India, a rapidly developing nation, has experienced an astounding surge in energy demand in recent years, trailing only behind global giants like the United States and China. With daily consumption reaching five million barrels of oil, it comes as no surprise that India’s appetite for energy is insatiable.
India’s rising oil dependency
However, this voracious demand has its consequences. In the fiscal year 2021-22, India imported a staggering 212.2 million tons of crude oil, a significant increase from the previous year’s 196.5 million tonnes, according to the Petroleum Planning and Analysis Cell (PPAC).
This rising dependence on oil imports, now standing at 86.4 per cent for April 2022-23 compared to 85.9 per cent in the previous year, has both economic and environmental ramifications.
The ever-increasing demand for oil has led to rising prices, adversely impacting India’s macroeconomic parameters. As oil imports swell, so does the country’s vulnerability to international price fluctuations and geopolitical disruptions.
However, the concerns extend beyond economics. Carbon emissions, a consequence of burning fossil fuels like oil, have severe environmental and health implications. With the recent geopolitical challenges affecting global supply chains, India’s reliance on oil imports has become even more precarious.
Biofuels: A sustainable solution
One promising solution to reduce India’s dependence on oil imports is biofuels, specifically biodiesel and bioethanol. These renewable energy sources have the potential to make significant strides in curbing carbon emissions, enhancing energy security, and mitigating forex outflows.
Biofuels, particularly bioethanol and biodiesel, have a unique advantage in the fight against carbon emissions. Unlike fossil fuels, biofuels contribute to a net reduction in carbon emissions. During the growth phase of the raw materials used in biofuel production, a substantial amount of CO2 is absorbed, helping to counterbalance the emissions produced during combustion. This aligns with India’s objectives to address climate change and enhance the overall quality of the environment.
Another factor that makes biofuels an attractive option is their compatibility with a wide range of vehicles. Flex Fuel Vehicles (FFVs) are designed to run on various fuel combinations, including 100 per cent ethanol, petrol, or a mix of both, with E85 (85 per cent ethanol and 15 per cent petrol) being a preferred choice.
Biodiesel, on the other hand, blends seamlessly with conventional diesel, typically in ratios like B5 and B20. Even petrol vehicles can accommodate low-level ethanol blends like E10 (10 per cent ethanol and 90 per cent petrol). This versatility encourages a smooth transition to biofuels across different vehicle types, promoting their widespread adoption.
Biofuels also offer economic advantages. Currently, they are priced between 10 per cent to 20 per cent lower than fossil fuels, shielding consumers from the volatility of international fossil fuel prices.
Moreover, biofuels are entirely produced within India, eliminating the vulnerability to forex currency fluctuations that import-dependent fossil fuels face. This stability ensures more predictable and affordable costs for consumers, highlighting the advantages of domestically manufactured biofuels.
The Indian government has shown commitment to reducing oil import dependence and promoting biofuels. Initiatives like the Ethanol Blending Programme (EBP) aim to cut carbon emissions, boost farmers’ incomes, and reduce crude oil imports. Notably, the target for 20 per cent ethanol blending in petrol (E20) has been accelerated to 2025 from the initial target of 2030.
The current regulatory environment in India is favourable for biofuels. Over the last five to six years, policies have mandated the use of biofuels across various industries, driving up demand and adoption.
To further accelerate the adoption of biofuels among petrol consumers, greater transparency is needed in the retailing of biodiesel, bioethanol, and bio-CNG. This transparency will foster increased confidence and facilitate the widespread adoption of biofuels on a larger scale.
As India grapples with its ever-increasing energy demand and the economic and environmental challenges posed by oil imports, biofuels emerge as a viable and sustainable alternative. These renewable energy sources offer economic stability, carbon emission reduction, and flexibility in fuel choices.
Through government initiatives and a favourable regulatory landscape, India has the opportunity to significantly reduce its dependence on oil imports, enhance energy security, and combat climate change. The path to energy independence is clear, and biofuels are the key to unlocking India’s energy future.
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