REVIEW OF AGRICULTURE
Sustainable Development of Biofuels:
Prospects and Challenges
S S Raju, P Shinoj, P K Joshi
In the context of shrinking crude oil reserves, rising
demand and the resultant rise in prices of petroleum, as
well as the concerns about global climate change and
energy security, bioenergy is becoming increasingly
relevant as a possible and potential alternative to fossil
fuels. However, with many developed countries
pursuing aggressive policies for encouraging the
production and use of biofuels, there are strong
apprehensions that as more and more land is brought
under biofuel crops, food prices would increase
substantially affecting poor consumers, particularly
those from low-income net food importing countries.
Keeping in view these facts, this paper presents a brief
overview of the current state of affairs of biofuels at the
global level, with a special emphasis on the ongoing
efforts of biofuel expansion in India. It throws light on
the various policies at the national and regional levels
and also on the implications of biofuels for changes in
land utilisation, food security, social welfare and
the environment.
S S Raju (raju@ncap.res.in) and P Shinoj (pshinoj@ncap.res.in) are with
the National Centre for Agricultural Economics and Policy Research,
New Delhi and P K Joshi (pkjoshi@naarm.ernet.in) is with the National
Academy of Agricltural Research Management, Hyderabad.
Economic & Political Weekly EPW December 26, 2009 vol xliv no 52
B
efore the advent of fossil fuels as a dominant source for
energy in the later part of the 20th century, energy gener-
ated from biomass (agricultural and forest products, or-
ganic wastes and residues) occupied a prominent position. The
period followed witnessed a role reversal with agriculture be-
coming increasingly reliant on fossil fuel energy for its inputs,
viz, chemical fertilisers derived from fossil fuels and fuels re-
quired to power farm machinery. Moreover, the increasing reli-
ance on road transport system for movement of produce has
made it even more dependent on fossil fuels. Today, any small
shock in the petroleum sector, either a cut in production or an
upward movement of prices, has a direct impact on the agri-
cultural sector. Like the agriculture sector, every other sector has
become immediately dependent on fossil fuels, which is a non-
renewable source of energy. The shrinking reserves, rising de-
mand and the resultant rise in prices of petroleum, the concerns
of global climate change and energy security are forcing the
world to look for its long-term replacement. It is in this context
that bioenergy is becoming increasingly relevant as a possible
and potential alternative to fossil fuels. Though, a number of
other alternatives like water power, geothermal energy, wind en-
ergy and solar energy are being explored, bioenergy is viewed as
a strong future source of energy.
Bioenergy is defined as the energy generated through biofuels
that are produced from renewable sources of plant origin (Rao
and Bantilan 2007). More specifically, bioethanol produced from
sugar or starch derived from grains/biomass and biodiesel ob-
tained from the processing of edible and non-edible vegetable oils
can be used as fuel for powering automobiles. Apart from this
purely technical angle, the growing attention on biofuels in recent
years can be attributed to various other reasons as well. Biofuels
offer a number of environmental, social and economic advantages.
The use of biofuels may lead to reduction in vehicular pollution
and greenhouse gas emissions as it is established that the emission
of sulphur dioxide (SO2), particulate matter and carbon monoxide
(CO), etc, are less from biofuels (Subramanian et al 2005). The
economic and social benefits arising out of the development of
biofuel sector through increased income and employment oppor-
tunities for the rural communities is also highlighted (UNCTAD
2006; Deepak 2008). The greening of wastelands and regenera-
tion of degraded forest lands through cultivation of biofuel crops
is another added advantage (Mandal and Mithra 2004).
However, with many developed countries pursuing aggressive
policies for encouraging the production and use of biofuels, new
dimensions on the adverse impact of expansion of biofuels have
65
REVIEW OF AGRICULTURE

surfaced. Various studies have raised concerns over the environ- – Various second generation biofuels like biohydrogen, bio-
mental sustainability of production, overall greenhouse gas emis- methanol, butanol and isobutanol, Fischer-Tropsch diesel, wood
sions based on lifecycle analysis, and the impact on land use and diesel, mixed alcohols, etc, produced from different types of bio-
food prices (IEA 2008; FAO 2008). There are strong apprehensions mass feed stock are under development.
that as more and more land is brought under biofuel crops, food
prices would increase substantially affecting poor consumers, Global Biofuel Scenario
particularly those from low-income net food importing countries. The world biofuel production has touched 62.2 billion tonnes
Keeping these facts in view, this paper presents a brief overview which is 36.12 million tonnes oil equivalent (mtoe) in the year
of the current state of affairs of biofuels at the global level, with a 2007-08. Currently, around 88% of the global production of liq-
special emphasis to the ongoing efforts of biofuel expansion in uid biofuels is in the form of ethanol. The two largest ethanol
India. The implications of biofuels for the agricultural sector in producers, Brazil and the United States (US), account for almost
India in terms of the changes in land utilisation, food security, 87% of total production, with the remainder accounted for mostly
social welfare and the environment are also discussed. by China, Canada, France, India, Russia, South Africa and the
United Kingdom (UK) make up the rest (Figure 1, p 67). The highest
Types of Biofuels per hectare yield in ethanol production is realised by Brazil which
For many, biofuels are still relatively unknown. Either in liquid form has set up an economically competitive national biofuel sector
such as fuel ethanol or biodiesel or gaseous form such as biogas or largely based on sugar cane. The bioethanol yield in Brazil is
hydrogen, biofuels are simply transportation fuels derived from around 5,476 litres/ha (74.5 litres/tonne) which is higher than
biological (agricultural) sources. There are two types of biofuels: that of any other country. Brazil has developed a cost-effective
technology of converting sugar cane juice directly to ethanol, in
First Generation Biofuels: First generation biofuels are made contrast to that of India, where ethanol is produced mostly from
from biomass consisting of sugars, starch, vegetable oils, animal molasses, a by-product of sugar cane industry. In comparison,
starch or biodegradable output wastes from agriculture, indus- yield of maize-based ethanol in the US and China are much lower
try, forestry and households using conventional technologies. at around 3,751 litres/ha and 1995 litres/ha, respectively (Naylor
– Cereals like maize, sweet sorghum and sugar crops like sugar et al 2007). In China, wheat, cassava and sweet sorghum are used
cane, sugar beet, etc, get fairly easily fermented to produce etha- besides corn for ethanol production (Table 1).
