The Hindu Business Line : Alternative fuel sources, the key

Energy security and escalating global crude oil prices have become the focus areas for policy-makers keen to maintain macro-economic equilibrium. Yet, it is seldom recognised that the key to solving the challenge of energy security lies in how far and fast India can commercialise cheaper oil substitutes.

This aspect was highlighted at the Fifth Petro India Conference organised by the India Energy Forum last week in the Capital. A member of the Planning Commission, Dr Kirit S. Parik, an energy expert who recently submitted the Integrated Energy Policy report to the Prime Minister, suggested addressing fuel-efficiency issues by focusing on public transport, diesel-based rail transport, inter-city freight movement by rail, and more fuel-efficient automobiles.

Listing out several alternative fuel options such as bio-fuels, ethanol and natural gas, gas hydrates and hydrogen, Dr Parikh dwelt on problems with Jatropa cultivation. He said that assuming the 60 million hectares of available wasteland is used for Jatropa cultivation, it would yield 60 million tonnes of oil, against the country's requirement of 200 million tonnes. As it is, the land allotted to Special Economic Zones (SEZs) has raised a political storm. So making more wasteland available for Jatropa cultivation will not be without its challenges.

Dr Parikh suggested importing alcohol at the same rate of duty as oil to push the ethanol-doped petrol programme. But, he said, such a move was bound to be resisted by the sugarcane lobby.

Only recently, the European Union (EU) had approached the World Trade Organisation's Dispute Settlement Body over India's import regime for spirits and wines. Brussels said the additional duties that are levied on top of the high basic Customs duty (of 150 per cent for spirits and 100 per cent for wines) raised the cumulative tax burden to between 177and 540 per cent (depending on the import price of the products).

By keeping spirit taxes high, New Delhi is earning the wrath of the beverage industry of advanced countries. Dr Parikh's suggestion to set alcohol import duty on a par with crude oil may have the unintended consequence of mollifying the EU, while ensuring adequate supply of alcohol to dope petrol with. Dr Parikh said that a way out could be to not make ethanol blending with petrol mandatory, if imports are disallowed. Speaking on the same occasion, the Brazilian Ambassador to India, Mr Jose Vicente Pimentel, pointed out that despite Dr Manmohan Singh's keenness to evolve a partnership in energy between India and Brazil, the progress was insignificant. .

"We have supported the ethanol initiative proposed by the President, Mr Luiz Inácio Lula Da Silva. Indian companies have evinced interest in exploring production opportunity in Brazil to meet the anticipated growth in ethanol use in India for both industrial as well as automobile use." With the country's import dependence at 78 per cent, a figure that is threatening to touch 90 per cent, it is time the authorities got their act together to ensure that there is no laxity on alternative fuel exploration and exploitation.

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