– By Evandro Gussi , President and CEO of UNICA
During the 2018 World Economic Forum in Davos, India’s Prime Minister Narendra Modi spoke about his country’s ambitious goal of shifting to greener forms of energy as a response to the challenges posed by greenhouse gas emissions and air pollution. India is currently the fourth largest emitter of carbon dioxide (after China, the US, and EU) in the world and has been struggling with poor air quality in its major cities.
The findings of a recent report on air quality suggest that there has been a drop in pollution levels in the world’s major cities during the COVID-19 pandemic. The drop in pollution levels is largely due to low vehicular movement during the lockdown and is, therefore, only temporary. It is likely that pollution levels will rise rapidly once economies open and activities resume as before. The best way to maintain air quality is to use cleaner fuels. Ethanol, when blended in petrol, reduces CO2 emissions and restricts formation of particulate residues compared to pure petrol. We believe that the large-scale use of ethanol blended in petrol is one of the most viable long-term solutions to the problem of greenhouse emissions and air pollution.
Thirty years ago, Brazil’s major large cities were dealing with air quality problems similar to what Indian cities are facing today. However, with the use of ethanol as vehicle fuel (E27 – 27 percent ethanol blend, and E100 – pure ethanol), the air quality showed exponential improvement. The use of ethanol has avoided more than 600 million tons of carbon dioxide emission since 2003 and has sharply reduced the level of air pollution in major Brazilian cities. In fact, while the car fleet in São Paulo has increased by more than 80 percent during this period, the level of particulate matters has reduced by half.
Brazil has 45 years of experience in the large-scale use of ethanol, and is therefore well-placed to complement India’s efforts, backed by the Memorandum of Understanding signed between the two countries during Brazilian President Jair Bolsonaro´s recent visit to Delhi. Brazil’s ethanol program started in 1973 as a response to the oil shock and has resulted in an efficient and sustainable production system, distribution pattern, and consumer market. Currently, all the petrol in Brazil has 27 percent of ethanol blend, and this has yielded major environmental and economic benefits for the country.
The Indian government has, meanwhile, established a target of 10 percent ethanol blend (E10) in petrol by the year 2022 from the current 5 percent blend (E5), and of 20 percent blend (E20) by the year 2030, which will allow for significant reduction in oil imports, carbon dioxide emissions, and air pollutants. India has a good cluster of companies to increase production of ethanol fuel and a solid automotive industry for consumption. It is one of the few countries that, with very little effort, has conditions to immediately adopt a higher ethanol blend.
According to our study, if India implements E10 by 2022 as envisaged, the production of ethanol for blending will have to be increased from the current 2.4 billion liter to around 5 billion liter. The increase in production will substitute for around 10 billion barrels of petrol per year for India. This implies significant savings, considering that India needs to import oil to meet more than 80 percent of its current needs. Having a sound and clear policy regime in terms of pricing, procurement and blending will open doors for necessary investments in production and supply of ethanol.
In Brazil, the use of ethanol has substituted for more than 100 billion litre of petrol consumption in the past 20 years, resulting in savings of around $50 billion. Moreover, ethanol has enabled product diversification for the sugarcane industry and cultivators, reduced the sugar market risks, and provided additional revenue and jobs in the field.
India, like Brazil, is one of the largest sugarcane producers in the world and, therefore, has the potential to become one of the largest ethanol producers too. India’s sugarcane industry needs to divert its surplus crop to produce ethanol, making the prices of both sugar and ethanol competitive. The adoption of E10 in India will be important from the point of view of offering an alternative to nearly 50 million sugarcane producers in the country and reducing dependence on the government’s sugar subsidies.
Ethanol is, in many ways, a low-hanging fruit. As India works towards a sustainable energy transition, substituting fossil for renewable sources, the Brazilian government and its private sector are willing to extend their support. If India gets its public policies right, it could well emerge as the Asian leader in creating a sustainable ethanol market.