nol, which can be used either as a motor fuel in pure form or as a Biodiesel production that accounts for a smaller proportion of liq-
blending component in gasoline. uid biofuels increased from 0.01 million tonnes in 1991 to 9.0 mil-
– Oil seed crops (edible: rapeseed, soybean, sunflower, oil palm lion tonnes by 2008. European Union (EU) is the major producer of
and non-edible: jatropha, pongomia, neem, etc) can be converted biodiesel (above 60%), with a significantly smaller contribution
into a liquid fuel which can be blended with conventional diesel coming from the US (17%). Other significant biodiesel producers in-
fuel or burnt as pure biodiesel. clude China, India, Indonesia and Malaysia (Figure 2, p 67). In EU,
80% of the biodiesel is produced from rapeseed oil, the rest being
Second Generation Biofuels: Second generation biofuel tech- animal fats and other used cooking oils. Oil palm is the major source
nologies are gaining importance because first generation biofuels of diesel extraction in Malaysia and Indonesia, whereas both the US
manufacture has got major limitations. The primary one is that, and Brazil are using soybean to extract biodiesel (Table 1). In India,
they cannot be produced beyond a threshold level without threat- biodiesel production is only in the nascent stage with around
ening food security. They are also not cost-competitive with 45 million litres being produced from jatropha and pongamia oil.
existing fossil fuels. The second generation fuels are more sus- The biofuel production programme in most of the countries is
tainable, affordable and have greater environmental benefits. being supported by subsidies. In Organisation for Economic Coop-
However, they have not become popular because the technology eration and Development (OECD) countries, both production and
for producing these is not yet standardised. Further;
Table 1: Biofuel Feed Stocks and Blending Targets in the Selected Countries
– Lignocellulosic materials, including vegetative grasses, trees, Country Feed Stock Production Forecast, Blending Targets
and various waste products from crops, wood-processing facili- 2009 (Million Litres) (%)
Ethanol Biodiesel Ethanol Biodiesel Ethanol Biodiesel
ties and municipal solid waste, can be converted to alcohol. But
US Corn Soybean 38,600 2,415 3 1
the process is more complex relative to processing sugars and
Brazil Sugar cane Rapeseed, 25,200 1,825 25 2
grains. Techniques are being developed, however, to more effec- castor seed
tively convert cellulosic crops and crop wastes to ethanol. EU Wheat, corn, barley, Rapeseed, 3,830 5,304 5.75 5.75
– Organic waste material converted into energy forms which can sugar beet sunflower,
soybean
be used as an automotive fuel: waste oil (e g, cooking oil) into
Canada Corn, wheat Vegetable oils 1,100 – 5 2
biodiesel; animal manure and organic household wastes into China Corn, wheat, cassava, Palm oil, 1,750 – 10 5
biogas; and special strains of algae, agricultural and forestry sweet sorghum jatropha
waste products into ethanol. Available quantities may be small in India Sugar cane molasses, Jatropha, 494 45 20 20
sweet sorghum pongomia
many areas, but raw materials are generally low cost or even free. Indonesia Sugar cane, cassava Palm oil, jatropha 405 – 10 10
Converting organic waste material to fuel can also diminish Malaysia none Palm oil – 140 – 5
waste management problems. Source: F O Licht (2009); FAO (2008); FAPRI (2008).

66 December 26, 2009 vol xliv no 52 EPW Economic & Political Weekly

consumption of biofuels are subsidised, mainly under the banner
of energy security and climate change mitigation. It is estimated
that, on a per litre basis the support ranges between $0.20 and
$1.00. Among the major producers, only the Brazilian sugar cane
ethanol appears to be competitive without subsidies (FAO 2008).
Demand-Supply Outlook for Biofuels
A number of countries are moving towards the blending of bio- tional requirement, while the balance is met through imports of
fuels with fossil fuels and governments are stipulating manda- nearly 146 million metric tonnes of crude petroleum products that
tory requirements of 5-10% blending (Table 1). Based on these cost the country close to $90 billion in 2008-09 (Figure 3, p 68).
mandatory requirements, FAPRI 2008 and F O Licht 2009 have This is impacting the country’s foreign exchange reserves in a big
projected the future demand for biofuels in Figure 1: Ethanol Production by Country, 2008
several countries. For instance, the forecasted EU
production of ethanol in China was estimated 4%
at 1,750 million litres in 2009. This is expected
USA
to rise to 2,093 million litres by 2017. In the 51%
case of Japan, if the country were to meet its
commitment to the Kyoto Protocol, its ethanol
demand will increase in a span of four years
from 719 million litres in 2007 to 897 million
litres in 2010 and the country will have to
meet the excess demand from imports. In the
EU, approximately 15,514 million litres of bio-
fuels are required by 2012 to meet 5.75% man-
datory blending target. Of this, the biodiesel
Figure 2: Biodiesel Production by Country, 2008
demand is expected to be 8,756 million litres.
EU has a production capacity of 11,705 million Brazil
Others
2%
litres of biodiesel of which it produced 5,898 12%
million litres, in 2008, up by 69% from 2005.
