Juggling Renewable Pledge Amidst Ethanol Quandary
Posted by admin on 2024-02-02 |
Many
countries, including India, pledged to triple global renewable energy capacity
by 2030 at COP28 in Dubai. However, India faces challenges in meeting its
ethanol blending target due to low sugar stocks and a potential shortfall in
sugarcane production. The government aims to transition to grains-based
ethanol, particularly maize, to achieve the 20% blending target by 2025. This
move, while supporting an organized maize-feed supply chain, may pose economic
challenges.
Ethanol production relies on feedstocks like
sugarcane and corn, with their prices linked to crude oil prices. Using corn
for ethanol directly impacts its use as food or livestock feed, creating a
food-fuel conflict. High crude oil prices from 2004 to 2014 elevated ethanol
and corn prices, contributing to the 2006-14 global food crisis. The strong
link between crude and food prices persists in the era of agro fuels, with
post-pandemic oil price recovery leading to increased food prices in 2021.
Unlike the U.S., where corn is used, tropical
countries like India prefer sugarcane due to higher yields. However, India's
differential pricing incentivized using cane juice for ethanol production,
causing reduced sugar stocks. To address this, the government banned the use of
cane juice for ethanol production in December 2023. Yet, the shift to
grains-based ethanol, especially maize, raises concerns about potential
uncontrollable food inflation, as India needs a significant quantity of grains
to meet the 2025 ethanol blending target.
The future of India's renewable strategy
depends on navigating the delicate food-fuel trade-off. The government must
decide between reconsidering the ethanol blending target or investing more in
public infrastructure, urban design to reduce automobile fuel demand, and
renewable like solar power.
