Paying more for fuel

Published : Jun 20, 2008 00:00 IST

Jatropha, a plant that can be used to produce bio-diesel, is cultivated on the Karunya University campus in Coimbatore. A file picture.-M. PERIASAMY

Jatropha, a plant that can be used to produce bio-diesel, is cultivated on the Karunya University campus in Coimbatore. A file picture.-M. PERIASAMY

The time has come to act fast to replace, over a reasonable period of time, our dependence on imported crude oil.

THE global oil crisis is not likely to vanish overnight. It will, from the looks of it, be with us for a fairly long time. The strikes and unrest in Nigeria do not look as if they will be resolved soon, and production from that country will continue to be badly affected. The Organisation of the Petroleum Exporting Countries (OPEC) seems to be firm in its decision not to increase oil production, and while the United States has been denouncing OPEC, even threatening to sue it for not increasing production, the U.S. itself has not been setting an example by pumping out more oil.

Meanwhile, sadly, countries like India will literally be paying a very heavy price for this example of international intransigence and blatant self-interest. Petroleum Minister Murli Deora said that the losses of Indian oil marketing companies (OMCs) have crossed Rs.200,000 crore. As of now, the credit line available to them is nearing zero:

Indian Oil Corporation will be able to import crude at the present prices only up to September, and Bharat Petroleum and Hindustan Petroleum are in an even worse situation as their credit lines will run out in June. In 2007-08, the net oil import bill was $63.52 billion, a huge increase from the 2006-07 bill, which was $45.05 billion. And remember, the price of crude oil has more than doubled since the last financial year.

None of the remedial measures being considered at this time will be pleasant to the common man: letting petroleum find its own price level or jacking up its price by Rs.10 to Rs.15 a litre and that of diesel by Rs.5 or reducing import and excise duties on crude oil imports or appropriating a hefty amount out of the windfall profit made by the OMCs from last years crude oil prices is not going to go down well with people when inflation is already virtually out of control, pushing towards 8 per cent and perhaps even higher.

And even if some drastic steps are taken, the basic issue will not have been addressed. India imports 75 per cent of its crude oil requirement, and that figure is, from all accounts, going to go up, given the increase in demand for petroleum and diesel. There is no certainty that extra oils reserves will be located in the areas where the OMCs and other oil public sector undertakings (PSUs) are tied up in exploration with international companies. Our gas reserves are not enough to sustain the increasing demand, and no one can say when the Iran-Pakistan gas pipeline will actually be built, if at all it will be.

What seems to be the only way out of this increasingly alarming crisis is for a concerted effort to be made to look for alternative sources of fuel. Efforts are being made to encourage the growth of plants that will yield biofuels, chief among them being the plant Jatropha curcas, which grows well on wasteland and needs little attention or water.

It is seen as a good source of bio-diesel, and the government has identified 400,000 square kilometres of wasteland out of the 600,000 sq km of wasteland in the country as suitable for cultivating the plant. Businesses are seeing its cultivation as a worthwhile investment opportunity, and it is expected to help thousands of the rural poor who own the land, which hitherto has been of little use.

The government is hoping that by 2011 bio-diesel from jatropha will replace 20 per cent of the diesel used in the country, which is a fairly substantial figure. A number of States have already begun encouraging farmers to cultivate the plant on wastelands, and the State Bank of India has entered into a memorandum of understanding with a private entrepreneur to make available up to Rs.1.3 billion as loans to farmers.

There is a need to identify, on an emergency basis, a plant or plants from which substitutes for petroleum can be derived. It is well known that ethanol from sugarcane is an excellent substitute. Indeed, 50 per cent of the cars and other vehicles in Brazil run on ethanol or a mixture of ethanol and petroleum called gasohol. The government needs to look at this alternative or at second-generation biofuels, where the leaves, stems and stalks of the plant can be used to produce cellulose from which ethanol can be extracted. For instance, agricultural scientists can look for local varieties of what is called switchgrass in the U.S., which is widely considered a good source of cellulose.

There are, of course, the doomsday prophets and the oil lobby, a very powerful lot, who have been mounting a huge worldwide campaign against alternative fuels. The frightening argument that they make is that large-scale cultivation of these plants will lead to an increase in global warming as farmers, particularly in Third World countries, will cut down forests to grow these more profitable plants.

This is a clever but false argument. Most countries, indeed all countries, one can venture to say, realise the perils of depleting their forest reserves, which are, in any case, not in the hands of small farmers. Deforestation is carried out by large companies, as is the case in Indonesia and Brazil, and continues even now. The oil lobbies conveniently choose to ignore that.

The fact is that growing plants such as jatropha, sugarcane, or switchgrass will mean growing plants, and plants release oxygen into the atmosphere and absorb carbon dioxide. If the cultivation of these plants can be carried out under some control, it will actually help reduce the toxic effects of petroleum and diesel. The harmful emissions from petroleum, even after efforts to keep pollution levels down, constitute 75 per cent of the total emission from an internal combustion engine; only 25 per cent is burned up as energy. In contrast, an engine running on ethanol produces virtually no toxic emissions at all.

All factors point to just one thing: it is imperative that overriding priority be given to identifying alternative sources of fuel, primarily biofuel, as other variants such as electricity as a source of energy are not going to be commercially viable propositions in the foreseeable future. On the other hand, the technology to convert plants into ethanol exists, and it has been established that internal combustion engines run just as well on ethanol as on petroleum. One needs to remember that Henry Ford designed and built his Model T car to run on ethanol not petroleum.

There will be enormous pressure exerted on the government by the oil lobby not to proceed, but if we are going to survive as a viable and growing economy, we will have to resist that pressure. The dependence on imported crude oil has always been a source of worry. The time has come to act fast to replace that dependence over a reasonable, but not too long, a period of time.

Incentives can be given, and the money for the switchover can and must be found. In the long run, when our dependence on imported crude oil is either eliminated or significantly reduced, it will have been worth 10 times the investments we make today.

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