In the US, the creation of new renewable
fuel standard is expected to substantially in-
crease the volume of renewable fuels to be
blended into gasoline from current levels of
about 3% for ethanol and about 1% for biodie- EU
sel. India, Indonesia, Canada and Malaysia 60%
are other countries that are mandating 5% to
20% blending in a phased manner over the
next two to three years.
Global trade in biofuels, even though limited, is picking up
gradually. Presently, trade in ethanol represents just 20% of total
ethanol demand, but the share has been steadily rising from
about 12% in 2002 (F O Licht 2009). Brazilian exports, including
volume re-exported from countries in the Caribbean Basin initia-
tive account for about 45% of global trade. Brazil is the largest
exporter of biofuels while the US is the largest importer. The
Netherlands, Germany and the UK are the largest importers in
the EU. Biodiesel derived from palm oil, exported from Indonesia
and Malaysia to the EU, accounts for the majority of biodiesel
trade. The US and Brazil also export soybean biodiesel to EU
countries (IEA 2008). However, protectionist policies adopted by
a number of governments to safeguard their emerging biofuel in-
dustry still act as a curb to biofuel trade. For example, Brazilian
ethanol is kept out of the US through high tariffs and duties.
In a nutshell, the outlook for global biofuels will depend on a
number of interrelated factors, including the future price of oil,
availability of low-cost feedstocks, and sustained commitment to
Economic & Political Weekly EPW December 26, 2009 vol xliv no 52
REVIEW OF AGRICULTURE
supportive policies by governments, technological breakthroughs
that could reduce the cost of second generation biofuels, and com-
petitions from unconventional fossil fuel alternatives.
Indian Biofuel Scenario
The domestic production of crude oil from fossil fuels remains
more or less stagnant over the years and meets only 30% of na-
way (Ethanol India 2009). Over the last eight
Others years, the consumption of motor spirit (gaso-
2%
line) has grown by 6.64% from 7.01 million
Brazil
36% tonnes in 2001-02 to 11.26 million tonnes in
2008-09. For high speed diesel (HSD), the
growth was 5.10% from 36.55 million tonnes to
51.67 million tonnes (petroleum planning and
analysis cell, MoPNG, GOI 2009). This growth is
expected to continue over the next several
years since it is projected that the motor vehi-
Canada
2%
cle population in India will grow by 10-12%
India
China
4%
that would further increase the demand for
1% petroleum products. This growing dependence
on fossil fuels for powering the transport sector
Canada
is the key reason for the country to embrace
1% biofuel production on its own. In addition to
China Indonesia
1% 4% this, various other socio-economic and environ-
Malaysia
3%
mental benefits have also encouraged the shift.
USA
17%
Bioethanol Scenario
Currently India’s biofuel production accounts
for only 1% of the global production. This
translates to around 425 million litres, consist-
ing of 380 million litres of fuel ethanol (F O Li-
cht 2009) and 45 million litres of biodiesel (FAO
2008). In India, ethanol is primarily produced
by fermentation of molasses, a by-product in
the manufacture of sugar from sugar cane. It is estimated that, out
of one tonne of sugar cane, 85-100 kg of sugar (8.5 to 10%) and 40
kg (4%) of molasses can be recovered. The recovery percentage of
ethanol from molasses is 22-25% as per Indian standards. Presently,
about 70-80% of cane produced in the country is utilised for the
production of sugar and remaining 20-30% for alternate sweeten-
ers (jaggery and khandsari) and seeds. Thus only molasses pro-
duced during sugar production is available for ethanol production.
Due to the cyclical nature of sugar cane and sugar production in
India, sugar cane farmers and the processing industry experience
periodic market gluts of sugar cane, sugar and molasses impacting
prices and farm income.
India has about 320 distilleries, with a production capacity of
about 3.5 billion litres of alcohol per year, almost all of which is
produced from molasses. More than 115 distilleries modified their
distillation facilities to produce ethanol with total ethanol
production capacity of 1.5 billion litres per year. The alcohol
produced in the country is used for various purposes. Around
67
REVIEW OF AGRICULTURE
Figure 3: Domestic Production and Import of Crude Oil in India
Million tonnes (MT)
160
120
Import bill (Billion $)
80
Import (Million MT)
40
Production (Million MT)
0 0
1974-75 1978-79 1982-83 1987 1990-91 1994-95 1998-99 2002-03 2006-07 2008-09
one-fourth of it is being used for industrial purposes while
30-35% is being used for potable purposes and 3-4% for other
uses. The surplus available alcohol is being diverted for fuel.
Biodiesel Scenario
Unlike other countries, India is not using vegetable oils derived from
rapeseed, mustard or oil palm for production of biodiesel. This is
because, India is not self-sufficient in edible oil production and de-
pends upon large quantities of imports of palm oil and other vegeta-
ble oils to meet the domestic demand. Around 40% of the total re-
quirement of the country is today met through imports. In the year
2006-07, 23.8 million tonnes of oilseeds were produced in the coun-
try that generated 8.0 million tonnes of edible oil, but the domestic
consumption was as high as 11.4 million tonnes which necessitated
the imports to the tune of 4.2 million tonnes. However, utilising
non-edible seed oils extracted from tree and forest origin does not
interfere with food security. Every year around 1.2 million tonnes
of tree-born seed oil is produced in the country. Therefore, biodie-
sel in India is mostly produced from the oils extracted from the
seeds of shrubs like jatropha and pongamia. Use of jatropha for
deriving oils has multiple benefits. First, the oil produced is non-
edible; second, it can survive in areas of low rainfall and low fertility;
third, it requires very little inputs and care for cultivation; fourth,
the cake left over after oil extraction can be used as an organic
manure, for preparation of herbal insecticides and biogas; fifth, ja-
tropha has the ability to assist in the build-up of soil carbon; sixth,
large-scale cultivation of jatropha in the marginal land can earn
carbon credits for the country, and so on. However, as mentioned
earlier, biodiesel industry in India is still at a nascent stage although
the government has ambitious plans to expand the sector.
