Vagish Sharma and Keshav C Das
Clean Trade Group, LLC
906, Hemkunt Chambers
89 Nehru Place, New Delhi-110019, India


Despite the abrupt emergence of biofuels, little is known about how they will affect human wellbeing – especially the welfare of the most vulnerable groups, such as the poor populations. In order to understand the pathways of impact through which biofuels ultimately affects human well-being, a well-framed and theoretically-consistent quantitative framework is needed, which accounts for both market-level interactions, as well as micro-level adjustments to shocks that imposed on local economies as well as to eradicate the generally conceived conflict between ‘Fuel verses Food’ controversy.
The present study has attempted to derive a market driven mechanism to biofuel proliferation in Haryana, a state of India; under the sectoral scope of Land Use, Land Use Change and Forestry [LULUCF] of Clean Development Mechanism [CDM], which could be implemented under the Article 12 of Kyoto Protocol to sustainable development and equitable development of poverty driven population of agrarian societies. The paper has highlighted that the degraded and waste lands of marginal or progressive farmers would be planted under biofuel crops, Viz., Jatropha sp. and Pongomia sp., which could have been left ‘unutilized’ without this CDM intervention. The opportunity cost of these lands would be zero and farmers would be obtaining carbon revenue through this plantation activity. Eventually, the lands would be converted to fertile stage, through the soil reclamation practices under the biofuel plantation activities, and farmers could use it for conventional agriculture practices. The resultant of this approach would be poverty alleviation and income generation of the marginal and small farmers. The paper has also established through correlation and regression analysis that with biofuel cultivation soil fertility could be enhanced and there is a positive correlation between poverty alleviation and CDM based biofuel planation activities. The paper also establishes that under CDM- ‘Food verses Fuel’ notion is a myth.

1: Introduction:

Despite the abrupt emergence of biofuels, little is known about how they will directly and indirectly affect human wellbeing – especially the welfare of the most vulnerable groups, such as the poor populations in under developed and developing countries. There has been a body of literature that has tried to ascribe the rise of the world food prices to biofuels, among other factors , , , – but much of that attribution is tenous, and has been questioned by some authors . In order to understand the pathways of impact through which biofuels ultimately affects human well-being, a well-framed and theoretically-consistent framework is needed, which accounts for both market-level interactions, as well as micro-level adjustments to shocks that imposed on local economies as well as to eradicate the generally conceived conflict between ‘Fuel verses Food’ controversy.

Such a framework would have to model the demand for energy and how biofuel-related policies translate the demand for fossil fuel [diesel] into ethanol and biodiesel. The human well-being impacts will mostly arise from the market-level effects that are caused by the growth of biofuels – such as the change in the employment pattern, prices of labor (i.e. wages) – whereas the environmental effects will arise from changes in land use and the use change. At the same length, it will be useful to examine the aforesaid cases in the domain of Clean Development Mechanism [CDM], which allows proliferating the biofuel plantation and production in the waste and degraded lands, which does not impact on the fertile agricultural lands, as well as it eventually nullifies the conflict between ‘agricultural crops’ and ‘biofuel crops’.

2: Energy Demand in India:

Energy is the prime mover of economic growth and is vital to the sustenance of a modern economy. Future economic growth crucially depends on the long-term availability of energy from sources that are affordable, accessible and environmentally friendly. India ranks sixth in the world in total energy consumption and needs to accelerate the development of the sector to meet its growth aspirations. The country, though rich in coal and abundantly endowed with renewable energy in the form of solar, wind, hydro and bio-energy has very small hydrocarbon reserves (0.4% of the world’s reserve). India, like many other developing countries, is a net importer of energy, more than 25 percent of primary energy needs being met through imports mainly in the form of crude oil and natural gas. The rising oil import bill has been the focus of serious concerns due to the pressure it has placed on scarce foreign exchange resources and is also largely responsible for energy supply shortages. The sub-optimal consumption of commercial energy adversely affects the productive sectors, which in turn hampers economic growth .

If we look at the pattern of energy production, coal and oil account for 54 percent and 34 percent respectively with natural gas, hydro and nuclear contributing to the balance. In the power generation front, nearly 62 percent of power generation is from coal fired thermal power plants and 70 percent of the coal produced every year in India has been used for thermal generation .

