Home/ News / India/  Is ethanol the right answer for India’s energy security needs?

New Delhi: While the National Democratic Alliance (NDA) government has been promoting ethanol production for India’s energy security and help meet its climate commitments, the water intensive crops required to produce the green fuel may pose a problem for country’s aim of becoming a $5 trillion economy.

At the heart of the problem is sugarcane production, with 48.84 lakh hectares under cane cultivation in India. This presents a difficult choice before the policy planners and is emblematic of difficult trade-offs that the country faces, caught between its pursuit of becoming a $5 trillion economy and the environment.

Ethanol’s growing importance comes in the backdrop of the Organization of the Petroleum Exporting Countries (Opec)-plus arrangement extending its compact for production cuts at a time of supplies from Iran and Venezuela drying up and tension escalating in the Persian Gulf. Higher oil prices stoke inflation and hurt economic growth in India, whose energy needs are primarily met through imports. Increasing ethanol production will help India save valuable forex reserves, given that the country is the world’s third largest oil importer and imports more than 80% of its oil requirements and around 18% of the natural gas it needs.

However, this comes in the backdrop of as many as 1,592 blocks in 256 districts facing acute water crisis and have reported over-exploitation of groundwater. India’s most water-stressed blocks are in Tamil Nadu (541), followed by Rajasthan (218), Uttar Pradesh (139) and Telangana (137), with several states reeling from drought-like conditions.

Experts believe that higher ground water usage for sugarcane production presents a clear and present danger given the huge political constituency build around it. Consequently, months before Maharashtra and Haryana, which are among the top cane producing states, go to polls, the NDA government came up with a string of measures to help counter the surplus sugar stock’s impact on prices. The move is aimed at helping farmers, a politically sensitive constituent that the NDA government is seeking to connect through various policy interventions.

Experts believe that a fine balance needs to be maintained between India’s energy security needs and climate change concerns.

“If we have to resolve the water crisis, then there is a general consensus that sugar production will have to come down gradually. It consumes disproportionately high amount of water in a relatively small piece of land. Rather farmers should be incentivized to produce less water intensive crops. There has to be a fine balance between water, air quality, import substitution and farmers' income and the government must look at it very comprehensively," said Chandra Bhushan, Deputy Director of Centre for Science and Environment (CSE), New Delhi.

Also, the focus on ethanol will help reduce pollution and strengthen India’s resolve towards fulfilling its COP-21, the UN Climate Conference commitments. The blending of ethanol with petrol had increased four times since 2014 and the aim was to increase it to 10%. Ethanol blending in petrol increased from 38 crore litres in 2013-14 to around 141 crore litres in 2017-18.

Prime Minister Narendra Modi had in March 2015 set a target of lowering import dependence in oil by 10 percentage points to 67% by 2022, when the country will celebrate 75 years of Independence. To meet such an ambitious target, ethanol holds the key.

However, with the water table declining in the country, policy think-tank Niti Aayog said in a report that nearly 600 million Indians already face “high to extreme water stress." It said 21 cities, including Delhi, Bengaluru, Chennai and Hyderabad, will run out of groundwater by 2020, affecting 100 million people. Matters are only likely to worsen with the country’s water demand likely to double by 2030, indicating there will be a 6% loss in gross domestic product by 2050.

This comes against the backdrop of India using only around 6% of the world’s primary energy despite it having 18% of the world’s population.

Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Updated: 04 Sep 2019, 08:26 AM IST
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