National Biofuels Policy
The Ministry of New and Renewable Energy (MNRE) is in the proc-
ess of preparing a “National Policy on Biofuels” which is expected
to lay the foundation for the accelerated development of the sec-
tor with a focus on research and development, capacity-building,
purchase policy and registration for enabling biofuel use. The draft
policy envisages utilisation of a wide range of crops such as sugar
cane, sweet sorghum, cassava, maize and tree borne oil (TBO)
seeds like jatropha, pongamia, etc, for production of biofuels. It
also proposed setting up the National Biofuels Development Board
to develop a road map for use of biofuels in petrol and diesel
engines in a time bound manner besides taking appropriate policy
68
measures. The national indicative target of 5% blending by 2012,
in billion $ 10% by 2017 and 20% by after 2017 has also been recommended
100
in the policy draft. Biodiesel plantations of non-edible oilseeds on
80
community/government/waste/degraded/marginal lands would
be encouraged, while, plantation in the fertile irrigated lands
60 would not be supported. The minimum support price (MSP) with
the provision of periodic revision for biodiesel oil seeds would be
40 announced to provide fair price to the growers. The minimum pur-
chase price (MPP) for the purchase of bioethanol by the oil market-
20 ing companies (OMCs) would be based on the actual cost of pro-
duction and import price of bioethanol. In case of biodiesel, the
MPP should be linked to the prevailing retail diesel price. The Na-
tional Biofuel Policy envisages that biofuels, namely, biodiesel and
ethanol may be brought under the ambit of “declared goods” by
the government to ensure unrestricted movement of biofuels
within and outside the states. It is also stated in the policy that no
taxes and duties should be levied on biodiesel.
The Ministry of Agriculture is providing subsidy through
National Oilseeds and Vegetable Oils Development (NOVOD) Board
to the farmers, non-governmental organisations (NGOs), individuals,
etc, for production of TBOs, including biofuel crops, under the
Integrated Development of Tree Borne Oilseeds Scheme. Under
this scheme, 30% credit linked subsidy is being provided, which is
linked with 50% term loan to be taken from bank, and 20% benefi-
ciary share in the form of land, labour, etc. Further, the Ministry of
Rural Development has provided financial assistance to the tune
of Rs 49 crore to nine identified states in 2005-06 and Rs 49.50
crore to 15 states in 2006-07 for the purpose of raising jatropha/
pongamia seedlings and plantation of the same under the ongoing
states/central sector area development programmes.
There are several ministries involved in policymaking, regula-
tion, promotion and development of biofuels sector in India. The
details on the responsibilities of each ministry are presented in
Table 2.
Table 2: Ministries Involved in Development of Biofuel in India
Ministry Responsibility
Ministry of New and Renewable Energy Overall policymaking, supporting research
and technology development.
Ministry of Petroleum and Natural Gas Marketing, development of pricing and
procurement policy.
Ministry of Agriculture Research and development of feedstock
crops
Ministry of Rural Development Promotion of jatropha plantations
Ministry of Science and Technology Biotechnology research on feedstock crops
Ethanol Policy in India
India is globally one of the largest producers of sugar cane and
ethanol made from sugar cane molasses. It is in view of this that
the government of India launched Ethanol Blended Petrol Pro-
gramme (EBPP) since January 2003. Subsequently, the Cabinet
Committee on Economic Affairs in October 2007 has taken the
following decisions:
– Five per cent mandatory blending of ethanol with petrol with
immediate effect across the country (except Jammu and Kashmir,
north-eastern states and island territories).
– Fixing of uniform purchase price of ethanol (ex-factory) all over
the country at Rs 21.50 per litre in the next three years.
December 26, 2009 vol xliv no 52 EPW Economic & Political Weekly
 REVIEW OF AGRICULTURE

To meet the targets for 5% blending with ethanol in 2008-09, This has left the producers in a precarious position, wherein they
about 0.62 million tonnes of ethanol was required, while about are unable to sell to government agencies at the procurement
1.25 million tonnes would be required to meet the target of 10% price. Moreover, the final price of ethanol depends on sugar pro-
blending (Table 3). The OMCs have been making all efforts to duction and the price of molasses, which has been fluctuating
implement the 5% EBPP considerably over the years (Rs 2,000-Rs 5,000/tonne), leading
Table 3: Projected Demand for Petrol and Ethanol
for which they have Requirements, India (Million tonnes) to large variation in ethanol production costs. Also, the MoPNG
finalised tenders for pro- Year Ethanol Blending
Requirement would not be in a position to direct OMCs to purchase the ethanol
curing ethanol in vari- Petrol Demand @ 5% @10% at a predetermined price since the purchase price is discovered
ous states. The require- 2007-08 11.00 0.55 1.10 and finalised by them through open tender system as per the
ment of ethanol for 2008-09 12.50 0.62 1.25 Central Vigilance Commission (CVC) guidelines.
2009-10 14.50 0.72 1.45
the three-year (2007-10)
2010-11 16.50 0.82 1.65 Biodiesel Policy in India
period is 182 crore litres.
