The Hindu Business Line : Bioethanol: For a mature policy

Instead of ad hoc responses to emerging situations, the country's biofuel policy deserves a holistic approach and adequate stakeholder consultation.

Several ground-level issues need attention as the ethanol-blended petrol programme gets underway. The Government's publicity campaign talks of clichéd justification, such as farmer's welfare, eco-friendly, renewable nature of the resource and reduced dependence on fossil fuels. These, by themselves, do not automatically justify the launch of a bio-ethanol initiative. The policymakers need to make a dispassionate assessment of the programme's relevance to Indian market conditions, and ensure that its working is transparent, economically viable and justifiable.

Cane output in the country has been unsteady and its cyclical nature is yet to be decisively broken. It is largely perceived as a food crop rather than as an energy crop unlike, say, in Brazil, the world's largest ethanol producer. Clearly, ethanol has not been consistently in surplus in India. In fact, the country has been importing ethanol since 2002. In 2005, imports were over 400 million litres, or 9 per cent of world trade. The imported alcohol was primarily used by the chemical industry as it could not access domestic alcohol. According to the Planning Commission, a 5 per cent blend of ethanol in petrol would require well over 600 million litres of ethanol, or 15 per cent of world trade in the commodity. India's blending policy can, therefore, affect the domestic and global markets significantly. Already, there is demand for a cut in import duty on ethanol. Talk of ethanol blending usually begins to surface when there is the prospect of a sugar glut. The blending programme announced in 2003 was soon forgotten because the sugarcane output shortfall and sugar shortage made imports a necessity. Therefore, one cannot dismiss the suspicion that the renewed interest in ethanol blending may have been motivated by apprehensions of a sugar glut and consequent price collapse.

Importantly, the water-intensive nature of cane cultivation cannot be overlooked. Potential area expansion in cane can, at best, help maintain a healthy balance between the needs of sugar production and the chemical industry. There is little irrigated area available for dedicated cultivation of cane for ethanol — again, unlike in Brazil. Thus, a viable ethanol policy has to evolve with extremely restricted degrees of freedom. The cane yields have to be considerably raised from present levels, especially in water-rich Uttar Pradesh and Bihar. Instead of ad hoc responses to emerging situations, the country's bio-fuel policy deserves a holistic approach and adequate stakeholder consultation. Incentive schemes, if any, have to be strictly monitored.

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