The criticality of biofuels and their impact on India's economy and ecology

In the annals of India's development narrative, the quest for sustainable energy sources has emerged as a defining challenge. With a population surpassing 1.3 billion and an economy poised for exponential growth, the country is on track to post an increase in oil demand of almost 1.2 mb/d over the forecast period, accounting for more than one-third of the projected 3.2 mb/d global gains. The need to balance burgeoning energy demands with environmental imperatives has never been more pressing.

Industry leaders must dedicate themselves to transitioning towards a low-carbon energy landscape, driven to emphasize the profound impact biofuels can have on India's economic prosperity and ecological sustainability. This potential is not merely theoretical; it is demonstrated by robust Government policies and forward-thinking insights.

First and foremost, let us scrutinize the economic dividends of embracing biofuels. India is a nation with vast agricultural resources, yet a significant portion of agricultural residues and organic waste remains underutilized, leading to economic inefficiencies. However, by harnessing these abundant resources for biofuel production, we can not only reduce waste but also create “Waste to Wealth” and empower rural communities with new revenue streams, saving huge forex amounts and creating a stronger economy.

Recent studies have illuminated India's position as the world's fastest-growing large economy, coupled with its notable status as the third-largest consumer of energy and crude oil, the fourth-largest refiner, the sixth-largest importer of petroleum products, and the seventh-largest exporter of petroleum products. Looking ahead, India's energy demand is forecasted to surge by approximately 3% annually until 2040, outpacing the global average of 1%. In this dynamic landscape, the biofuels market in India is poised for substantial growth, with projections indicating a valuation of
USD 10.6 billion by 2025, reflecting a robust compound annual growth rate (CAGR) exceeding 5%. This burgeoning sector not only presents a ripe opportunity for job creation but also holds significant potential for rural development and inclusive economic growth.

Furthermore, India's remarkable trajectory is accentuated by its pivotal role in global energy dynamics. Forecasts suggest that a quarter of the world's energy growth between 2020 and 2040 will emanate from India, propelled by its rapid economic expansion and demographic dividend. Despite these promising prospects, India's heavy reliance on petroleum imports, and domestic oil production accounts for just 10% of India’s oil supply needs, with the country’s high dependence on imports a major and pressing concern for the government. A key energy policy objective is to
cut India’s oil import dependency by accelerating domestic oil exploration and production activities.

Indeed, India's journey towards "Amrit Kaal" - a golden era characterized by prosperity and self-sufficiency - hinges upon its ability to attain energy independence by 2047. This ambitious yet attainable goal demands a concerted effort to diversify the energy mix, bolster domestic production of renewable fuels, and foster innovation across the energy sector. Only through proactive measures and strategic investments can India realize its vision of a sustainable, self-reliant future.

Since 2016, the government has implemented a series of policy and fiscal reforms, and improved contract terms for private and foreign companies to attract more investment aimed at reversing steep decline rates and raising crude oil production to narrow the gap with refinery intake that is currently met by imports, we can reduce our dependence on imported fossil fuels, adopt production of biofuels thereby enhancing energy security and mitigating economic risks. Supported by these policies, ethanol production for blending in gasoline has seen a remarkable surge between 2018 and 2023, nearly tripling its demand and now accounting for approximately 12% of the blend (7% on an energy basis).

Recognizing the critical significance of sustainable energy and clean mobility, the government has successfully expanded operations to include the production of 1G Bioethanol. Additionally, there have been ventures into producing Compressed bio-gas and Fermented Organic Manure. Looking ahead, there are efforts to further push the boundaries by exploring the production of various other biofuels and future fuels.

The purpose is to foster a circular economy, empowering agriculture, strengthening local communities, addressing environmental issues, and making sustainability a tangible reality. The aim is to lead the Global Energy Transformation Story, with innovation, cutting-edge technological progress, and creating Wealth from Waste. The mission is to spearhead the global transition to a sustainable, cyclical, and self-reliant economy and significantly contribute to achieving Net-zero emissions. The objective is to drive the adoption of cleaner sources of energy, enhancing energy
security, and creating an era where sustainability is the norm.

While the economic advantages of biofuels may appear gradual, the immense value they contribute to the economy is truly remarkable. As someone rooted in the Indian sugar industry and fortunate to be involved in the biofuels sector, I often reflect on the vast potential that remains untapped. The opportunities for forward integration in this field are boundless, far exceeding our current endeavours. Therefore, when juxtaposed with their ecological impact, the looming threat of climate change becomes starkly evident. India, with its vulnerability to erratic weather patterns and rising sea levels, must assume the role of conscientious guardians of the environment. Transitioning towards cleaner, sustainable energy sources is not just a choice but an imperative.

Biofuels, sourced from renewable biomass like agricultural residues, organic waste, and energy crops, stand as a compelling alternative to fossil fuels. Particularly noteworthy are bioethanol, compressed biogas, sustainable aviation fuel and biodiesel, which boast significantly lower carbon footprints, thereby actively combating greenhouse gas emissions and addressing global warming concerns.

Looking ahead, projections suggest that widespread adoption of biofuels in India could result in a substantial reduction of over 150 million tons of CO2 equivalent emissions annually by 2030. This aligns seamlessly with India's commitments under the Paris Agreement, showcasing our nation's determination to combat climate change on a global scale. Additionally, the cultivation of energy crops for biofuel production while ensuring food security holds promise for enhancing carbon sequestration, curbing soil erosion, and fostering biodiversity conservation. Such
endeavours will not only boost ecological resilience but also promote sustainable land management practices for our farmers, securing a greener future for generations to come.

Unlocking the full potential of biofuels in India requires a comprehensive strategy that integrates policy interventions, technological innovations, and collaborative efforts among stakeholders. As India assumes the esteemed role of the current G20 presidency, it has embarked on a historic endeavour by establishing the Global Biofuels Alliance (GBA).

The Alliance stands as a monumental initiative aimed at expediting the adoption of sustainable, secure, and affordable biofuels on a global scale. It addresses three critical priorities essential for the success of biofuels worldwide: identifying high-potential markets, accelerating the deployment of technology, and fostering consensus on sustainability frameworks.

Recognizing successful expansions of biofuels supply to mitigate GHG emissions from the transportation sector, while simultaneously bolstering energy security and rural development objectives, various countries have demonstrated effective strategies. While each country faces unique challenges and adopts distinct approaches, there are overarching similarities that the GBA can leverage to assist other nations in scaling up biofuels. By developing and maintaining comprehensive strategies, providing appropriate investment signals, ensuring both the security and
affordability of fuel supplies, addressing sustainability concerns proactively, and fostering collaboration with the international community, the GBA can accelerate.

[This piece was written by Vijay Nirani, Managing Director, TruAlt Bioenergy]