Is Bioenergy a Bad Idea?

WRI14_WorkingPaper_4c_WRRIX_012815.pdf_A new study published by the World Resource Institute (WRI) has sparked new debates about bioenergy.  The Report titled, “Avoiding Bioenergy Competition for Food Crops and Land,” show that any dedicated use of land or growing bioenergy inherently comes at the cost of not using that land for growing food or animal feed, or for storing carbon.  Particularly concerning, experts say “Bioenergy, energy derived from any fuel that comes from biomass, is an inefficient use of land to generate energy,” (Searchinger and Heimlich, 2015).  Here’s the problem: India’s growth is driving just this type of energy consumption.

India’s Economy is Expected to Grow

According to the World Bank, India’s economy is expected to grow by about 5.6 percent in Indian fiscal year (IFY) 2014/15 (April-March), an increase over the sub-five percent levels in the previous year.  This would be the strongest among major developing economies between 2013 and 2016.  Importantly, India’s growth, which drives energy consumption across all major sectors, would make India the fourth largest energy consumer, following the United States, China, and Russia (GAIN Report, 2014).

India’s Biofuel Policy 

The Government of India (GOI) approved India’s National Biofuel Policy in 2009.   The policy encourages use of renewable fuel as an alternative to petroleum and proposes to supplement India’s fuel supply with a 20 percent biofuel (i.e. bioethanol and biodiesel) mandate by end of 12th Five-Year Plan (2017).

The salient features of the policy, include: strengthening India’s energy security; farming degraded soils or wastelands not otherwise suited to agriculture; providing financial incentives for feed stocks, conversion processes, production units and innovation; advancing biofuels technologies in the marketplace; and, meeting the energy needs of India’s vast rural population by stimulating rural development and creating employment opportunities and addressing global concerns about containment of carbon emissions through use of environment friendly biofuels (GAIN Report, 2014).

Implications for Domestic Energy Base

Man hauling Sugar Cane in Chandigarh Punjab. Photo taken by Sophia N. Johnson 9 October 2008

First, biofuels are an alternative energy option due to the availability of feedstock crops. Since the sugar industry is one of India’s largest industries, sugar cane and its processing byproduct are widely available for bioethanol production (Chand, Kumar et. al., 2008).

Second, while India’s domestic energy base is substantial, India continues to import significant amounts of energy resources.  In IFY 2006/07, imports of fossil fuels grew at a rate of seven percent, which outpaced consumption growth by three percent.  However, in last three fiscal years, higher petroleum prices led to demand contraction (GAIN Report, 2014).  Currently, coal and oil constitute 66 percent of India’s total primary energy consumption basket.  Natural gas maintains a seven-percent share of the basket, and renewables such as wind, geothermal, solar, hydroelectricity, and waste account for 25 percent of India’s total energy.  Nuclear accounts for a one-percent share.

Third, the biofuel industry could have significant impacts on the health, education, and productivity of the rural poor population in India.  Some anticipate that the biofuel industry will create new jobs for the poorest communities in India because biofuel production requires mostly unskilled labor, which is widely available in rural areas (Chand, Kumar et. al., 2008).

Finally, the poor are unlikely to reap any benefits or additional income from the biofuels industry.  Biofuel production has the potential to cause harm to the rural and urban poor.  The Indian government cited that there were over 30 million hectares of wasteland available for jatropha production around the nation.  The question seems to be, whether biofuels widen or narrow the inequality gap?

The New Delhi Deal

U.S. President Obama and India's PM Modi wave towards the media during a photo opportunity ahead of their meeting at Hyderabad House in New DelhiThe New Delhi Deal initiated by U. S. President Barack Obama and Indian Prime Minister Narendra Modi last week has emboldened India’s economic reform agenda and deepen U.S. – India bilateral relations.  The two countries reached agreement on a series of measures designed to reinvigorate commercial trade, restore the confidence of investors in India’s vast market, and resolve differences over the liability of suppliers to India in the event of a nuclear accident and U.S. demands on tracking the whereabouts of material supplied to the country.

  “Chalein saath saath; forward together we go.”

 – India-U.S. Delhi Declaration of Friendship

Trade and Investment

Under President Obama, trade between the two countries has increased by about 60 percent to nearly $100 billion a year (White House, 2015).  Speaking at a U.S.-India Business Council Summit in New Delhi,  President Obama announced a series of steps that will generate more than $4 billion in trade and investment with India while supporting thousands of jobs in both countries:

  • The Export-Import Bank will commit up to $1 billion in financing to support “Made-in-America” exports to India.
  • OPIC will support lending to small and medium businesses across India that will result in more than $1 billion in loans in underserved rural and urban markets.
  • The U.S. Trade and Development Agency will aim to leverage nearly $2 billion in investments in renewable energy in India.

Climate Change

The President and Prime Minister Modi pledged to enhance U.S.-Indian cooperation on our mutual climate and clean energy goals. The new deal ranged from financing initiatives aimed at helping India use renewable energy to lower carbon intensity.  The progress made on combating climate change, include the U.S.-India Partnership to Advance Clean Energy (PACE) umbrella program and technical work on emerging technologies.

The agreements include:

  • Enhancing bilateral climate change cooperation to achieve a successful and ambition agreement in Paris this year.
  •  Cooperating on Hydro-flurocarbons to make concrete progress in the Montreal Protocol in 2015.
  • Expanding PACE-R, the U.S.-India Joint Clean Energy Research and Development Center, to extend funding for research on solar energy, energy efficiency, and advanced bio-fuels.
  • Launching air quality cooperation to help urban residents reduce their exposure to harmful levels of air pollution.

More than 80% of electricity generation in India comes from fossil fuels and the power sector consumed nearly 70% of the coal the country produced in 2011, according to the International Energy Agency (IEA, 2014).

Human Rights

President Obama addressed an audience of 1,500 at Siri Fort Auditorium in New Delhi on the final day of his trip.  In a pointed message, the President pressed India on the need to address wider social challenges, including human trafficking and slavery, the status of girls and women in society, religious and racial tolerance and the need for programs to empower young people (Baker/Barry, New York Times: 2015)