The Ministry of Petroleum & Natural Gas has given a big push for the ethanol blending programme, and is close to achieving 5% blending at national level
Biodiesel is being promoted world over as a green fuel to mitigate harmful exhaust emissions from diesel vehicles. Besides helping in reducing the air pollution, biodiesel improves lubricity of low sulphur diesel fuels required for meeting Euro III & Euro IV emission norms.
It is safe to handle, as the flash points of biodiesel are higher than the conventional diesel. Blending of biodiesel with diesel would result in the reduction of un-burnt hydrocarbons, carbon monoxide and particulate matter in auto emissions, and will be in line with the objectives of the auto sector.
It is promising to note that the government has taken unprecedented initiatives in the field of biofuels in the last two years. That has enabled the starting of this green industry that was almost written off during the last 10 years. Several policy interventions and clearing of many hurdles in implementation of national blending targets can be achieved by a comprehensive national policy.
The Ministry of Petroleum & Natural Gas (MoP&NG) has given a big push for the ethanol blending programme, and is close to achieving 5% blending at the national level. The biodiesel blending programme, which was started on August 10, 2015, as a pilot in four cities, has now been extended to six states and sold through nearly 3,000 retail outlets in the country within a year. The Railways slowly but surely has started consuming biodiesel across its various zones.
The government is well aware about the potential of biofuel in India. Biodiesel is the most appropriate tool being envisaged to achieve the GHG (greenhouse gas) reduction targets. In order to bring about substantial reduction in emissions, it is essential that biodiesel is made widely available to the common man through the retail outlets of the Oil Marketing Companies (OMCs). The MoP&NG or Railways can only create a conducive marketing environment, but the key taxation issues can only be addressed by a national policy.
Biodiesel: Fueling future
There are several benefits associated with the promotion of biodiesel. If Indian Oil, Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) buy a total of 20 million litres of biodiesel from local manufacturers, it will tremendously help India, which imports 80% of its crude oil, to reduce its oil import bill.
It is heartening to note that the oil ministry is pushing for biodiesel, and has set a target of seven-fold expansion in India’s biofuel market in the next six years. As per the ministry’s estimate, blending 5% of biodiesel with diesel and 10% ethanol with petrol can expand the biofuel market to Rs 50,000 crore by 2022 from about Rs 6,500 crore currently. For this, India would need 6.75 billion litres of biodiesel and 4.5 billion litres of ethanol.
OMCs are at present selling biodiesel in West Bengal, Odisha, Andhra Pradhesh, Telangana, Tamil Nadu and Gujarat, after procuring it from biodiesel manufacturers and blending it.
To tide over the shortage of biodiesel, a policy is needed to assure regular supply of used cooking oils (UCOs) from restaurants, hotels and other food processing industries, as cooking oils have a large share in the production of biodiesel, and can be easily made available. Cooking oil accounts for 18-20% of the total output of biodiesel. The benefits would be two-pronged, as it will be saving the health of the masses since it would be removed from the food chain and used as a feedstock for green fuels.
Also, the national policy could support the oil seed collection in the tribal areas, thereby, creating employment opportunities in the tribal areas. The industry has geared up to deliver three million tonnes of biodiesel by 2019. This will provide half a million direct jobs, and one million jobs to ancillaries. The direct and indirect jobs would be four million.
Challenges
India is at the threshold of rapid scaling of the biofuel programme, and still faces many challenges that need to be addressed. The industry has sought Value Added Tax (VAT) relaxation on blending of biodiesel from states for promoting green fuel blending and energy security in the country.
Currently, VAT on biodiesel blending goes up to 14-30 % in several states, and the industry has warned that if the states do not provide promotional VAT rate on B5 blends, the biodiesel blending in the retail segment would be killed.
The states are required to declare a promotional VAT rate for biodiesel blending. A small levy of 10 paise per litre on High Speed Diesel (HSD) could fund the entire blending programme.
Andhra Pradesh, Telangana, West Bengal, Tamil Nadu and Gujarat are leading biodiesel producing states and these states charge 24 -30% on blending. The Centre provides excise relief for biodiesel blends, that is, once duty paid diesel is blended with biodiesel, no additional duty is required. But none of the states has come forward to offer promotional VAT. This has resulted in biodiesel getting taxed at the rate of 24-30% in the blended form.
The current blending programme is largely supported by the central government. The sector has been demanding a changed National Policy for Biofuels, which will encourage investment and create millions of jobs with overall environmental protection.
UCOs and biodiesel
Used Cooking Oils (UCOs) are a major health concern, resulting in obesity and cancer in masses. There is a need to create awareness about the health hazard. The UCOs could be used as a feedstock to manufacture biodiesel.
There is also a need for a national policy on the UCO that should ensure end traceability for vegetable oils, material balance by all major vegetable oil consumers. UCO sales only to authorised collection agency will ensure UCO elimination from our food chain.
India produces nearly 22 million tonnes of oil and nearly two million tonnes of UCO is available for blending. Imagine a city like Delhi with a large amount of UCO can provide huge scope for blending and this can further enhance biofuel economy. Used oil collection in system in metro cities will certainly offer urban jobs.
{The writer is President of Biodiesel Association of India (BDAI)}
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