India's food is being burned for fuel because of the government's inaction on pricing

India produces ethanol using valuable food crops

Greener Alternative: Ethanol produced from crop waste

The lack of government pricing is a barrier to the expansion of new fuel

Bhasker Tripathi

They say that the government's refusal to pay for more ethanol made from waste, but which costs more to make, is a major obstacle.

The second-generation, 2G, ethanol that uses crop waste in place of valuable food crops is a great way to reduce global warming emissions, cut oil imports, and avoid fuel made from food for human consumption.

Producers say that the government should pay a different price for 2G ethanol, which is more expensive.

The economics of 2G ethanol are not viable without a separate price policy, said Monish Ahuja. Ltd. (PRESPL), a company that supplies farm waste to two-generation plants.

Ahuja stated that investors will not invest unless the returns reflect the costlier production of biofuel.

He said, "That's where the bottleneck is."

The Indian government has accelerated ethanol production, diverting surplus food crops such as sugarcane and maize to produce fuel. This is known as 1G ethanol.

The production of 1G reduces the amount of grain available for humans and cattle, and takes land away from production.

In a period of a year, spanning the years 2024-2025, India allocated a record amount of 5.2 million metric tons of rice to 1G ethanol. This is nearly 9% percent of global rice shipments.

Newer technology can be used to convert tough plant wastes like straw and husk into sugars that are fermentable. This could also help reduce stubble burning in India. After harvest, crop remnants are burned to create air pollution.

The government has stated that India will produce 700 crore litres (7 billion litres) of biofuels in October 2024.

Experts say that the lack of production of 2G ethanol is mainly due to the lack of differentiation in government procurement pricing and higher production costs.

The Indian government doesn't provide specific numbers on 2G ethanol.

According to the minutes of a meeting at a high level committee in July 2023, the government considered a different rate for 2G-ethanol.

According to Indian media reports, the price is expected in April 2025. However, no official announcement has yet been made.

The Indian government launched in 2019 a national program to promote 2G ethanol. It has a budget of 1,97 billion rupees ($227.76 millions) for financial assistance.

Only one of the twelve plants that were planned for India is currently operational.

Requests for comment from the Indian Ministry responsible for biofuels production were not answered.

Costs Add Up

Y.B. Ramakrishna is the senior vice-president of Indian Federation of Green Energy.

Experts say that India produces hundreds of millions tonnes of agricultural waste each year, which could be used to fuel hundreds of 2G Biofuel plants.

Ramya Natarajan, research scientist at CSTEP, a Centre for Study of Science, Technology and Policy, explained that the waste from the small farms spread across large areas must be collected, stored and dried.

Experts said that because the costs can be high, financial support and clarity in pricing for 2G Ethanol is critical.

Ramakrishna stated that a higher initial price was necessary for at least the first three to four year period.

Ahuja stated that without a price and target for the 2G procurement, even firms with a good financial standing are unable get funds from banks, or commit to long term plans.

The lack of a 2G ethanol blend target means that the greener option will have to compete with 1G for customers.

(source: Reuters)