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Can second generation ethanol fuel India’s growth?

According to reports, the world’s need for energy is greater than ever before, and it is continuously increasing. India is the world’s 4th largest consumer of energy. It currently imports around 80% of its crude oil. On the other hand, India’s road transport sector is set for robust growth mirroring the country’s GDP. Demand for gasoline and diesel is expected to increase considerably going forward. With international crude prices crossing $ 100 a barrel and our increasing dependence on few countries that produce them, there is a need for focusing on renewable and sustainable energy solutions which can provide the much needed energy security.

In 2008, the Ministry of New & Renewable Energy established a National Policy on Biofuels to limit the country’s future carbon footprint and dependence on foreign crude. Under this, the Government had proposed an ambitious target of 20% ethanol blending by 2017 and laid down a roadmap for the phased implementation of a programme. However, today we are doing less than 3% of ethanol blending with petrol. This could not be achieved mainly due to the shortage of availability of ethanol for transport industry while demand from chemical and beverage industry has been also increasing.
Thus, achieving the proposed target of 20% by 2017 still remains a big challenge and would necessitate the development and use of second generation ethanol going forward.
Second generation or cellulosic ethanol is produced from agricultural residues containing cellulosic biomass – such as the stalks, leaves, bagasse, and husks of rice, wheat, wood chips, sawdust or energy crops.
These agricultural residues contain lignocellulosic fibers, which can be converted into fermentable sugars. Enzymes play a vital role in the conversion of lignocellulosic fibers and leading enzyme manufacturers have been successful in identifying the right enzymes for this conversion process. During the ethanol production process, lignin, a polymer, which burns very well, can also be extracted from biomass. This lignin can be used to produce power to meet the facility’s energy needs and the excess green electricity can be sold to the local grid.
The last decade has seen significant progress in innovation of enzymes for hydrolysis of various biomass advancing from a pilot facility to demonstration facility and today a commercial facility.
Today, world over, countries are shifting to renewable energy source in the biofuels segment. While most of them are currently blending gasoline with ethanol produced from the first generation, governments are progressively supporting and promoting the need for cellulosic ethanol.
Today, the cellulosic ethanol technology has become a reality with the first commercial plant already operational in Northern Italy by Beta Renewables. This plant primarily produces bioethanol from agricultural residues like wheat straw, rice straw and energy crop using enzymatic conversion. Similar facilities are expected to come up in other parts of the world.

The agricultural sector has long been the backbone of India’s economy. It also presents a unique opportunity to develop second generation ethanol industry due to availability of vast agricultural residues. According to the Bloomberg New Energy Finance Report between 125 million and 183 million tonnes of biomass residues will be available annually in India for second generation ethanol conversion by 2020, without changing today’s agricultural land-use patterns or cultivating new energy crops. According to this report, by 2020 the available biomass residue could in theory be converted into between 34 billion and 50 billion litres of second generation ethanol annually.

Cellulosic ethanol industry also has the potential to create jobs, catalyse rural development and reduce CO2 emissions. According to Bloomberg New Energy Finance Report, developing the industry will have the following positive impact:
  • Job creation: Unlocking the Indian biomass potential could create around a million aggregated jobs. These jobs would predominantly be in rural areas, therefore enhancing India’s agricultural sector and providing impetus to inclusive growth.
  • Economic impact: This new industry could generate up to $ 15 billion – $20 billion of annual revenues in India by 2020, and lead to inclusive growth specially in the rural economy
  • Environmental benefits: Second generation ethanol consumption in India could reduce road transport greenhouse gas emissions from fossil gasoline by 47-69%. Furthermore, CO2 and methane emissions would also decrease as biomass residues would no longer be burned or decompose in the field.
One can see positive momentum in India. There are few Government sponsored cellulosic ethanol pilot projects in the country already and few private companies have also announced their plans for initial demonstration plants.
However, much more is needed for this industry to be established in India. While there is positive intent from the Government, stable & coherent policy framework is required to speed up the deployment of second generation biofuels including blending mandates, loan guarantees, private/public co-financing, biomass collection programmes, and infrastructure directed towards end consumers such as pipelines and blending infrastructures.
Some steps that can be considered to fast track the second generation ethanol industry:
  • India’s policy-makers could introduce an India-wide mandate for next-generation ethanol especially given the ongoing debate over first-generation ethanol availability
  • The absence of any incentive to collect agricultural residues and the requisite infrastructure to preserve and transport them hinders the development of a second generation ethanol market in the short term
  • Government support for first movers in the segment as it will certainly be a high investment proposition initially
Thus, while India has the biofuel policy and the resources to implement it, the support and the push from the Government with proactive steps will make the cellulosic ethanol a reality in India in the best interest of the economy and overall development of farmers.

The author is the Regional President – India at Novozymes South Asia Pvt Ltd. He is associated with the company for more than two decades and has been working closely with various industrial biotech segments in developing the industrial enzyme business in India.

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