Changing how we move

• Recently International oil prices are surging, nearing $100 per barrel once again.

India’s dependency over crude oil

• Idia’s import dependence on crude oil and products stood at an all-time high of 87.3 per cent in FY2023, and 25.8 per cent of the country’s import bill was spent on it.
• And India has the third-largest crude and product demand in the world with significant room for consumption growth.
• Therefore, over dependency on crude oil import put burden on import bill and Current account deficit that has spill over impact on economy

India’s initiatives to reduce crude oil import dependency

• As International Energy Agency suggest that in the last decade, up to 20 per cent of our total primary energy supply was met by biomass, and a large portion of it was used by households.
• And newly formed Global Biofuel Alliance under India’s G20 presidency must now convert this fuel into a form that can supply clean bio-energy to multiple end uses, improve energy security and get value for public spending
• In order to reduce dependence on imported crude, India launched its ethanol blending programme in 2003 but it saw little progress for more than a decade.
• In 2022, after a concerted policy push for five years, India’s blending programme achieved the significant milestone of 10 per cent ethanol blending in petrol. Plans are now afoot to increase the blending share to 20 per cent (E20) by FY25-26, a target that was brought ahead by five years.

Concern Ethanol blending programme:

• Currently, Ethanol producers supplied nearly 430 crore litres of ethanol in 2022. The demand for 20 per cent blending is set to increase India’s ethanol demand to nearly 1,100 crore litres by 2025.
• But achieving the 2025 target will require investments, and the ability to provide (and divert) the necessary feedstock for the domestic production of ethanol.
• In line with this aspiration, a NITI Aayog report also indicated a growth in petrol demand by over 45 per cent by 2030, compared to 2021. In such a scenario, blending alone can deliver a small reduction in the overall demand for petrol.
• Much of India’s supply of ethanol for the blending programme comes from first-generation production – using underlying sugars in food crops, mostly sugarcane (84 per cent) and grain (16 per cent).
• Given the predominance of first-generation production, the often-discussed food-energy-water nexus considerations must be put into practice at the earliest.
  • Food crops require fertiliser and water, and these in turn require heavily subsidised energy (natural gas and electricity) to produce (or draw)
• While the prospects for second-generation (2G) technologies for ethanol production are immense, investments have been slow and even Indian Oil’s state-of-the-art facility will only produce 3 crore litres of 2G ethanol.
  • There are 12 such facilities in various stages of planning and construction but are unlikely to contribute to the lion’s share of ethanol demand.
• While ethanol opens up a new income stream for the farming community by way of assured procurement, climate change considerations suggest that rainfall and yields will both see significant variations and can leave us vulnerable to supply shocks
• India needs a robust assessment of these tradeoffs, and a clear research and development plan for 2G technologies, before it can scale up ethanol production.

Bio fuel and Flex fuel engines are new alternatives to crude oil

• As, nearly 60 per cent of our petrol demand comes from two-wheelers, which cater to the mobility needs of citizens across the economic spectrum. The remaining 40 per cent demand is from four-wheelers and this share is likely to increase.
• I such a situation, biofuels and flex-fuel vehicles (that can run almost entirely on biofuels) may merit consideration. As a consequence of it Indian government recently unveiled India’s first flex fuel vehicle.
• EVs are also EVs are also solution to our mobility needs but the minerals, materials and components they need, present more trade, employment and economic concerns

Way forward

• Even in diversifying our fuel base, the primary focus of policy must be to slow down the overall consumption of petrol in the economy and address the private demand for the fuel.
• Targeted promotion of EVs in public transit and pricing the use of private vehicles in urban settings could ease the transition to higher levels of biofuels.

Conclusion

• At a time when the automobile industry is grappling with the challenges of transitioning to EVs, a well-thought-out and implementable plan to transform the way India moves, will not only help reduce the import bill but also buy us time to help transition a marquee industry of our economy.