Global Biofuel Alliance: India Takes a Leadership Role

India hosted the G20 summit recently with much enthusiasm and professionalism.

One of the big deals that was signed at the summit was the Global Biofuel Alliance.

In this editorial, we will dig into this agreement and find out how India benefits from this.

Read on...

What is the Global Biofuel Alliance?

Biofuels are fuels from biomass such as animals, plants and algae. These are ethanol biodiesel, green diesel, and biogas. These are among the many renewable energy sources available to the world.

This alliance brings together biofuel producers and consumers to strengthen trade and help nations meet their emission reduction targets and enable their energy transition away from fossil fuels.

It's goals include ensuring energy security, affordability, and access to cleaner fuels. It will also help to raise awareness about the role biofuels plays in reducing greenhouse gas emissions.

The alliance will work to achieve these goals by facilitating global collaboration as well as helping the development of biofuels in member countries. The alliance will also act as a central repository of knowledge and an expert hub.

How Will This Alliance Work?

The Global Biofuels Alliance is an initiative of the G20, specifically 7 member nations - Argentina, Brazil, Canada, India, Italy, South Africa, and the USA.

There are 8 other nations supporting this initiative - Sri Lanka, Kenya, Paraguay, Seychelles, Uganda, Iceland, Finland, and Guyana.

In addition, 12 international organisations are also on board - World Bank, Asian Development Bank, World Economic Forum, World LPG Foundation, UN Energy for All, UNIDO, Biofutures Platform, International Civil Aviation Organization, International Energy Agency, International Energy Forum, International Renewable Energy Agency, and World Biogas Association.

These nations and organisations, along with private biofuel companies, will work together to build biofuel capacity across the value chain in member nations.

They will support each other's national biofuel programs, share learnings from their respective policies, provide technical support to each other, attempt to change public perception about biofuels, and also boost global trade in these fuels.

Ideally, these efforts will promote best practices across the industry in these countries and drive costs lower enabling higher profits. Eventually, the result should be a multi-national ecosystem for biofuels. This should comprise suppliers, tech consultants, biofuel producers, distributors, and consumers.

If successful, this effort would create an international market for biofuels that can benefit many industries. The plan is to create a sustainable biofuel feedstock to match rising global demand. This is to be achieved by converting higher amounts of feedstock into biofuels over time.

This would be a positive for the environment as well as biofuel trade. The global effort would also create thousands of new, well-paying jobs in many nations.

To ensure these goals are realised, the parties involved will work towards developing and implementing international standards and regulations regarding the adoption, development, distribution, and consumption of biofuels.

What is India's Role?

India is one of the leaders of this alliance along with Brazil and the US.

The US and Brazil are the world leaders in the production and consumption of biofuels, mainly ethanol. India has a 3% global market share and is attempting to catch up fast.

India has major central government run biofuel programs, along with many smaller programs at the state and local levels, which will receive a boost due to this initiative. The 3 central government ones are PM JIVAN Yojna, SATAT, and the GOBARdhan scheme.

Also, policies like the ethanol blending program, aims to reach 20% blending of biofuels by 2025. The National Policy on Biofuels promotes the adoption and production of biofuels.

Challenges

As per the International Energy Agency, biofuels provided more than 4% of total transport energy supply in 2022.

However, their deployment is not accelerating fast enough, especially compared to other renewable resources like solar and wind.

Also, more than 80% of total biofuel production occurs in just a few countries, namely Brazil, US, and India. There is massive, unlocked potential in many countries of the world.

Despite all this potential, the development and adoption of biofuels are facing many challenges around the world.

The main challenges are availability of feedstock used to make biofuels, lack of consensus on what sustainable fuels are (some countries don't think biofuels are sustainable like solar and wind), and the pace at which the technology has been commercialised.

These challenges will need to be overcome for the Global Biofuels Alliance to succeed.

Conclusion

We believe Indian has taken the right steps to develop a biofuel ecosystem domestically. It stands to reason that India take a leading role in the same internationally as well.

To achieve success the alliance will need to adopt a long term approach. There won't be many opportunities to make big, short term breakthroughs in the global energy market.

The alliance will have to develop sustainable, long term plans, make sufficient investments, foster innovation, resolve supply chain issues, quickly resolve any disputes, and encourage collaboration.

If successful, this initiative will lead to job creation and significant profits for the private sector.

To know more about the Indian companies that are likely to benefit, read this article - Top 5 Biofuel Stocks to Add to Your Watchlist.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...