2011-12 18.15 0.91 1.82
The OMCs have been Source: MoPNG (2009). The government of India is in the process of firming up various
able to contract 146.6 policies to encourage the use of biodiesel in its energy sector, with
crore litres; however, they have procured only 49.44 crore litres special emphasis on transport sector. Various steps in this direc-
as on January 2009 under this programme (MOPNG 2009). EBP tion have already been undertaken. The primary one is the bi-
releases have commenced in all the states except in Orissa, odiesel blending programme announced in the year 2003, which
Chhattisgarh, West Bengal, Tamil Nadu, Kerala and Jharkhand. mandates blending of biodiesel in HSD before using in the vehi-
cles. Similar to that of ethanol, the target is to have a 5% blending
Issues in Implementing EBPP by the year 2012, 10% by 2017 and 20% blending after 2017. As a
part of this, a minimum support price for biodiesel oilseeds will
(1) Taxation Issue: There is a delay in the procurement of etha- be announced to ensure a fair price to the growers. The details of
nol in certain parts of the country due to the taxation policy and the minimum support mechanism will be worked out subse-
procedural measures adopted by the state governments such as quently and considered by the steering committee and the price
levy of export/import duties, excise duty and sales tax procedure will be revised periodically. A minimum purchase price for pur-
and issues of permits, etc (Table 4). Efforts are being made by chase of biodiesel by the OMCs will be also established and is to be
MoPNG to resolve these issues. linked to the prevailing retail market price of diesel. The MoPNG
has already announced a biodiesel purchase policy, in October
(2) Availability of Ethanol: Ethanol supplies are not in line with 2005, which become effective from 1 January 2006. Under this
the demands placed on the ethanol suppliers in all the states where scheme OMC’s will purchase biodiesel for blending with HSD to the
EBP implementation is in progress. Ethanol supplies are affected extent of 5% at identified purchase centres across the country.
due to erratic feedstock supplies and high cost of raw material.
Table 4: Ethanol Tax Structure in Different States of India
Sugar cane and sugar production in India typically follows a six to State Sales Tax (%) Import Fee (Rs/kl)
eight-year cycle, wherein three to four years of higher production Punjab 20 + 2% SC on ST 1,000
are followed by two to three years of lower production. The Indian Haryana and Chandigarh 20 2,000
sugar industry crushes about 70-80% of the sugar cane for sugar Uttar Pradesh – 1,500
Gujarat, Daman and Diu, Dadra
production, with the remaining used for local sweeteners (khandsari
and Nagar Haveli 4 3,000
and jaggery), seed, feed and cane juice, chewing and waste. The by- Maharashtra 4 1,500
product of the sugar industry, sugar molasses, is used for production Goa 19 190/tank lorry
of alcohol and ethanol. The availability of molasses in sufficient Andhra Pradesh 12.5 –
quantities to meet the projected demand for ethanol depends on Tamil Nadu 8 + 5% SC on ST 1,000
cane production and consequently sugar production and govern- SC: surcharge; ST: sales tax.
Source: MoPNG (2009).
ment policy on use of molasses, etc (70% alcohol for industrial and
potable purpose and 30% of alcohol made available for fuel pur- The approximate demands for biodiesel to satisfy the blending
pose). Lower molasses availability and consequent higher molasses requirements at different rates and for different years are presented
prices affect the cost of production of ethanol, thereby causing dis- in Table 5. The estimates suggests that the demand for biodiesel
ruptions in the supply of ethanol for the EBPP. Due to this, the imple- would be 3.35 million tonnes at the rate of 5% and 6.69 million
mentation of 5% ethanol blending has not yet fully stabilised. tonnes at the rate of 10% Table 5: Projected Demand for Diesel and
blending in 2011-12. OMCs Biodiesel Requirement, India (million tonnes)
(3) Pricing Issue: As regards fixing of the minimum purchase would buy biodiesel at a Year Diesel Demand Diesel Blending Requirement
@ 5% @ 10%
price of ethanol, two years ago, the government and sugar indus- uniform landed price, which
2009-10 60.07 3.00 6.00
try agreed to fix the price of ethanol at the rate of Rs 21.50/litre. is to be reviewed every six
2011-12 66.90 3.35 6.69
However, recent estimates show that, the cost of ethanol production months. At present, the
2016-17 83.58 4.18 8.36
in the country is around Rs 30/litre (Biofuels International 2009). purchase of biodiesel is at 2009-20 111.92 5.60 11.19
The cost estimates arrived at by the authors based on the esti- Rs 26.50 per litre with ef- 2019-20 202.84 10.14 20.28
mates of GoI (2003) also gives similar figures (Appendix, p 72). fect from 22 August 2006. Source: Planning Commission, GoI and TERI.
Economic & Political Weekly EPW December 26, 2009 vol xliv no 52 69
REVIEW OF AGRICULTURE

However, public sector OMC’s has not been able to purchase subject, the responsibility for the promotion of jatropha plantation
biodiesel at the identified purchased centres so far, as the parties rests with the state governments. Biofuel plantation programme is
who have expressed interest are not willing to supply at the in dire need of integrated approach across various states. While,
declared price. Now, jatropha seeds are mainly crushed for oil at the authority for transfer or leasing of government land rests with
village level or small-scale plants for local use or for sale to the the district collector, the nodal agency for processing of application
unorganised sector. differs in each state. The type of land made available for plantation
The availability of land is an important requirement for the also varies across different states (Table 8, p 71).
large-scale national biofuel programme. The present strategy
of the central government is to utilise wastelands for biodiesel Recent Initiatives and R&D on Biofuels
plantations so as not to affect the food security of the country.
