Fidel fuels a cause

When Nitish Kumar became chief minister of Bihar, one of the key sectors he promised to turn around was sugarcane cultivation. Science and an emerging global consensus on energy security have been good for his cause, and last week his government amended regulations to allow ethanol to be directly made from sugarcane juice. This should accelerate what is already a rapid flow of investment into Bihar in ethanol distilleries. It is not just Bihar, the good news in terms of crop demand and the prospect of job creation impacts vast swathes of land given to sugarcane.

This is why the petroleum ministry must move beyond roadshows for its programme for 5 per cent ethanol blended petroleum. The first concern is pricing. There is little point asking the government to test the new technology8217;s price in the market. Fuel pricing is administered anyway, never mind occasional promises that oil PSUs can set their own price. So ethanol will be 8216;given8217; a price. But let the process be intelligent. Fuel from sugar appears to be the most energy-efficient biofuel. But new research could deliver more optimum blends from bio-waste. Therefore, rushing subsidy to current technology may hinder a switch in case better options are found. Also, with its vast acreages under cultivation, India must look to the export market. That market has been perverted by the huge subsidy given by the US to its producers and the tariff barriers it has put in place. It is in India8217;s interest to make common cause with Latin American producers to have those distortions dismantled.

It must be understood that it is those distortions that are fuelling fears of cereal price increases on account of shifts in cultivation patterns in the US. America8217;s corn-based ethanol is not a good idea, because its production is less energy-efficient than that from sugarcane. So, believe it or not, when Fidel Castro asks for, in a widely publicised piece, cuts in cereal-based biofuels, he has good free market reasons.