The distribution of primary commercial energy resources in India is quite skewed. 70 percent of the total hydro potential is located in the Northern and Northeastern regions, whereas the Eastern region accounts for nearly 70 percent of the total coal reserves in the country. The Southern region, which has only 6 percent of the total coal reserves and 10 percent of the total hydro potential, has most of the lignite deposits occurring in the country . On the consumption front, the industrial sector in India is a major energy user accounting for about 52 percent of commercial energy consumption. Per capita energy consumption in India is one of the lowest in the world as shown in Fig. 1. But, energy intensity, which is energy consumption per unit of GDP, is one of the highest in comparison to other developed and developing countries . For example, it is 3.7 times that of Japan, 1.55 times that of the United States, 1.47 times that of Asia and 1.5 times that of the world average. Thus, there is a huge scope for exploring alternative means for creating energy independency, and in that front, renewable sources of energy is an immediately available avenue.

Figure: 1: Per capita energy consumption [Source: CMIE ]

3: Bioenergy in India:

India is facing an acute energy scarcity which is hampering its industrial growth and economic progress. Setting up of new power plants is inevitably dependent on import of highly volatile fossil fuels. Thus, it is essential to tackle the energy crisis through judicious utilization of abundant the renewable energy resources, such as biomass energy, solar energy, wind energy and geothermal energy. Apart from augmenting the energy supply, renewable resources will help India in mitigating climate change. India is heavily dependent on fossil fuels for its energy needs. Most of the power generation is carried out by coal and mineral oil-based power plants which contribute heavily to greenhouse gases emission.

Bioenergy can play a major role in reducing India’s reliance on fossil fuels by making use of thermo-chemical conversion technologies. In addition, the increased utilization of biofuel will be instrumental in safeguarding the environment, creating new job opportunities, sustainable development and health improvements in rural areas. Biomass energy could also aid in modernizing the agricultural economy. A large amount of energy is expended in the cultivation and processing of crops like sugarcane, food grains, vegetables and fruits which can be recovered by utilizing energy-rich residues for energy production. The integration of biomass-fuelled gasifies and coal-fired energy generation would be advantageous in terms of improved flexibility in response to fluctuations in biomass availability with lower investment costs.

The share of Bioenergy in primary energy consumption in India is still astonishingly high even through a sharp downward trend is visible in the recent years. One estimate places this share at 26% of the total primary energy consumption in 1997, very high compared to most developed countries since rural India still sources much of its energy from fuel wood, crops residues, animal and human power and cattle waste. This high level of traditional use of biomass is, however, indicative of low quality of life since the higher dependence on Bioenergy in rural areas is on account of lack of access to modern energy forms rather than a matter of choice and has severe health consequences for women and children. However, the recent development in the Bioenergy sector is impressive in India, which has been discussed below.

4: Perspective of Biofuel in India:

Biofuels are going to play an extremely important role in meeting India’s energy needs. The country’s energy demand is expected to grow at an annual rate of 4.8 per cent over the next couple of decades. Most of the energy requirements are currently satisfied by fossil fuels – coal, petroleum-based products and natural gas. Domestic production of crude oil can only fulfill 25-30 per cent of national consumption. In fact, the crude oil imports are expected to total 147 million tons (Mt) in 2006-2007 . With the ever-escalating crude oil prices, if one assumes a price of $57/barrel ($420/ton), the estimated crude oil import bill for 2006-2007 would be $61.74 billion, about 10 per cent of the country’s Gross Domestic Product.

Ethanol, 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. Ethanol and biodiesel are gaining acceptance worldwide as good substitutes for oil in the transportation sector. 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 country in a phased manner.

The Government of India has developed an ambitious National Biodiesel Mission to meet 20 per cent of the country’s diesel requirements by 2011-2012. Since the demand for edible vegetable oil exceeds supply, the Government decided to use non-edible oil from Jatropha Curcas oilseeds as biodiesel feedstock. Extensive research has shown that Jatropha Curcas offers the following advantages: it requires low water and fertilizer for cultivation, not browsed by cattle or sheep, pest resistant, easy propagation, high seed yield and ability to produce high protein manure. The National Biodiesel Mission has been implemented in two stages: 1) a demonstration project carried out between 2003-2007; which cultivates 400,000 hectares of land and yields about 3.75 tons oilseed per hectare annually. The expected annual biodiesel production from the project is 1.2 t/ha/year for a total of 480,000 tons per annum. The Government will build a transesterification plant with a biodiesel production capacity of 80,000 t/year as part of the demonstration project; and 2) a commercialization period from 2007-2012 will continue Jatropha cultivation and install more transesterification plants which will position India to meet 20 per cent of its diesel needs through biodiesel.
An economic analysis indicates that ethanol from sugarcane and biodiesel from Jatropha Curcas can be manufactured at under Rs. 21/litre ($0.47/litre at an exchange rate of Rs 45/$). Current production cost of petrol and diesel from crude is $0.46/litre, and with crude oil prices on an upward swing, the production costs of ethanol and biodiesel compare favourably with those of petrol and diesel.

The following table shows the projected demand for petrol and diesel and the amount of ethanol and biodiesel required for 5, 10, and 20 per cent blending.

The above demands are based on estimated growth rates of 7.3 and 5.6 per cent for petrol and diesel, respectively, in the 10th plan (2001-2002 to 2006-2007), 5.0 and 5.0 per cent in the 11th plan (2006-2007 to 2011-2012) and 5.0 and 4.5 per cent in the 12th plan (2011-2012 to 2016-2017).

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.

Our analysis indicates that while India has an ethanol distillation capacity of 2,900 million litres/year, sufficient to meet 5 per cent ethanol blending requirements, domestic sugarcane molasses might not represent a reliable feedstock, given the vagaries of the sugar industry and the dependence of sugarcane cultivation on monsoons. For instance in 2003-2004, the sugar output dropped to 15 Mt, molasses production sunk to 6.75 Mt, and the ethanol manufacturing level decreased to 1,518 million litres . This caused India to import ethanol and molasses in 2003-2004. In addition to more efficient agricultural practices for improved sugarcane yield, crops like sweet sorghum and tropical sugar beet represent attractive alternate feedstock for ethanol. New exciting technologies like enzymatic fermentation of cellulose will, in the near future, enable ethanol to be manufactured at competitive prices from cheap, easily available material like wood and crop residue. In the meantime, ethanol imports can be used to satisfy some of India’s ethanol demand, especially for 10 and 20 per cent ethanol blending. Brazil exported about 2 billion litres in 2004-2005, and other countries like Thailand, Mexico and Cuba are increasing production. Molasses imports from agro-industries in Asia can also augment India’s ethanol production.
In the biodiesel sector, India has taken the initial steps toward commercial production. The work accomplished so far includes developing high-yielding varieties of Jatropha and Pongamia, initiating nurseries, setting up pilot-plants for biodiesel manufacture and testing biodiesel in public transport locomotives and buses. Phase I of the National Biodiesel Mission seeks to demonstrate the viability of all aspects of successful biodiesel manufacturing enterprise.

The amount of land available for Jatropha cultivation is estimated at 13.4 million hectares, which could potentially yield 15 Mt/year of Jatropha oil. New infrastructure for seed collection, oil extraction, transesterification, biodiesel storage, blending with diesel and marketing is needed. But more importantly, large-scale cultivation of Jatropha must be established before biodiesel production can meet even a 5 per cent blending requirement nationally.

The lack of assured supplies of vegetable oil feedstock has stymied efforts by the private sector to set up biodiesel plants in India. Because difficulties procuring oilseeds and lack of developed infrastructure may obstruct substantial biodiesel production by 2011-2012, importing biodiesel may become necessary, especially if the price of crude oil continues to rise. Europe and the United States are rapidly increasing production, but their biodiesel is mainly earmarked for domestic consumption. India’s biodiesel imports would probably come from developing countries.

5: Feedstock for India’s biodiesel

Biodiesel is typically made from vegetable oil though animal fat can also be used. Rapeseed oil has 82 per cent of the share of the world’s biodiesel feedstock, followed by sunflower oil (10 per cent), soybean (5 per cent) and palm oil (3 per cent). The choice of feed is country specific and depends on availability. The United States uses soybean, Europe rapeseed and sunflower, Canada canola, Japan animal fat and Malaysia palm oil. In India, non-edible oil is most suitable as biodiesel feedstock since the demand for edible oil exceeds the domestic supply.

It is estimated that the potential availability of such oils in India amounts to about 1 million tons per year; the most abundant oil sources are sal oil (180,000 t), mahua (180,000 t), neem oil (100,000 t) and Pongamia Pinnata, also known as Karanja oil (55,000 t). However, based on extensive research carried out in agricultural research centres, it was decided to use Jatropha Curcas oilseed as the major feedstock for India’s biodiesel programme. Jatropha was originally developed in Central America and is a tree-borne oilseed which grows in dry, arid land.

6: Benefits from the use of biofuels in India

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.

6.1: Reduced emission of harmful pollutants

Ethanol and biodiesel are both oxygenated compounds containing no sulphur. These fuels do not produce sulphur oxides, which lead to acid rain formation. Sulphur is removed from petrol and diesel by a process called hydro-desulphurisation. The hydro-desulphurisation of diesel causes a loss in lubricity, which has to be rectified by introducing an additive.