Biodiesel plantation on wastelands mainly depends on two fac- Sweet Sorghum for Ethanol: Sweet Sorghum (Sorghum
tors; availability of wastelands and suitability of different agro- bicolor (L) Moench) is a leading crop targeted for bioethanol
ecological regions for biodiesel plantations. GoI (2003), esti- production globally. Ethanol is extracted from the sugar rich-
mated that with appropriate extension and availability of plant- stalks of sweet sorghum thereby leaving the grains for human
ing stocks, it would be possible to cover 13.4 m ha of land with consumption and other uses. Globally, it occupies about 45 m
jatropha curcas so as to meet the 5% blending requirement by ha, Africa and India accounting for about 80% of this. Although
the year 2011-12 (Table 6). sorghum is best known as a grain crop, sweet sorghum is a
An exercise was carried out to assess the required area under close variant used mainly as livestock fodder since its high rate
jatropha plantations for meeting the blending requirements of 5% of photosynthesis produces leafy stalks that make excellent
and 10% set out by the Planning Commission. Since the yield of silage. The stalks are rich in juice, which can be processed into
jatropha is highly variable depending upon the soil type, irrigation sugar, jaggery or distilled to produce ethanol. Therefore, the
status and cultivation practices, area estimates for the yield range juice, grain and bagasse can be used to coproduce a combina-
of 1 tonne/ha to 5 tonnes/ha were arrived at separately. An aver- tion of food, fodder, ethanol and electricity. The resistance to
age biodiesel yield of 0.31 tonne per tonne of jatropha seed is as- drought, saline-alkaline soils, to waterlogging has been proven
sumed under standard conditions of oil extraction and transesteri- by its wide cultivation. The comparative advantage of sweet
fication.1 The calculations suggest that, if the average yield of jat- sorghum with sugar cane is that its growing period is only four
ropha is 3 tonnes/ha, an area of 3.66 million hectres of land is re- months against 12-16 months of sugar cane and water require-
quired for producing 3.35 million tonnes of biodiesel to blend at ment is about four times lesser. The cost of cultivation is also
the rate of 5% by the year 2011-12. By the year 2016-17, this needs about 60% lower than that of sugar cane which makes the eth-
to be expanded to 4.57 million hectares. At 10% of blending the anol produced from it is more cost-effective than that of sugar
corresponding area required by 2016-17 would be 9.14 million cane (Rao and Bantilan 2007).
hectares. However, as the seed yield vary, the area requirement
can vary from 2.20-10.99 million hectares by 2011-12 and from Tree Borne Oilseeds for Biodiesel: The National Oilseeds and
2.74-13.71 million hectares by 2016-17 at 5% blending. The corre- Vegetable Oil Development Board (NOVOD) established a National
sponding range of area requirement for 10% blending would be
4.39-21.94 and 5.48-27.42 million hectares, respectively. Table 7: Area Required for Jatropha Plantations for Meeting the Biodiesel Blending
Targets
However, jatropha plantations are slow to take off due to the Jatropha Seed Biodiesel Yield Jatropha Area (million ha) Required for Blending at
lack of good quality planting materials, ownership issues of com- Yield (Tonnes/ha) (Tonnes/ha) 5% 10%
2011-12 2016-17 2011-12 2016-17
munity or government wastelands and other factors (Kureel 2007).
1 0.31 10.99 13.71 21.94 27.42
So far, nearly five lakh hectares of land in the country is only put
2 0.61 5.49 6.86 10.97 13.71
under jatropha cultivation. Chhattisgarh is leading with around
3 0.92 3.66 4.57 7.31 9.14
0.84 lakh hectares followed by Rajastan (0.33 lakh hectares), Tamil 4 1.22 2.75 3.43 5.49 6.86
Nadu (0.20 lakh hectares) and Andhra Pradesh (0.16 lakh hectares) 5 1.53 2.20 2.74 4.39 5.48
(Gopinathan and Sudhakaran 2009). Agriculture being a state Source: Authors’ calculation

Table 6: Planning Commission Estimates on Potential Land Availability for Jatropha Plantation
Type of Land Total Area Area Estimated for Assumptions
(m ha) Jatropha Plantation (m ha)
Forest cover 69 3 14 m ha of forests are under the scheme of Joint Forest Management out of which
20% would be easily available for jatropha plantation.
Agriculture land 142 3 It is assumed that farmers will like to put a hedge around 30 m ha for protection of
their crops.
Agro-forestry 2 Considerable land is held by absentee landlords who will be attracted to jatropha
plantation as it does not require looking after.
Cultivable fallow lands 24 2.4 10% of the total area is expected to come under jatropha plantation.
Wastelands under Integrated Watershed
Development and other poverty alleviation
programmes of MoRD. 2 –
Public lands along railway tracks, roads and canals 1 –
Source: GoI (2003).

70 December 26, 2009 vol xliv no 52 EPW Economic & Political Weekly
 REVIEW OF AGRICULTURE

Network on Jatropha and Karanja in 2004 by involving Indian In India, nearly 70% of the population live in rural areas and de-
Council of Agricultural Research (ICAR), state agricultural univer- pend on agricultural and related activities to earn their livelihood.
