic materials such as bagasse, wood waste, agricultural and forestry residues etc. The Bio-diesel is a methyl or ethyl ester of fatty acids produced from vegetable oils, both edible and non-edible, or animal fat of diesel quality. The bio-fuels are said to be of First Generation, if they are characterized by use of sugars, starches or vegetable oils. All the current bio-fuels production falls into this category. Second Generation bio-fuels are characterized by the use of nonfood/feed, biomass feed stocks, such as woody and cellulosic plants and waste material. The bio-fuel is said to be Advanced Bio-Fuel, when it uses both the first and second generation feed stocks so long as the final fuel results in the significant reduction life cycle GHG emissions and improved sustainability.

Rationale for the Bio-Fuels in India: The main reasons for the Government of India to support bio-fuels are Energy Security, Socio-economic and environmental benefits. During 2008-09, the domestic production is 33.51 Million Metric Tones (MMT) and imports are 128.16 MMT. The Indian economy is expected to grow at a rate of 8 % per annum and petroleum products are projected to rise.

Hence there is a growing need for energy security as any disturbance in the supply of the petroleum fuels or increase in petroleum prices can have a negative impact on the growth of Indian economy. Indigenously produced bio-fuels are being considered as one of the options to partially substitute the petroleum fuels and reduce dependence on imported fuel. Bio-Fuel Production in India A Special Case: As per the study by the German Development Institute on Bio-fuel in India, the developmental effects are positive for Bio-fuel in India. This is a special case for India because of the far reaching consensus that production of the bio-fuel will be promoted only on the basis of the non-edible oil seeds on marginal lands. Hence this reduces the risks of crowding out food production and rising prices for edible oil. In addition to this, cultivating the tree-borne oil seeds on degraded lands stabilize the soil and also create carbon sinks and also production requires low inputs which further serves to improve the carbon balance. As per the study there are more than 13 different ways of organizing the value chain, ranging from cultivation on large plantations to the contract farming agreements, social forestry projects and farm based production for rural electrification. Depending on the value chain chosen the differences would be in terms of food security, climate change, natural resources management, economic sustainability, participation and empowerment and income generation. Bio-Fuel Production in India Issue of Economic Viability: Although there are lot of opportunities for the Bio-Fuels in India, the current issue of economic viability hinders the growth. The important reasons for the issue are: Heavy subsidization of the prices of the conventional diesel. This act hides the negative environmental externalities of diesel on the price. As per the research, most of the oil bearing trees are wild plants. The expectation that oil bearing trees, especially the Jatropha, which was thought to give good yields on the marginal and dry lands without inputs of irrigation, fertilizers and pesticides has not materialized. The yields on the fertile farm lands are higher but the return on the investments is lower for tree-borne oil seeds.

Hence in these conditions without government subsidies, only the niche markets such as the oil extraction for the chemical industry, CDM funded projects and reproduction of seedlings are only economically viable. Policies at Central and State Levels: Concrete policies with respect to the bio-fuels already exist at the central and state level. In 2008, the government of India adopted a National Bio-Fuels Policy. This policy emphasizes the need on the research and development of bio-fuels and establishes the incentives on the demand side to increase the blending of biofuels. There are also centrally sponsored schemes to promote the plantations. The most important scheme is National Rural Employment Guarantee (NREG) which guarantees payment for the work to rural employed people up to 100 days. The states also adopted more or less similar packages. The states use different incentive schemes and specific strategies for the development of Bio-Fuels. For example, Uttarakhand launched a bio-diesel program to create employment and regenerate degraded forest land. This is characterized by a high degree of regulation, allowing only one company to participate in the program by entering into a public-private partnership with it. Andhra Pradesh on the other hand focuses on the promotion of the plantations on specific private land by emphasizing on linkages with the private entrepreneurs. Highlights of National Bio-Fuel Policy, 2008: Strategy and Approach: The issue of fuel vs. food security is not relevant in Indian context because of the utilization waste and degraded forest and non-forest lands only for cultivation of shrubs and trees bearing non-edible oil seeds for production of bio-diesel. Plantations supported through a Minimum Support Price for the non-edible oil seeds used to produce Bio-diesel. This is to ensure a fair price to the farmers.

