Economy

Biofuels policy: Industry voices concern over lack of transparency in tech, funding

Richa Mishra/TV Jayan New Delhi | Updated on August 20, 2018 Published on August 20, 2018

Most industry observers believe that instead of experimenting with unknown technology, the government can do good by promoting the existing 1G technology   -  MajaMitrovic

 

Less than three months of the Union Cabinet approving the National Policy on Biofuels – 2018, questions are being raised on the lack of transparency in adopting the policy both in terms of technology and funding.

“The government needs to revisit its policy. India needs to adopt a holistic approach to meet the consistent targets of ethanol blending, which is at abysmal levels at present,” said an industry observer, terming the policy as short-sighted and non-sustainable in the current form.

To extend financial and fiscal incentives, the policy categorises biofuels as ‘Basic’, that is, First Generation (1G) including bio-ethanol and biodiesel; ‘Advanced’ or Second Generation (2G) covering ethanol, Municipal Solid Waste (MSW) and drop-in fuels; and Third Generation (3G) such as bio-CNG, etc.

With a thrust on Advanced Biofuels, the policy proposes a viability gap funding scheme for 2G ethanol bio-refineries of ₹5,000 crore in six years in addition to tax incentives and higher purchase price compared to 1G biofuels.

“Instead of venturing into a technologically and commercially unexplored territory, it would have been better if the government had focussed on a two-tier ethanol procurement policy for sustainable supply at a higher blending rate,” said Kalikesh Narayan Singh Deo, MP and a Member of the Standing Committee on Petroleum and Natural Gas.

The setting up of a VGF “beats all logic”, he said, wondering, “Why can we not go for a tried-and-tested mechanism (1G — molasses based ethanol) that is available? Much smaller economies such as the Philippines have shown the way on how to balance domestic interests while promoting a consistent ethanol blend.”

The government is highlighting the fact that it is investing significantly in the effort to transform biomass into biofuel and that there is a plan to set up 12 modern refineries for generating advanced biofuels (2G) across 11 States — Punjab, Haryana, Uttar Paddesh, Madhya Pradesh, Bihar, Assam, Odisha, Gujarat, Maharashtra, Karnataka and Andhra Pradesh, at an estimated cost of ₹10,000 crore.

“The plans announced by the government have been repeated in one form or other since 2014, with little or no success,” he pointed out.

Some are also questioning the tendering process being adopted to set up these projects. “The government signed six MoUs with oil marketing companies without any transparent process of selection,” he said adding “facilitating import of ethanol will address the inconsistency in domestic availability, and ensure the current blending mandate of 10 per cent is achieved.”

In fact, most industry observers believe that instead of experimenting with unknown technology, the government can do good by promoting the existing 1G technology which is being used by the industry for churning ethanol. Any gap between supply and demand can be met through imports and parallely work on adopting newer technology can continue. And as the domestic industry is able to meet the local demand, dependence on import can be reduced.

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Published on August 20, 2018
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