What would it take to hop on alternative fuels bandwagon?

Bio fuel is the most promising development in alternative fuel technologies

Pollution is undoubtedly one of the most pressing problems today. Even the new year which normally commences with the wishes of ‘Happy New Year’ has begun with the debate on the odd-even formula initiated by the Delhi Government. While everyone is agreeing that the pollution levels should come down to acceptable levels, if not zero– the puzzling aspect is that nobody knows how to achieve it exactly, especially for a remarkably dynamic country as India. At least there is no agreement on what is to be done due to lack of information or institutional barriers at times.

Arguably, major sources of air pollution with increasing times have been the conventional fuels, especially diesel, which is the primary fuel for commercial vehicles and has increasingly been taking petrol’s share in personal vehicles too. The problem is compounded by the fact that it is used as the fuel for power back up as well, thanks to erratic power supply in urban India. It is no hidden fact that India’s energy demands have ever been on the increasing side over the years. Currently, India stands at fourth rank globally in annual energy consumption after China, USA and Russia. And everything seems justified given India’s large demographic pressure and unending resource demands. But the disturbing fact is that there is a huge and larger dependence on conventional fuels only, which exists as limited stock in nature. Moreover, with dwindling supplies, petroleum prices would soar higher in coming times. It is worth mentioning the peak oil concept here, which emerged through M. King Hubberts’ theory worldwide. It suggests that rate of extraction of petroleum cannot continue forever and after a certain maximum extraction stage (‘the peak point’) it will eventually decline. Hence, even if mitigation efforts like fuel conservation, in line with the peak oil concept are followed, it may be useful only for extending the use of petroleum but not in reducing its consumption.

In this regard, alternative fuels or non-conventional/ advanced fuels can solve the problems caused by conventional fuels. Alternative fuels not only produce lesser pollution but most importantly they are renewable or at least quasi-renewable unlike conventional fuels. For a naturally gifted country like India in the sense of having such huge reserves of natural resources- like the potential for wind and solar energy, not utilizing them till full potential and capacity is like leaving an essential asset unexplored. Given India’s huge population, finite conventional fuels and unending demands, it’s high time for India to develop its own alternative fuels’ story. Apart from concern of pollution, water stress, other factors to opt for developing alternative fuels in India are- ever increasing energy demand in the automobile sector; unsustainable extraction of fossil fuels; lack of clear regulations and conformity among countries for emission norms; and the alarming oil import bills, enough to fixate the macroeconomic focus only on solving fiscal deficits’ problem than focusing on environmental concerns.

Present scenario

As many might imagine the case, India’s thinking for alternative fuels is not something new. It has been proactive in suggesting for alternative fuels off late. But the question is, why are we still not leaving our over dependence on conventional fuels even after all the awareness?

At present, Indian government is following the Bharat stage (BS) emission standards for pollution control and regulation which are based on European norms and standards. At present, BS-IV stage is being followed since 2010, and it is believed that Indian Government is directly planning to skip Euro-V (i.e. BS-V) and switch to Euro-VI straight, by 2020.

Some of the major alternative fuels which are currently being thought in India are- ethanol (Oil companies in India has already commenced supplying Ethanol blended fuel); Natural Gas; Hydrogen; Propane; Bio-diesel; Methanol; P-series fuel.

Admittedly, with the BJP government in power since 2014, the steps taken in the needed direction deserve an appreciative note. The push given to clean energy through the “Saffron (solar) revolution” and remarkable targets such as, to increase solar energy capacity from current 2.5 Giga watt (GW) to over 100 GW by 2022 and wind energy from 26 GW to 50GW by 2030, are surely positive signal for alternative fuels’ development. One cannot comment upon the attainability of these targets at present, but at least the fact that clean, renewable energy development is high on Indian government’s agenda is quite reassuring for the upcoming generations.

Challenges with alternative fuels

At least 70 per cent of India’s electricity generation capacity is from fossil fuels. As per the International Energy Agency (IEA)’s projections through the World Economic Outlook 2015, Coal would continue to dominate India’s energy mix till 2040 if no major policies are formulated against coal; India’s oil demand would rise by 6.0 million barrels (mb) per day to 9.8 mb /day in 2040 and oil import dependence would reach from 78 per cent today to about 90 per cent by 2040, pushing the production or supply of oil way behind it’s demand.

Some of the major challenges faced while developing and working with alternative fuels are- inordinately high initial or capital cost, lack of information and awareness about the potential and the techniques of using renewable and alternative fuels technologies, market failure in the form of inadequate valuation of public benefits of alternative fuels and market barriers like lack of access to capital. These challenges are felt especially in developing countries like India.

Finally, India’s alternative fuels development trajectory seems to face the ‘chicken and egg problem’ hurdle too. Who should be blamed is not clear. While the private sector is found as less investing in this arena due to expensive investments involved and uncertainty of profitability and positive returns, the common people also do not have huge demand for alternative fuels, for instance, a hydrogen fuel car, in the first place, and naturally so, because of very high price differential over conventional fuel car. With not much demand, there is no ‘popularity’, in the form of enough aggregate demand to have hydrogen fuel stations. Hence, how can we expect the private sector to invest in alternative fuels without any long run or higher security in investments?

What would it take to make the switch?

The most important thing needed to successfully have alternative fuels in India is undoubtedly the availability of a proven efficient alternative fuel technology. This is where India should explore as much as possible; get assistance from the developed countries too and by efficiency, it is important to meet both technical and productive efficiency, in terms of minimization of the huge costs involved in alternative fuels.

Secondly, industries must resolve to ‘go-green’ with using agricultural waste (also called “agro waste”) as alternative fuels. Agro wastes have indeed emerged as successful initiatives worldwide for industries which adopted them. Government must also step forward proactively as- providing funds to the corporations for stimulating markets for alternative fuels, to solve market failure problems.

Thirdly, there is an eminent need for periodical cost benefit analysis to be able to move towards Euro-V and Euro-VI norms, given due consideration to be given to the costs in the process. Within that shift, low-cost finance and access to cheap zero (and low) emission technologies has to be continuously explored by the Indian government; industries which directly and indirectly invest in clean energy technologies, must be incentivized.

Finally, to reach a bandwagon-type usage stage of alternative fuels in any country, surely it can’t be attained as a ‘one-time’ stunt. It has to be gradual transformation from conventional to alternative fuels’ usage. There must be a confidence in the process and this confidence has to emerge from awareness among people about positives in using alternative fuels, knowledge about global warming, pollution causes and harmful effects to be known across people whether in urban or rural communities. For instance, the fact that walking, public transport, car pooling are some of the best methods to combat the issue of pollution due to vehicular movements should be publicized as much as possible.

India’s situation with alternative fuels is akin to what Kenneth Boulding, a well-acclaimed economist has recently argued on ideology of conservationists versus technologists: conservationists would always lament over the sad plight of scarce resources which will inevitably get depleted a day and human beings, with their unending demands, can never solve the resource crisis problem. But the technologists would take this crisis as an ‘opportunity’ value man’s potential as “jackpot” if the necessary plan, technology and determination are present.

Fortunately, in India’s case, the challenge itself is the gateway to solve the present problems ranging from pollution to energy crisis. It’s not the case that nothing has been done towards using alternative fuels. But the challenges must be gradually fully met. In the end, it is really the mindset and the behavior of each one of us that will define whether we can successfully hop on the alternative fuel bandwagon. The importance of the need to reduce the dependence on conventional fuels for treading the path of sustainable development for India has to move from paper to action.

Shobhna Jha | The author is pursuing Masters in Economics from TERI University, New Delhi