How biofuels can double farm incomes

  • IASbaba
  • December 30, 2020
  • 0
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Topic: General Studies 2,3:

  • Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
  • Indian Economy and issues relating to planning, mobilization, of resources, growth, development 

How biofuels can double farm incomes

Context: India currently consumes only one-third of the global average consumption of energy. Also, India imports about 84% of our oil and 56% of our gas for domestic use 

As we move towards more robust energy consumption figures, the country faces the unique challenge of the following

  • A ballooning appetite while cutting dependence on imports
  • Greening the grid while ensuring affordability
  • Replacing old forms of energy production while boosting employment.
  • Improving the human and economic capital of the people. 

In the above context, biofuels have become a tool for achieving these delicate balance of outcomes.

  1. Ethanol Blending Programme
  • Objective of Scheme: The aim is to achieve 10% ethanol blending in petrol by 2022 and 20% blending by 2030 — something that will cut down carbon emissions in vehicles.
  • Source for Ethanol Production: The primary raw material for ethanol production in India is sugarcane and its by-products, accounting for more than 90% of fuel ethanol supplies under the ethanol blended petrol (EBP) programme of Union Government. In addition to sugarcane, ethanol is also produced from damaged food grains, B-heavy molasses and sugarcane juice
  • Benefits Sugar Industry: EBP programme injects liquidity into the stressed sugar sector. This programme also encourages diversion of sugarcane for ethanol production, which results in a decrease in the sugar glut in the country.
  • Helps in Doubling Farmers Income: EBP scheme provides an alternative revenue stream to farmers. A sum of nearly Rs 35,000 crore in the past six years has flown back to farmers through sugar mills and distilleries as oil marketing companies (OMCs) provide off-take guarantee at fixed prices. 
  • Improves Payment Cycle for farmers: The arrangement of OMCs providing off-take guarantee at fixed prices also improves the health of the payment cycle to farmers since OMCs settle their ethanol dues to distilleries in 21 days instead of the months that the farmers had to wait for their payment from sugar mills.
  • Alternative Market for Rice produce: The recent decision to utilise surplus rice available with the Food Corporation of India and maize as an additional source of feedstock for ethanol production, starting this year, means farmers will now have an alternative market for their produce.
  • Increased Production indicates India moving in right direction: Ethanol supplies have improved from 380 million litres in 2013-14 to 1.89 billion litres in 2019. Offers of about 3.5 billion litres from both sugar/molasses and grain-based distilleries are expected in 2020-21.
  • Determined Push: In 2019, in a first for the Republic Day parade, the Indian Air Force flew aircraft in a Vic formation, with the lead plane using a mix of traditional fuel and biofuel, symbolising the government’s determination to seek alternative sources of fuel. 
  1. National Policy on Biofuels 
  • Objective: The Policy formulated in 2018 targets 5% blending of biodiesel in diesel by 2030. 
  • Source: The policy encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, used cooking oil and short-gestation crops. 
  • Better land use and increased farmer income: These crops can be easily cultivated in various states on land that is barren or not fit for edible crops, thus leading to efficient land usage and boosting farm incomes.
  • Increased Farmers Income: A total of Rs 1 lakh crore worth of biofuel will be purchased by OMCs every year in the near future for blending. This money will be ploughed back to the rural economy, thus doubling farmers’ incomes. 
  • Increased Production indicates India moving in right direction: Biodiesel procured by OMCs for blending high speed diesel has increased from 11.9 million litres in 2015-16 to 105.5 million litres last year.
  1. Sustainable Alternative Towards Affordable Transportation (SATAT) 
  • Objective: The scheme launched in October 2018 aims to establish an ecosystem for production of compressed biogas (CBG) from various waste biomass sources in the country.
  • Under SATAT, 5000 CBG plants with a total production capacity of 15 million metric tonne per annum (MMTPA), which is equivalent to 54 MMSCMD of gas by 2023, has been planned.
  • Investment Potential: This initiative offers a potential for investment of about Rs 1.75 lakh crore, generating about 75,000 direct employment opportunities.
  • Environmental benefits: The SATAT scheme will not only stanch greenhouse gas emissions, but will reduce burning of agricultural residue, which results in significant air pollution in cities like Delhi
  • Increases Farmer Income: One of the byproducts of CBG plants is biomanure, which can be used in farming. The scheme also generate employment in rural and waste management sectors, and boost income for farmers from their unutilised organic waste.


  • The components of a biofuel supply chain create a circular rural economy that results in substantial environmental, socio-economic and health benefits for communities

Connecting the dots:

  • Paris Climate Deal
  • India’s Strategic Petroleum reserves

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