In today’s Finshots, we dive into India’s ambitions for biofuel and the Global Biofuel Alliance (GBA).
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On the 9th of September, India made a big announcement at the G20 — the formation of a Global Biofuel Alliance (GBA). India, the US, and Brazil would be the founding members. And 19 other countries would join in to show support too.
Now before we get into why on earth we need an alliance, we need to understand biofuels.
We’re talking primarily about Ethanol and Biodiesel.
And they’re called biofuels because they can be extracted from plant-based substances. Ethanol can be extracted from sugarcane. Or you could extract it from the likes of corn, rice, and bamboo. Biodiesel on the other hand can be made from animal fat, vegetable oil, soybean oil, and even restaurant grease. Yup, what generally gets thrown can actually be processed into something that’s really useful. Some enterprising folks are even converting oils secreted by algae.
And there’s a simple reason why India is gung-ho about biofuels. We want to reduce our dependence on importing expensive barrels of oil from the Middle East and elsewhere. We’re good oil refiners but not big producers, so, we need an alternative to the black gold. We don’t have massive reserves of oil to tap into easily.
With biofuels, there’s absolutely no petroleum involved. And in the past 9 years, India has apparently saved a whopping ₹73,000 crores worth of imports by relying on domestically produced ethanol and biodiesel. We’re blending ethanol with petrol. Yup, your car is getting a hybrid mix when you go the the fuel pumps. And we’re blending biodiesel with conventional diesel too.
So yeah, you see how these biofuels could change our fortunes. It could save precious dollars. It could make the country self-reliant in meeting certain energy needs. And it could get us closer to our Atmanirbhar ideal.
And things seem to be going quite well at the moment. We initially had a target of blending 20% ethanol in petrol by 2030. But right now, the target has been revised to 2026. We’re more confident. And we have a target of blending 5% biodiesel in conventional diesel by 2030 too.
Now one aspect is saving money by reducing imports of course. But the other aspect is also that biofuels don’t contribute to pollution as much. See, 40% of the country’s pollution is thanks to vehicles. At least that’s what Nitin Gadkari, the Minister of Road Transport and Highways, says. And ethanol burns relatively cleanly and reduces carbon monoxide emissions.
Okay. All this is good. But why do we need another alliance? Why can’t we just go at it alone? After all, it’s not going to be like OPEC where producers get together and decide how much biofuel to supply or not, right?
Well, the thing is, India has some big ambitions. For instance, to hit the milestones we mentioned earlier, we need 17 billion litres of ethanol. Unfortunately, we currently produce only 10 billion litres. And at the moment, we actually just account for 3% of the world’s biofuel production. Not to forget that we also have plans to install 5,000 plants for compressed biogas in the country. Maybe we need help to pump this up. And maybe having an alliance will help - Not just in improving technical know-how but also in accessing specific international funds set up for this transition.
Kind of like what the International Solar Alliance (ISA) did - a program jointly initiated by India and France in 2015. Apparently, the agreement signed by 114 countries has a financing facility for solar projects. It has something like an incubation centre to guide and mentor solar startups. And they function as advisors for government policies too. Pooling of minds and resources seems to have helped.
And maybe that’s what the GBA can do as well.
Because if you’re expecting biofuels to help with the global net zero emissions target by 2050, everyone needs to join hands. And we need to get more people excited about using this alternative fuel to achieve the big goal.
Will the GBA help? We’ll just have to wait and see now.
PS: Also, check out our story from August 2020 if you want to know more about the challenges in the ethanol ecosystem — about sugarcane production and flex-fuel vehicles in India.
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