sities (SAU), Council of Scientific and Industrial Research (CSIR), Moreover, in rural India, around 28.3%2 people are still below pov-
Indian Council of Forestry Research and Education (ICFRE), Cen- erty line. Food security continues to be a priority for the Indian gov-
tral Food Technological Research Institute (CFTRI), Indian Insti- ernment in all its developmental efforts. Even though India is food
tute of Technology (IIT, Delhi) and The Energy Research Institute self-sufficient in terms of food production, almost 50% of children
(TERI). Research is mainly focused on issues such as the identifica- and practically the same number of women suffer from protein calo-
tion of elite planting material, tree improvement to develop high rie malnutrition as judged by anthropometric parameters (Bamji
yield varieties (HYVs) with better quality of reliable seed source, 2007). Therefore, any large-scale biofuel programme has to ensure
intercropping trials, developing suitable package of practices, that it does not compromise with the nation’s food and nutritional
post-harvest tools and technology and detoxification of oil meal of security. In an effort to expand the biofuel sector in the country, it
important TBOs. The Central Soil Salinity Research Institute should be ensured that the area under food crops should not be
(CSSRI) under ICAR is conducting field trials on various cultivars of diverted for the purpose. However, utilising unirrigated, barren and
wastelands for growing non-food biofuel crops would
Table 8: Initiatives Taken by the States for Jatropha Plantations
State Nodal Agency Type of Land Made Available
prove fruitful with multiple benefits like greening up of
Rajasthan Department of Agriculture Waste lands and ravine lands
unused lands, creation of employment opportunities,
Andhra Pradesh Department of Rain and Shadow Irrigated and rain-fed lands greater people’s participation, and so on. In this regard,
Area Development there is another point of view that diversion of forest
Tamil Nadu Watershed Development Agency Wastelands and degraded forest lands
and Watershed Development Corporation
and wasteland for cultivation of energy plantations may
Chhattisgarh Biofuel Development Authority Wastelands or ravine lands cause a conflict with pastoral livelihoods. Ambiguity in
Gujarat Agro Industrial Corporation Hilly areas and barren lands land rights is also considered as an issue in develop-
ment of wastelands for biofuel. Therefore, the facts re-
jatropha and pongamia for developing site-specific genotypes that garding such arguments also need to be verified before opting for a
are tolerant to adverse climatic conditions. The Central Research full-fledged expansion of biofuels in the country.
Institute for Dryland Agriculture (CRIDA), another institute under
ICAR is also undertaking studies on genetic diversity, variability Appropriate Technology and Feedstock: Given the current
and other biotechnological studies on jatropha. The department crop yields, feedstock availability and conversion technology, the
of biotechnology (DBT) has initiated a “Micro mission on produc- ethanol production in the country seems to be barely cost-effec-
tion and Demonstration of quality planting material of jatropha” tive. The country has to look for improved technology and man-
with the aim to select good germplasm and develop quality plant- agement practices to bring down costs. Lower plant capacity, use
ing material. TERI has commissioned a social and environmental of batch process technology, inefficient by-product and effluent
impact assessment on Jatropha with respect to its own plantation management practices, etc, are considered as major technologi-
project in Andhra Pradesh. As part of the bioenergy strategy the cal constraints. The long-term technological targets like biotech-
International Crops Research Institute for the Semi-Arid Tropics nological applications to increase sugar content of crops, com-
(ICRISAT) is also promoting non-edible oilseeds for the production mercial use of membranes and microbes for ethanol production,
of biodiesel. Jatropha and pongomia plantations are being intro- etc, should be devised. Even though, direct conversion of sugar
duced in watershed programmes. cane to ethanol yields higher recovery, this would not be a viable
option when weighed against sugar requirement of the country.
Implications of Biofuels on Food Security, Social Welfare At present, ethanol production is totally on sugar cane molasses,
and Environment and there is an urgent requirement to search for alternate feed-
stock to enhance ethanol supply. Sweet sorghum is one option;
Food Security and Poverty: Large-scale programmes for bio- however, concerted research effort should be focused on produc-
fuels based on agricultural feedstocks can have considerable im- ing ethanol from second generation biofuels like lingo-cellulosic
plications for the food and livelihood security of the people of a materials (TERI 2005).
country. The recent debates over rising food prices and the asso-
ciated fallouts as a result of large-scale shift of area from food Socio-economic Development: The promotion of biofuel de-
crops to biofuel feedstock crops have created concerns among velopment is attractive for a country like India because of its po-
the policymakers in both developed and developing countries. tential for creating employment opportunities for the rural poor
This is mainly because the market response of a shift against as well as offering opportunities for promoting local level entre-
food crops at the global level may affect not only the agricultural preneurship and enhancement of women’s participation. The
sector, but other sectors of economy, irrespective of the level of availability of technologies for decentralised production of bio-
participation of a country in biofuel production. Moreover, huge fuels offers opportunities for the development of local level en-
sums of outlays for subsidies on biofuels essentially means a shift trepreneurship. Local institutions like Joint Forest Management
of money away from the poor and vulnerable who end up spend- (JFM) committees, self-help groups (SHGs) and panchayats can
ing more on food due to increased food prices, with little left for play an important role in involving village communities in bio-
energy, even though cheaper. fuel programmes. Locally produced biofuels can provide fuel for
Economic & Political Weekly EPW December 26, 2009 vol xliv no 52 71
REVIEW OF AGRICULTURE

irrigation pumpsets and for electricity generation, which will
improve access to modern energy services to rural population
and help in improving productivity. The potential for engaging
women in raising nurseries and in collection of TBOs could lead
to their enhanced participation in the village economy. As there
are uncertainties over the yields of oilseeds, for which sufficient
field data is not yet available, the financial viability of the bi-
odiesel is yet to be proven. The varied experience in yield levels
and crop management practices have raised some apprehen-
sions among farmers leading to a hesitation for taking up plant-
ing of biofuel crops.
Environmental Sustainability: Scientific studies on the envi-
ronmental sustainability of biofuels have been rather limited in
India. However, it has been established that biodiesel use in vehi-
cles have resulted in reduction in several important air pollut-
ants. It is also proved that biodiesel has a positive energy balance
and life cycle carbon dioxide (CO2) emission from biodiesel is
around 78% lesser than that of conventional diesel (Paramathma
et al 2007). However, in an age when the world is getting increas-
ingly concerned about global warming, comprehensive studies
on the following aspects are extremely important before further
expanding the sector: (1) Cropwise, location-specific impacts on
primary energy consumption and emissions over complete pro-
duction cycle; (2) impact on biodiversity; (3) effects on land and
water resources as a result of change in cropping pattern; and
(4) cost-effectiveness of achieving emission reductions through
biofuels. Also, the potential for India to gain carbon credits under
the Kyoto Protocol’s Clean Development Mechanism (CDM) has
to be verified properly. However, its introduction has a potential
to create new opportunities for biofuel promotion by making it
financially viable.