Research, development and demonstration will be supported to cover all aspects from feedstock production and bio-fuels processing for various end-use applications. Plantations: Quality seedlings will be raised in the nurseries of the certified institutions and organizations identified by the states for distribution to the growers and cultivators. The National Rural Employment Guarantee Program (NREGP) covers the employment provided in plantations of trees and shrubs bearing non edible oilseeds. Processing: Mandatory blending of the ethanol with gasoline is specified in 20 states and 4 union territories. The blending has to follow the protocol and certification process, and conform to the BIS specification and standards, for which an appropriate mechanism and required facilities have to be set up by the OMCs and the processing industry. Oil Marketing Companies (OMCs) can bank the surplus of the Bio-fuels left after blending of bio-diesel and bio-ethanol because of the fluctuations in the availability of the bio-fuels. Pricing: For pricing the bio-diesel, the entire value chain has to be considered from production of oil seeds, extraction of the bio-oil, its processing, blending, distribution and marketing. The Minimum Purchase Price (MPP), for bio-diesel by the OMCs will be linked to the prevailing retail diesel price. The MPP for bio-ethanol will be based on the actual cost of production and import price of bio-ethanol. The MPP, for both biodiesel and bio-ethanol will be determined by the Bio-fuel steering committee and decided by the National Biofuel Coordination Committee.

 Financing: Plantation of non-edible oil bearing plants, the setting up of oil extraction and processing units for production of bio-diesel and creation of any new infrastructure for storage and distribution would be declared as a priority sector for the purposes of lending by financial institutions and banks. The other sources of funding are multi-lateral and bi-lateral and the carbon financing opportunities can also be explored on account of avoidance of CO2 emissions. The 100 % FDI participation is allowed for the bio-fuel technologies and projects and not for plantations, provided bio-fuel is for domestic use only. Financial and Fiscal Incentives: As bio-fuels are derived from renewable biomass resources the plants are eligible for various fiscal concessions and incentives that are available to the New and Renewable Energy Sector from the central and state governments. Bio-ethanol enjoys concessional excise duty of 16 % and bio-diesel is exempted from excise duty. Pollution from biofuel processing operations After the fermentation process that produces ethanol, the wastewater must be disposed of. The wastewater effluent from sweet sorghum-based ethanol production is less polluting than that from sugarcane molasses, having 1/4th of biological oxygen demand (BOD; 19,500 mg liter-1) and lower chemical oxygen demand (COD; 38,640 mg liter-1), according to the results of a pilot study conducted by Vasanthadada Sugar Institute (VSI), Pune, India. Biofuel feedstock constraints In India, molasses from sugarcane are currently the main feedstock for producing bioethanol. However, quantities are insufficient and the supply is not reliable enough to keep processing plants running efficiently. There is a need for alternative feedstock sources such as sorghum and starchy tuberous roots such as cassava.

In countries like India, human food demand for food and feed oilseed crops (e.g. soybean, sunflower) exceeds supply, so it is not desirable to divert large quantities of these crops for biodiesel. However large wasteland areas are available that might be cultivated with non-conventional oilseed species that are not eaten by humans but can withstand such rugged conditions, for example Pongamia and Jatropha. Benefits of Bio-Fuels: The new employment opportunities are generated for raising, reaping and processing of bio-fuel crops. Bio-Fuels can be used as fuel for motive power applications in energy deficit rural India and for decentralised distribution generation (DDG) of electricity Regeneration of degraded forest-lands and greening of wastelands, thereby preventing land degradation and then by helping in eco-restoration. Reduces the vehicular pollution and Green House Gas emissions helping for the betterment of environmental performance. The use of bio-fuels in vehicles results in reduction of SO2, articulate matter, CO2, etc. Bio-Fuels help in the global climate change and helps in reducing the CO2 content because the plants and trees that serve as feedstock for bio-fuels require CO2 to grow. Bio-Fuels quickly biodegrade in water. This reduces the threat that gasoline poses to waterways and groundwater. Hence because of this reason spills or leaks of the bio-fuels do not constitute an environmental hazard. Bio-Fuels provide energy security to nations and also strengthen the balance of trade between nations. Bio-Fuels help preserve natural resources. For example, for every unit of energy needed to produce bio-diesel, 3.24 units of energy are gained nearly four times more than diesel.

