Today, India is struggling with rising petrol prices, energy insecurity, economic slowdown, and climate change. People across the world are seeing biofuels as a potential solution to all these challenges.
Fossil fuels (Crude oil, coal, and natural gas) are prone to depletion and contribute significantly to pollution and global warming. Biofuels such as ethanol (blended with petrol) can be used as a substitute for fossil fuels and are produced from bioenergy crops such as corn, sugarcane, miscanthus, and switchgrass.
Most of the fossil fuels will run out one day, but these bio-energy crops can be produced again and again on demand, and will help in energy independence, climate change, reducing foreign oil dependence (83% of India’s oil need depends on imports), health benefits, and will also help the economy by providing jobs.
The United States is the world’s largest producer of ethanol, and it's Renewable Fuel Association (2015) has stated that the production of ethanol had substantial economic impacts including 83, 949 direct jobs, 295, 265 indirect and induced jobs, $53 billion contribution to GDP, and $27 billion in the household.
In India, biofuels' need was felt as early as the 1970s, and a study was conducted to examine the scope of using biofuels. Under the Ethanol Blended Petrol (EBP) Program, 5% ethanol blending in petrol was made mandatory from October 2008, and a target of 20% ethanol blending was set to be achieved by 2030. In January 2021, this target was preponed five years to 2025 by Oil Minister Dharmendra Pradhan. It is important to know that ethanol can be broadly classified into two categories based upon the raw material used for its production: grain ethanol and cellulosic ethanol.
Grain ethanol is produced from sugar and starch from plants such as corn. On the other hand, cellulosic ethanol is produced from wood, crop residues, and grass, such as miscanthus and switchgrass. In India, ethanol is primarily produced from sugarcane molasses, and whereas most of the ethanol production in the USA is from corn. India is also planning to produce ethanol from corn, but as India is the second most populated country, so using corn to produce biofuel will always be seen as a threat to food security. Presently, the entire world is looking towards cellulosic ethanol, i.e., biofuel production from non-food crops.
The bioenergy crops like miscanthus and switchgrass are the best examples of such non-food crops. These bioenergy crops can grow in poor quality soil with low fertilizer applications and less water. They are also drought-resistant and have high resistance to naturally occurring pests and diseases. Although the demand for such energy crops is increasing and they also have several agronomical, environmental, economic, and other benefits, they are still not adopted by the farmers commercially for energy use. One of the reasons for non-adoption can be farmers’ lack of information about the two most critical factors in adopting any new crop, its profitability and riskiness relative to the existing crop-system. A farmer will adopt bio-energy crops only when they will provide more advantages than other conventional options.
A lot of research is happening in the USA to investigate the profitability and riskiness for farmers if they switch from the production of conventional crops (like corn, cotton, soybean etc.) to the production of bioenergy crops. Few studies have assessed the competitiveness of these bioenergy crops relative to conventional crops and concludes that bioenergy crops can be a viable addition to the crop-mix which can increase the farmer’s profitability and can reduce the variability of returns. It will be interesting to consider how much this positive impact can be increased using policies that provide farmers with payments for environmental benefits of bioenergy crops, as it should be remembered that in addition to economic gains, there are many important agronomical and environmental benefits also. The risk minimization solutions to farmers, e.g., by means of contracting, crop insurance options, etc. can really motivate the adoption of bioenergy crops.
The U.S. government is subsidizing cellulosic biomass production via few programs, such as the Biomass Crop Assistance Program (BCAP). The policymakers in India should also start such assistance programs and target those areas where the share of low-quality land is larger for promoting bioenergy crop production as it will also lead to employment generation and rural development.
Author: Dr. Mohit Anand has a Ph.D. degree in Applied Economics from the Department of Agricultural Economics, Auburn University, Auburn, AL, USA, and currently serving as a division chair at Miles College, Fairfield, AL, USA. Dr. Anand is a lead researcher in the field of economies of biofuels and the adoption of bioenergy crops.