Conclusions and Policy Suggestions
Currently, India’s position in the global biofuel map is not very promi-
nent. However, the country has ambitious plans to expand the biofuel
sector, though cautiously. Due to various reasons, the development of
the sector has been rather slow and right now the blending targets of
both ethanol and biodiesel look unfeasible at least in the time frame
of the 2017. For the sector to pick up momentum, it is important to
encourage the producers with adequate stimulus packages and
proper price and procurement policies. The decision in 2009 to re-
duce the basic customs duty on biodiesel from 7.5% to 2.5% to make
it at par with petro-diesel is a welcome move in this direction.
An up to date technology policy is central to bring in efficiency
in production which is also cost-effective so that the industry
would survive on its own without any subsidies or support. The
focus on research has to be sustained to explore the feasibility of
environment-friendly and economically sustainable feedstocks.
Research thrust to develop technologies for commercial produc-
tion of second generation biofuels from cellulose-rich biomass
should also go hand in hand. Efforts should also be directed to
promote community participation and entrepreneurship through
greater participation of local institutions in the process of biofuel
development. Above all, it is important to ensure that the national
policy on biofuels is comprehensive and is based on the pillars of
economic viability, technological feasibility, environmental sus-
tainability and market-friendliness. Such a policy should simulta-
neously ensure energy security and environmental sustainability
without compromising food security of the nation.

Notes IEA (2008): World Energy Outlook (Paris: Inter- Rao, P P and M C S Bantilan (2007): “Emerging
1 It is the process of converting the raw oil produced national Energy Agency Publications), p 457. Biofuel Industry: A Case for Pro-Poor Agenda
from the oil seeds to biodiesel. http: //www.fas.usda.gov, accessed on May with Special Reference to India”, ICRISAT
2009. http: //www.ethanolindia.net, accessed Strategic Assessment and Development Path-
2 Poverty estimate based on uniform recall period.
on June 2009. ways for Agriculture in the Semi-Arid Tropics,
Kureel, R S (2007): “Biofuel Scenario in India, IREDA Policy Brief, No 12.
News-Focus: Biofuels”, pp 5-12. Subramanian, K A, S K Singal, M Saxena and
References Mandal R and P Mithra (2004): “Biofuels: Indian S Singhal (2005): “Utilisation of Liquid Bio-
Scenario and Policy Issues”, proceedings of the fuels in Automotive Diesel Engines: An
Bamji, S M (2007): “Nutrition Secure India – How Do
“Inter national Conference on Biofuels: Perspec- Indian Perspective”, Biomass and Bioenergy, 29,
We Get There? Nutrition Conclave Discusses the
tives and Prospects”, organised by Winrock 65-72.
Way Forward”, Current Science, Vol 93 (11),
International India, 16-17 September. TERI (2005): “Liquid Biofuels for Transportation:
December.
Mittal Surabhi (2006): “Structural Shift in Demand India Country Study on Potential and Implica-
Biofuels International (2009): Regional Focus: Biofuels
for Food: India’s Prospects in 2020”, ICRIER tions for Sustainable Agriculture and Energy”,
in Asia, 2(6): 30-32.
Working Paper No 184. Report submitted to German Technical
Deepak, Rajgopal (2008): Rethinking Current Strategies Cooperation.
MoPNG (2009): Ministry of Petroleum and Natural
for Biofuel Production in India, Energy and Resources
Gas, www.petroleum.nic.in, accessed on June UNCTAD (2006): “An Assessment of the Biofuels
Group (Berkley: University of California).
2009. Industry in India” (Geneva: United Nations Con-
Ethanol India (2009): http://www.ethanolindia.net/
Naylor, R, A J Liska, M B Burke, W P Falcon, J C Gaskell, ference on Trade and Development).
ethanol_demand.htm accessed on October 2009.
S D Rozelle and K G Cass-
FAO (2008): “Biofuels: Prospects, Risks and Opportu- Appendix: Economics of Ethanol Production from Molasses in India
man (2007): “The Ripple
nities” in The State of Food and Agriculture (Rome: Effect: Biofuels, Food Item Unit Stand-alone Integrated with Sugar
Food and Agricultural Organisation). Security, and the Environ- Distillery Production
F O Licht (2009): World Ethanol and Biofuels Report, 7 ment”, Environment, 49(9): Cost of molasses Per MT 5,000 5,000
(18): 365, 26 May. 31-43.
FAPRI (2008): World Biofuels in Agricultural Outlook Transportation cost Per MT 150 0
Paramathma, M, P Venkatach-
(Iowa: Food and Agricultural Policy Research alam and A Sampath Raja Total 5,150 5,000
Institute). (2007): “Jatropha Improve- Recovery of ethanol /MT of molasses Litres 220 220
Gopinathan, M C and R Sudhakaran (2009): “Bio- ment, Management and
fuels: Opportunities and Challenges in India”, Production of Biodiesel”, Recovery cost Rs/ litre 23.40 22.72
Invitro Cellular and Developmental Biology-Plant, Centre of Excellence in Direct cost of distillation Rs/ litre 6.69 5.17
45:350-371. Biofuels (Coimbathur:
Finance and other indirect costs Rs/ litre 3.05 2.77
GoI (2003): Report of the Committee on Development Agricultural Engineering
of Biofuels, Planning Commission, Government College and Research Total costs Rs/ litre 33.14 30.66
of India. Institute). Prepared based on GoI (2003). Price of molasses has been revised to present rates.

72 December 26, 2009 vol xliv no 52 EPW Economic & Political Weekly