Economic and Environmental Issues of Biofuels
Authors: Shaikh Mohd Mouzam

Biofuels are renewable liquid fuels extracted from biological raw material and considered to be best substitutes for oil in the transportation sector. As such biofuels like ethanol and biodiesel are getting accepted worldwide as a panacea to environmental issues, energy requirements, employment in rural areas and improving agricultural economy. Ethanol is used as fuel to gasoline. Raw material used for producing ethanol varies from cereals, sugar, molasses to sugar beet in India. About 20 per cent of vehicles in Brazil use ethanol as 100 per cent fuel and in rest of the vehicles 25 per cent blend with gasoline is used as fuel. USA uses 10 per cent ethanol-gasoline blends whereas a 10 per cent blend is used in Australia. Sweden uses 5 per cent ethanol-gasoline blend. Biodiesel is made from vegetable oils (both edible & non-edible) and animal fats through trans-esterification and is a diesel substitute and requires very little or no engine modifications up to 20 per cent blend and minor modification for higher percentage blends. The use of biodiesel results in substantial reduction of un-burnt hydrocarbons, carbon monoxide and particulate matters. It has almost no sulphur.

India is the eighth largest ethanol producer after the United States, Brazil, EU, China, Canada, Thailand and Argentina, its average annual ethanol output amounting to 1.8 billion liters with a distillation capacity of 2.2 billion liters per year. India is not as efficient an ethanol producer compared to the United States and Brazil. For instance, the cost of ethanol production in Brazil is $0.20-$0.30/litre. Brazil is currently the largest exporter of bioethanol and has a large capacity to expand its industry to meet domestic and export targets. The US is the main importer of bioethanol. One of the greatest hurdles to large-scale development of biofuels is their higher production costs compared to conventional fuels. Some research studies proved that biofuels to be twice as costly as conventional fuels. Biofuels generate a new demand for agricultural products. It provides an opportunity for more value-added for agricultural output. Biofuel production can also lead to increase in agricultural employment and livelihoods.

One of the greatest benefits associated with biofuels and main driving force behind worldwide biofuel uptake is because of their vital role in reducing GHG emissions, and hence their potential to help minimise climate change. In addition to reducing GHG emissions, biofuels also have the potential to reduce emissions of key toxic substances associated with standard fuels. Energy crops are unique and mostly differ in terms of their energy efficiency, impacts they have on GHG emissions and other environmental effects, and also on employment creation.


About Author / Additional Info:
Department of Agricultural Economics, University of Agricultural Sciences, GKVK, Bangalore