 Bio-diesel may not require any engine modification. It can be blended with diesel to improve the efficiency of the engine without hassles. The vehicles using biodiesel will have very low idle stating noise. Bio-diesel has a cetane number of over 100 which means that vehicle can be started coldly with low idle noise. Bio-diesel is easy to transport and store because of the high flash point at 2660 F. This means that it cannot form a combustible mixture unless it is heated above the boiling point of water. Adverse Effects of Bio-Fuels: Bio-fuels brought corporate control over the agricultural farms by converting the crop fields into fuel farms threatening the peoples food security and sending food process high. For example, In Mexico, Maize is used as a bio-fuel crop. So, this raised the prices and has given birth to the new slogan Crops for humans or crops for cars?. As of now there is a less importance on these bio-fuels but once the urban middle classes and auto industry get the cheaper, eco-friendly fuels there would be large transition of farmlands into spaces for bio-fuels which would be a total disaster. Indias plan to increase the domestic production of bio-fuels will put its water resources at risk. This may also undermine the ability of the country to meet future food and feed demands. Bio-fuel production needs a lot of water and this could threaten the ground water and river systems. International Best Practices in Transportation Sector: Mandatory Laws: The nations of the American continent have mandated in the laws to run the vehicles on the mixtures of ethanol. Vehicle Design Modifications: To realize the maximum benefits from the ethanol, the vehicle engines should have a high compression ratio. Hence, the vehicle engines are to be designed accordingly. In Brazil, the cars are modified to

make the engines suitable for a 25 % ethanol blended fuel. In United States, the cars are modified for the 10 % blends. Production of Ethanol from Cellulose: The cellulosic ethanol is primarily produced from cheaper sources of cellulose like poplar trees, Switch grass and straw. These grasses consume less urea and have natural ability to resist insects and diseases. Hence ethanol produced from these grasses will produce lesser green -house gas emissions when burnt in the internal combustion engines than any other natural or fossil fuel. This has been recently proved. A company (named AE Bio-Fuels) have applied for patent for the technology to produce cellulosic ethanol. The production of this cellulosic ethanol will have minimum impact on the food chain. It also reduces the cost of production because of the wastes such as corn stover and straw. The technology used reduces the processing costs because of the use of low cost enzymes. Maintaining Fuel Quality: The quality can be maintained by executing a monthly or quarterly fuel analysis programs for safekeeping of fuels, by adhering to the standard program directives, by referencing to the cold weather performance and other special needs. For example, in U.S, the fuel quality is specified by American Society for Testing of Materials (ASTM) for fuels by giving names as ASTM D975 (generic diesel), ASTM D396 (heating oil), ASTM D 6751 07 a (bio-diesel) etc. Transportation of Bio-Fuel: The aluminium, carbon steel or stainless steel containers are to be used during transport. The seals and hoses are to be compatible with the bio-fuel. Insulation determination should be done if the transportation is done in the winter months. Placards specifying the hazardousness are not required because the flashpoints of the biofuels are above 200 oF. Storage of Bio-Diesel: The bio-diesel is stored in the tanks of aluminium, steel, fluorinated polyethylene, fluorinated polypropylene, Teflon and fibreglass. Proper fuel fire tests are to be conducted to decide the extinguishing equipment. The pastes like Kolor Kut and Sar Gel can be used for detecting water in the bio-diesel and bio-diesel blends. Proper color marking system should be established to

designate the tanks and piping which carries the bio-diesel. For example, In U.S, API RP 1637 colour marking system has been established for bio-diesel and associated blends. Cold Weather Blending Guidelines: The bio-diesel has to be blend with the 50 % kerosene, prior to introducing it into the final fuel mixture. It is to be made sure that kerosene is above 45 oF. The details regarding the cold filter plugging point , the cloud point and the pour point of the generic diesel fuel product are to be known prior to blending. Higher blending speeds are to be sought through gravity distribution or mechanical agitation, which can be as high as 650 gallons per minute. The least expensive techniques like sequential blending can be used. Taxes and Incentives: A number of tax incentive programs have been implemented which will benefit the bio-fuel industry. For example, in U.S, the programs are giving Volumetric Tax Credit, Small Agri-Biodiesel Producer Tax Credit (for the production of bio-diesel from vegetable oils and first use animal fats), Alternative Fuel Refueling Infrastructure Tax Credit (for the installation of certain qualifying fueling infrastructure that dispense alternative fuel, including bio-diesel blends B20 and higher). Formation of Accreditation Commission: The accreditation commission should be formed to audit fuel producers and marketers in order to improve the quality of the biodiesel production and handling throughout marketing channels. It should issue a certificate like Certified Bio-Diesel Marketer, a seal of approval for the marketers if they meet all the requirements of fuel accreditation requirements. For example, In U.S there is a commission called National BioDiesel Accreditation Commission which does all the above said activities. The seal of approval it provides gives an assurance to engine manufacturers, as well as customers, that the bio-diesel marketed by the companies meets the ASTM standards for bio-diesel.

