Karnataka India - India's southwestern state of Karnataka has produced a draft biofuel policy suggesting legislation to mandate the use of the green fuels both in the transport and industrial sector. The policy projects major social and economic benefits to emerge for the state's predominantly rural population, especially its sugarcane farmers who face a crisis.

The document was prepared by a subcommittee of experts constituted by the Agriculture Department and as a first step proposed the mandatory use of biofuel in all state-owned vehicles, including those of public sector undertakings. It further recommends a mandate for the use of bioenergy in stationary applications, including power stations and generators of the industrial sector.

The draft policy wants Karnataka to follow the Union Government’s target of blending 5 per cent biofuel with fossil fuel next year, thereafter progressively stepping it up to 10 per cent by 2015, 15 per cent by 2020 and ultimately to 20 per cent by 2025.

Biofuel expert Balakrishna Gowda, member of the subcommittee, said the biofuel sector will provide supplementary incomes to farmers, especially sugarcane growers, who are in dire straits owing to the crash in prices of various agricultural produce. While first generation biodiesel is produced from the seeds of neem, jatropa, honge and other oilseed bearing species, ethanol will be produced from sugarcane, sweet sorghum and other sugar and starch-rich crops. Later on, cellulosic biomass will be the feedstock for advanced biofuels.

Karnataka is one of India's key sugarcane growing areas (map, click to enlarge), with over 300,000 hectares dedicated to the crop and over 40 sugar factories in operation. However, despite a record global output in sugarcane ethanol, world sugar prices have declined over the past year, affecting millions of farmers across the country (here, here and here). In October, Karnataka's farmers joined their collegues from across the nation in pressuring the government into mandating biofuels, to take the sugar industry out of its crisis (here).

Both national and state governments responded positively and see the biofuels sector as an opportunity to alleviate rural poverty and economic insecurity. Members of Karnataka's subcommittee on biofuels project the following numbers to apply to the sector as it would emerge in the state once the policy comes into force:

500,000 hectares of unused farmland land suitable for energy crops and trees would be devoted to bioenergy

biofuels and bioenergy would provide 200,000,000 - 250,000,000 rupees (€3.5/$5m - €4.37/$6.35) of net annual income for each of the state's 29 districts, or a total of €100-127 / $145-184 million.

the bioenergy sector would offer additional employment for 15 to 60 days a year in rural areas; roughly 66% of Karnataka's 53 million inhabitants live in rural areas, wih 56% of the state's workforce employed in agriculture

with an estimated poverty ratio of 25% and much of this due to hidden rural unemployment, the biofuels industry is set to play a key role in alleviating rural poverty

To achieve the social benefits of biofuels, the draft policy recommends the creation of oil extraction units at the village, taluk and district-levels, including those managed by the community at panchayats besides promoting small scale extraction units at home-level. To encourage the biofuel production, the draft policy has recommended tax holidays and various incentives besides remunerative prices.

Laying emphasis on the marketing network, the committee also recommends establishing a cooperative market system on the lines of milk unions with assured price and purchase policy. Plans are also afoot to derive carbon trading benefits from this eco-friendly activity: