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What Needs To Be Done To Accelerate The Adoption Of Biofuels In The Transport Sector? The adoption of biofuels in the transport sector will allow us to reduce our dependence on fossil fuels and mitigate the environmental impact it causes.

By Milind Patke

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Photo Curtesy: Freepik

It is becoming increasingly evident that sustainable and renewable energy is the way forward. This is not only a wise step but it's also a necessity to adopt alternative sources and facilitate a transition towards clean energy. Biofuels play a key role in making this transition from fossil fuels to renewable energy a reality.

The adoption of biofuels in the transport sector will allow us to reduce our dependence on fossil fuels and mitigate the environmental impact it causes. Biofuels encompasses various types, including ethanol (1G) derived from sources such as molasses, rice, or maize, and 2G Ethanol (2G) produced from agricultural residues like paddy straw or forest resources like bamboo. Additionally, compressed biogas, sustainable aviation fuel, and biodiesel constitute other forms of biofuels.

Meeting ambitious blending targets

India needs over 1000 crore litres of ethanol to meet the 20% blending target by 2025. The current blending rate stands at approximately 12%. The available nameplate capacity of ethanol (for blending purpose) has increased from 600 crore litres to almost 1500 crore litres in three years, thanks mainly to the incentive scheme launched by the Ministry of food and generous long-term tie-up by OMCs. However, due to shortages on account of rice, maize and sugar cane juice/B molasses, the actual capacity may be much less. But since not all vehicles can accept 20% as of now, there is no shortage at the field level. As and when new vehicle models are launched in the future, ethanol demand would gradually pick up. One hopes that we do not see food vs fuel conflict when the demand across the country swells in line with actual 20% requirement and supplies do not get affected due to shortages of feedstock.

Producing 1G Ethanol - Challenges

1G ethanol plants are not capital-intensive, but the main challenge was that the bulk of this capacity was concentrated only in three states namely Maharashtra, Uttar Pradesh, and Karnataka that are known for high sugarcane cultivation. OMCs faced major challenges in moving ethanol from so-called surplus states to deficit states. To overcome this problem, the Government incentivized production of ethanol from Surplus rice (available with FCI)), broken rice and maize. Additional capacity creation thus occurred in deficit states during the last few years. Recently however, the global situation dictated the Government to export more of rice thus increasing the rice prices for ethanol producers. Maize cultivation has not picked up in a big way. Further, Government asked sugar factories to export sugar and disallowed use of sugar cane juice and B molasses for production of ethanol. All these changes dampened the spirit of ethanol and many of the new players are now skeptical of the viability of their plants should the conflict with food persist for longer duration. Therefore, achieving a 10% blending rate poses no immediate challenge, but transitioning to 20% blending is expected to present significant hurdles over the next 2 to 3 years on account of actual availability of ethanol vis vis increased blending requirement due to new vehicle models, both four wheeler and two wheelers. .

Can 2G ethanol address the gap?

To address the current challenges in ethanol availability, the focus has shifted to 2G ethanol production that is derived from agricultural residue. However, 2G ethanol plants require heavy capital investment. Without additional support from the government and OMCs, the possibility of new 2G ethanol plants remains uncertain. Although five plants are scheduled for commissioning this year, they are primarily initiated by OMCs themselves. Private sector investment in 2G ethanol will require substantial backing from the Ministry of Petroleum and Natural Gas (MOPNG) and OMCs to become viable.

Compressed Biogas - Increasing the production

Under the SATAT initiative of 2018, the Government aims to establish 5000 plants capable of producing 15 million metric tons (mmt) of Compressed Biogas (CBG). Presently, only 61 plants are operational, yielding a mere 0.022 mmt. This sluggish progress in CBG plant installation is indicative of persistent challenges related to feedstock availability, feedstock pricing, securing bank financing, and, notably, domestic demand for CBG/CNG. These factors collectively contribute to our poor performance in this domain. However, it's worth noting that technological issues are not hindering plant operation; rather, the primary challenge lies in seamlessly integrating various project components and ensuring consistent operation.

We need more and more entrepreneurs to turn up with successful stories to showcase that CBG production has reached some level of maturity. State governments have to take a big leap of faith and come up with feedstock aggregation at affordable prices to give confidence to the project developers that feedstock would always be available. Government will have to operationalize some of the incentive schemes around Fermented liquid manure, On the demand side, automotive companies need to launch new models running on CNG/CBG and OMCs need to ensure availability of CNG at all times and this would require building pipeline networks across the country. Once this is done CBG can safely be injected into CNG pipelines.

Sustainable Aviation Fuel and Biodiesel - Challenges

India has set a 1% blending mandate for the use of Sustainable Aviation Fuel (SAF) starting from 2027 for all international flights. This percentage is expected to double to 2% by 2028 and become 5% by 2030. However, challenges in production, storage and transportation of SAF persist. In India, potential SAF sources include cooking oil, municipal solid wastes, agricultural residues, cane molasses, syrup, and hydrogen technology. Existing technologies imported from the USA allow for SAF production at a significantly higher cost compared to traditional Aviation Turbine Fuel (ATF). Unless entrepreneurs are assured of guaranteed offtake at such high prices, there may not be new capacity additions. OMCs and Airline companies could form JVs to put up such plants. Additionally, feedstock sourcing will always be a challenge, especially with increasing percentages of SAF blending.

Although several biodiesel plants operate in the country, they rely on imported feedstock due to limited availability of indigenous sources. Without favorable policies ensuring sustained access to feedstock like used cooking oil, biodiesel production may not pick up. If OMCs find that the landed cost of biodiesel is higher as compared to High speed diesel they do not pick up such quantities. Significant quantity of biodiesel gets exported also.

When can biofuels become a viable option for the transport sector?

Biofuels' viability in transportation depends on several key factors. It requires new vehicle models capable of accommodating a 20% blending ratio, coupled with Oil Marketing Companies (OMCs) ensuring consistent ethanol availability nationwide. Incentivizing 2G ethanol plants and mandating OMCs to utilize 2G ethanol, despite its higher cost, could further drive adoption. Offering carbon credits to CBG-producing industries and providing incentives to vehicle owners for using green fuels are additional steps toward viability. Lastly, the government's role in ensuring the widespread availability of used cooking oil for biodiesel production is essential to realizing the potential of biofuels in the transport sector.

The way forward

Perception of biofuels is positive but unless it is economically feasible, no one will embrace it. Ultimately the polluter will have to pay to the non-polluter. If this principle is understood at all levels, it will be easier for the government to implement carbon credits schemes.

In the west and in developed countries in Southeast Asia, well-known companies are proudly announcing that they use biodiesel and it helps them in building positive perceptions about their brand. Unless customers and the public at large get convinced about climate change initiatives, adoption looks far-fetched. Amongst all, Compressed Biogas is much closer to acceptance levels, and if the government and OMCs step up their efforts to ensure availability of CNG at all times, replacing CNG with CBG won't take time or effort.

Milind Patke

President (Biofuels), GPS Renewables

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