Principal energy advisor to the government Surya P Sethi in a recent paperSustainable Policy Framework for Bio-fuelssaid I with all the humility at my command, must state my fundamental objection to direct input subsidies and interventions by the government in markets through the proposed National Bio-Fuel Board.
The new and renewable energy ministry has suggested setting up of a National Bio-fuel Development Board (NBDB) and formulation of a national bio-fuel policy. The NBDB would determine the minimum support prices (MSPs) for bio-fuel crops like jatropha, karanja seeds and oil-bearing materials. It also suggested that the government render financial support to oil processors for a period of five years. On the other hand, the rural development ministry has demanded a gross budgetary support of Rs 1,340 crore for five years to set up a national mission on bio-diesel and the launch of its first demonstration phase of jatropha cultivation in 4,00,000 hectares.
Sethis remarks comes at a time when a GoM headed by Union agriculture minister Sharad Pawar is deliberating on the demands made by two rival ministries.
Sethi suggested that bio-energy be pursued as a domestically available energy and chemical feedstock option. This objective must not be diluted by a desire to meet other legitimate objectives like raising rural income and employment, creating another cash crop based on MSP and promoting renewables. Even any climate dividend should be treated as a bonus. The government should not distort markets by mandating blending, restricting rights to direct marketing of bio-fuels, imposing ad-hoc and differential taxes and duties on inputs and restricting import or movement of bio-fuels. Any taxes that should be imposed should be on outputs rather than inputs. There should be only output-based incentives. R&D outlays should be allowed as a deduction from taxes due and this incentive should be made tradable, he said.
According to Sethi Green Energy are not always green. The total lifecycle emission of 5 major pollutants (carbon dioxide, volatile organic compounds, PM10, Sox and Nox) are higher with corn-based ethanol (E85) compared to gasoline. However in India sugarcane-based ethanol has an overall negative energy balance when all energy inputs are considered. Sweet Sorghum based ethanol, bio-diesel, cellolosic ethanol, farm and animal waste and wood plantations come out progressively greener, he said. Sethi is against compromising food security at the expense of bio-fuel programme.