My Suggestions for Development of Bio-Fuels in India: The critics claim that production of bio-fuel will lead to food security and seizure of common lands by corporate investors, putting livelihoods at risk. This seizure can be reduced by strictly following the guidelines set by the government and frequently conducting the checkups and penalising the corporate investors. As of now the Govt. of India heavily subsidizes the conventional diesel, keeping it artificially low. Hence these subsidies are hiding the real scenarios. Instead of subsidizing the diesel, it would help the development of bio-fuel production if the funds are diverted and more funds are allocated. The policy makers, instead of making concrete policies, should allow some changes to be implemented as per the situations and conditions in the states. As there are different value chains, the policy makers must consider them and use them for maximising the potentials and minimising the risks. The alliances are to be properly formed between the government programs, local communities and companies to get the exact estimates of the unutilised or underutilized land reserves for productive use, which contributes to the rural development. Some of the seeds used for the bio-fuel plantations require a lot of time and fertilisers to grow. The use of more fertilisers will increase the emissions. Hence biotechnological improvements should take place in this field to fight against these issues. The successful development of advanced bio-fuels technologies, using the nonfood biomass feed stocks, could help overcome the barriers and achieve the sustainable costeffective bio-fuels with low CO2 . Introduction of futures in trading of raw material required for the production of bio-fuels may reduce the problems of the price fluctuations. Educating the people about the importance of bio-fuels. This education can be imparted to the people through rallies, TV Shows, Banners etc. The introduction

of the lessons on Biofuels for the high school children will also have a great impact.

Fuelwise Total Primary Energy Consumed in India, 1994 to 2008

in thousand tonnes of oil equivalent 700000 600000 500000 400000 300000 200000 100000 0

Combustible Renewable & waste Non Fossil Fuels (nuclear, hydro, geothermal, solar etc) Gas Crude oil and Petroleum products Coal

Year

Crude Oil (Million tonnes of oil equivalent)

Crude Oil (Million tonnes)

Diesel (Million tonnes) 30 %

Petrol (Million Tonnes) 5 %

2011

166

162

49

2021

278

272

82

14

2031

486

476

143

24

Notes: Crude Oil - 1.022 Million tonne of oil equivalent per tonne

Year

Diesel 30 % (Million Tonnes) 48.73 81.60 142.66

Biodiesel 20% (Million Tonnes) 9.75 16.32 28.53

Land requirement for Biodiesel (Million hectares) 8.15 13.65 23.86 1.196 tonne 4555kg 3.28 kg

2011 2021 2031

Per hectare yield of biodiesel Per hectare yield of jatropha seeds Quantity of jatropha seeds required for one litre of biodiesel One kg of biodiesel

1.2486 litres of biodiesel

Land use classification and estimates for India (in million hectares)

1950-51 Forests Not available for cultivation Permanent pastures and other grazing land Land under miscellaneous tree crops and groves Culturable waste land Fallow lands Net sown area Reporting area for land utilisation statistics Total Geographical Area Source: Agricultural Statistics at a Glance 40.48 47.52

