Biofuel Industry

Biofuel is any fuel that is derived from biomass. It is a renewable source unlike other natural resources, such as petroleum, coal and nuclear fuels.

Overview of the industry
With the prices of crude oil surging up to $ 150 barrel, biofuels have essential role to play in meeting energy needs for India. Most of the energy requirements are at present satisfied by fossil fuels – coal, petroleum based products and natural gas. Domestic production of crude oil can only fulfill 25-30% of national consumption and extensive demand for oil has forced India to depend on other countries for oil. This has increased risk exposure of the country to the high price of the crude oil in the international market.
India started on with its biofuel journey in 2003 with an impressive growth. Ethanol and biodiesel are gaining acceptance worldwide as good substitutes for oil in the transportation sector.
· Ethanol is currently produced in India by the fermentation of sugarcane molasses is an excellent biofuel and can be blended with petrol.
· Likewise, biodiesel which can be manufactured by the transesterification of vegetable oil can be blended with diesel to reduce the consumption of diesel from petroleum.
· Brazil uses pure ethanol in about 20 per cent of their vehicles and a 22 to 26 per cent ethanol-petrol blend in the rest of their vehicles.
· The United States and Australia use a 10 per cent ethanol blend.
· With a normal production rate of 1,900 million litres a year, India is the world’s fourth largest producer of ethanol after Brazil, the United States and China.
· Beginning 1 January 2003, the Government of India mandated the use of a 5 per cent ethanol blend in petrol sold in nine sugarcane producing states. The Government will expand the 5 per cent ethanol mandate to the rest of the country in phased manner.

Biofuels offer a number of environmental, social, and economic advantages, including lower emissions of harmful pollutants; decreased greenhouse gas emissions; increased employment; increased energy security, especially in rural areas; decreased dependence on oil imports; and good fuel properties for vehicles.

Key findings
· Ethanol dominates the world biofuel market and its production is expected to grow at a CAGR of around 6% during 2008-2017.
· Worldwide biodiesel production is expected to grow at a CAGR of over 5% from 2008 to 2017.
· Ethanol production of India is likely to attain a CAGR of slightly over 2% during the period 2008-2017.
· Increased ethanol use is expected to supersede the production during the forecasted period. Domestic ethanol consumption in India is projected to expand at a CAGR of around 6.5% during 2008–2017.
· India’s total biodiesel requirement is projected to grow to 3.6
· Million Metric Tons in 2011-12, with the positive performance of the domestic automobile industry.
· Similar to Brazil and the US, the Indian automobile industry has huge potential for the flex-fuel vehicles.