How biofuels can double farm incomes

Advantages of biofuels for farmers

Approx Read Time: 5 min

Advantages of biofuels for farmers
Advantages of biofuels for farmers

India’s per-capita energy consumption is low: 

  • India currently consumes only one-third of the global average consumption of energy.

Increased consumption will come with new challenges:

  • As India moves towards more robust energy consumption figures, the country faces the unique challenge of merging together often-conflicting needs:
    • Addressing a fast increasing demand while cutting dependence on imports
    • Greening the grid while ensuring affordability
    • Replacing old forms of energy production while boosting employment, and the human and economic capital of the people
  • Another major challenge is that the energy sector is closely intertwined with issues related to climate change.

Problem with the petroleum and natural gas sector:

  • India imports about 84% of our oil and 56% of our gas for domestic use.
  • This is in conflict with India’s energy transition goals, as well as cutting India’s energy imports.

Biofuels can help achieve balance in this regard:

  • In this context, biofuels have become a tool for achieving a delicate balance of outcomes.
  • They will help reduce imports and carbon footprint while also helping India’s energy transition. 

India’s efforts at biofuels:

  • In the past few years, progress has been made in the use of different forms of biofuel, like:
    1. Ethanol (mixed with petrol)
    2. Biodiesel
    3. Compressed biogas
  • This will have a direct positive impact on both farm incomes (and the prosperity of agricultural communities), even as it cuts down our import dependence for energy.
  • Currently, the aim is to achieve 10% ethanol blending in petrol by 2022 and 20% blending by 2030 — something that will cut down carbon emissions in vehicles. 

Ethanol biofuel:

  • Ethanol supplies have improved from 380 million litres in 2013-14 to 1.89 billion litres in 2019.
  • Offers of about 3.5 billion litres from both sugar/molasses and grain-based distilleries are expected this year.
  • Ethanol is mainly produced from sugarcane, while it is also produced from damaged food grains, B-heavy molasses and sugarcane juice.

Farmers also benefit from ethanol push:

  • EBP programme and Sugarcane sector:
    • The primary raw material for ethanol production in India is sugarcane and its by-products.
    • Ethanol produced in this way accounts for more than 90% of fuel ethanol supplies under the ethanol blended petrol (EBP) programme of the ministry.
    • The EBP programme injects liquidity into the stressed sugar sector and provides an alternative revenue stream to farmers.
    • This programme also encourages diversion of sugarcane for ethanol production, which results in a decrease in the oversupply of sugar in the country.
  • Farmers benefit from EBP-like programmes:
    • Ethanol production generated about Rs 35,000 crore in the past six years.
    • Most of this money went to farmers through sugar mills and distilleries, as oil marketing companies (OMCs) provide off-take guarantee at fixed prices.
    • This arrangement also improves the health of the payment cycle to farmers since OMCs settle their ethanol dues to distilleries in 21 days instead of the months that the farmers had to wait for their payment from sugar mills.
  • Allowing more agri produce to produce ethanol also helps farmers:
    • The government recently allowed the utilization of surplus rice available with the Food Corporation of India and maize as an additional source of feedstock for ethanol production, starting this year.
    • With this, farmers will now have an alternative market for their produce.

Biodiesel and India:

  • Biodiesel procured by OMCs for blending high speed diesel has increased from 11.9 million litres in 2015-16 to 105.5 million litres 2019-20.
  • To promote biodiesel, the National Policy on Biofuels in 2018 targets 5% blending of biodiesel in diesel by 2030.
  • The policy encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, used cooking oil and short-gestation crops.
  • These crops can be easily cultivated in various states on land that is barren or not fit for edible crops, thus boosting farm incomes
Compressed Biogas:
  • The Sustainable Alternative Towards Affordable Transportation (SATAT) scheme launched in October 2018 aims to establish an ecosystem for production of compressed biogas (CBG) from various waste biomass sources in the country.
  • Under SATAT, 5000 CBG plants with a total production capacity of 15 million metric tonne per annum (MMTPA) has been planned.
  • This initiative offers a potential for investment of about Rs 1.75 lakh crore, generating about 75,000 direct employment opportunities.
  • Benefits:
    • Reduce stubble burning: Many of the proposed plants will use crop residue such as paddy straw and biomass as feedstock for production of CBG, especially in Haryana, Punjab and Uttar Pradesh. This will reduce burning of agricultural residue (which results in significant air pollution in cities like Delhi).
    • Employment: The SATAT scheme will also generate employment in rural and waste management sectors, and boost income for farmers from their unutilized organic waste.
    • Manure: One of the byproducts of CBG plants is bio manure, which can be used in farming.

Many benefits of biofuel ecosystem:

  • The components of a biofuel supply chain create a circular rural economy that results in substantial environmental, socio-economic and health benefits for communities.
  • A total of Rs 1 lakh crore worth of biofuel will be purchased by OMCs every year in the near future for blending. This money will be ploughed back to the rural economy, thus doubling farmers’ incomes.

Conclusion: Advantages of biofuels for farmers

  • In energy sector, India’s emphasis, based on domestic requirements and international climate commitments, has been on:
    1. Energy availability, accessibility and affordability
    2. Efficiency in energy use
    3. Energy sustainability
    4. Energy security for mitigating global uncertainties
  • Hence, with emphasis on biofuel, the focus of energy sector for the government has moved from international trade to one that strengthens the human development indices of our people.

Also Read: Editorial Analysis: The biofuel alternative to farm fires

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