1990-91 67.81 40.48

2006-07 69.81 42.63

6.68

11.4

10.36

19.83 22.94 28.12 118.75 284.32 328.73

3.82 15 23.37 143 304.88 328.73

3.45 13.24 25.72 140.3 305.51 328.73

Wastelands in India
1 2 3 4 5 6 7 8 9 10 11 12 13 Gullied and/or Ravenous land* Land with or without scrub* Waterlogged and Marshy land Land affected by Salinity/Alkalinity Shifting cultivation* Under-utilised/Degraded Notified Forest land* Degraded pastures/grazing land* Degraded land under plantation crops* Sands (riverine/coastal/desert) Mining and Industrial Wasteland Barren rocky area Steep sloping areas Snow covered and/or Glacial area Total wastelands Wastelands suitable for jatropha cultivation

Million hectares
1.90 18.79 0.97 1.20 1.88 12.66 1.93 0.21 3.40 0.20 5.77 0.91 5.43 55.27 37.38*

Notes: The categories with asterisk sign above are suitable for jatropha cultivation in India. Source: Department of Land Resources, 2005; GOI, 2005 and TERI, 2005 cited in Biswas, Pohit and Kumar (2010)

Fuelwise Total Primary Energy Consumed in India, 1994 to 2008

in thousand tonnes of oil equivalent 800000 600000 400000 200000 0

Combustible Renewable & waste Non Fossil Fuels (nuclear, hydro, geothermal, solar etc) Gas Crude oil and Petroleum products

From the first graph, we can observe that the contribution of Renewable resources towards the total primary energy consumed in India have been quite small as compared to Fossil fuels. Also we can see that the share of the renewable resources is also not increasing as rapidly as the other resources. From the second graph, we can see that the transport sector shares a considerable portion of the total final energy consumed in India

The above graph shows that the petroleum products almost fully contribute to the total final energy consumed by indian transportation sector. In contrast, electricity and other renewable resources are not at all prominent in the final evaluation. Now for the Potential estimation of Bio-fuel production and consumption in India, we need some forecast of the Indian demand for Crude oil in the upcoming years. The data given below is the projection for Crude Oil, Diesel and Motor Gasoline demand for India, in 2011, 2021 and 2031.

Year

Crude Oil (Million tonnes of oil equivalent) 166 278 486

Crude Oil (Million tonnes) 162 272 476

Diesel (Million tonnes) 30 % 48.7 81.6 142.7

Petrol (Million Tonnes) 5 %

2011 2021 2031

8 14 24

Notes: Crude Oil - 1.022 Million tonne of oil equivalent per tonne

Now since we know the forecast of the amount of the fossil fuel required in the coming years, we will try to calculate the land requirement for the bio-diesel production. For that, we will consider a 20% blending of Bio-diesel with normal diesel obtained from crude oil. Also from the present value

Year 2011

Diesel 30 % (Million Tonnes) 48.73

Biodiesel 20% (Million Tonnes) 9.75

Land requirement for Biodiesel (Million hectares) 8.15

2021 2031

81.60 142.66

16.32 28.53

13.65 23.86

Land use classification and estimates for India (in million hectares) 1950-51 Forests Not available for cultivation Permanent pastures and other grazing land Land under miscellaneous tree crops and groves Culturable waste land 40.48 47.52 1990-91 67.81 40.48 2006-07 69.81 42.63

6.68

11.4

10.36

19.83 22.94

3.82 15

3.45 13.24

Fallow lands Net sown area Reporting area for land utilisation statistics Total Geographical Area Source: Agricultural Statistics at a Glance

28.12 118.75 284.32 328.73

23.37 143 304.88 328.73

25.72 140.3 305.51 328.73

Wastelands in India
1 2 3 4 5 6 7 8 9 Gullied and/or Ravenous land* Land with or without scrub* Waterlogged and Marshy land Land affected by Salinity/Alkalinity Shifting cultivation* Under-utilised/Degraded Notified Forest land* Degraded pastures/grazing land* Degraded land under plantation crops* Sands (riverine/coastal/desert)

Million hectares
1.90 18.79 0.97 1.20 1.88 12.66 1.93 0.21 3.40

10 11 12 13

Mining and Industrial Wasteland Barren rocky area Steep sloping areas Snow covered and/or Glacial area Total wastelands Wastelands suitable for jatropha cultivation

0.20 5.77 0.91 5.43 55.27 37.38*

Notes: The categories with asterisk sign above are suitable for jatropha cultivation in India. Source: Department of Land Resources, 2005; GOI, 2005 and TERI, 2005 cited in Biswas, Pohit and Kumar (2010)