Biodiesel has natural lubricity, and thus no lubricity-enhancing additive is required. Since ethanol and biodiesel contain oxygen, the amount of carbon monoxide (CO) and unburnt hydrocarbons in the exhaust is reduced. With the introduction of ethanol in Brazil, CO emission from automobiles decreased from 50 g/km in 1980 to 5.8 g/km in 1995. The emission of nitrogen oxides (Nox) from biofuels is slightly greater when compared to petroleum, but this problem can be ameliorated by using de-Nox catalysts which work well with biofuels due to the absence of sulphur.

One of the disadvantages in using pure ethanol is that aldehyde emissions are higher than those of gasoline, but it must be observed that these aldehyde emissions are predominantly acetaldehydes. Acetaldehydes emissions generate less adverse health effects when compared to formaldehydes emitted from gasoline engines. Table 2 shows how the automotive emissions using 22 per cent ethanol and 100 per cent hydrated ethanol compare with the legal limits in Brazil and India.

Table 3 shows the results of the emission tests for pure biodiesel (B100) and 20 per cent biodiesel blend (B20) compared to conventional diesel.

6.2: Increased employment

At the beginning of the new millennium, 260 million people in India did not have access to a consumption basket which defines the poverty line. India is home to 22 per cent of the world’s poor. A programme that generates employment is therefore particularly welcome.

The biofuels sector has the potential to serve as a source of substantial employment. The investment in the ethanol industry per job created is $11,000, which is significantly less than the $220,000 per job in the petroleum field . In India, the sugar industry, which is the backbone of ethanol production, is the biggest agroindustry in the country. The sugar industry is the source of the livelihood of 45 million farmers and their dependants, comprising 7.5 per cent of the rural population. Another half a million people are employed as skilled or semi-skilled labourers in sugarcane cultivation .

The first phase of the National Biodiesel Mission demonstration project will generate employment of 127.6 million person days in plantation by 2007. On a sustained basis, the program will create 36.8 million person days in seed collection and 3,680 person years for running the seed collection and oil-extraction centres.
Table 4 shows the estimated cumulative achievements of the project in terms of output and employment.

6.3: Energy security and decreased dependence on oil imports

India ranks sixth in the world in terms of energy demand, accounting for 3.5 per cent of the world commercial energy demand in 2001. But at 479 kg of oil equivalent, the per capita energy consumption is still very low, and the energy demand is expected to grow at the rate of 4.8 per cent per annum. India’s domestic production of crude oil currently satisfies only about 25 per cent of this consumption. Dependence on imported fuels leaves many countries vulnerable to possible disruptions in supplies which may result in physical hardships and economic burdens. The volatility of oil prices poses great risks for the world’s economic and political stability, with unusually dramatic effects on energy-importing developing nations. Renewable energy, including biofuels, can help diversify energy supply and increase energy security .

6.4: Improved social well-being

A large part of India’s population, mostly in rural areas, does not have access to energy services. The enhanced use of renewables (mainly biofuels) in rural areas is closely linked to poverty reductions because greater access to energy services can:

• Improve access to pumped drinking water. Potable water can reduce hunger by allowing for cooked food (95 per cent of food needs cooking);
• Reduce the time spent by women and children on basic survival activities (gathering firewood, fetching water, cooking, etc.);
• Allow lighting which increases security and enables the night time use of educational media and communication at school and home; and
• Reduce indoor pollution caused by firewood use, together with a reduction in deforestation.

Lack of access to affordable energy services among the rural poor seriously affects their chances of benefiting from economic development and improved living standards. Women, older people and children suffer disproportionately because of their relative dependence on traditional fuels and their exposure to smoke from cooking, the main cause of respiratory diseases. Electricity through transmission lines to many rural areas is unlikely to happen in the near future, so access to modern decentralized small-scale energy technologies, particularly renewable (including biofuels), are an important element for effective poverty alleviation policies. A programme that develops energy from raw material grown in rural areas will go a long way in providing energy security to the rural people.

6.5: Increase in nutrients to soil, decrease in soil erosion and land degradation

In ethanol production from sugarcane, the by-products like vinasse (solid residue left after distillation) and filter cake contain valuable nutrients. Using these organic fertilizers instead of chemical fertilizers reduces the need for chemicals, which could be hazardous and avoids pollution of ground water and rivers. Table 5 developed by the International Crop Research Institute for Semi-Arid Tropics (ICRISAT) compares the nutrient content of filter cake obtained from various oilseeds in biodiesel manufacture with that of commonly used fertilizers like Di-Ammonium Phosphate (DAP) and Urea and demonstrates that the filter cake is an effective fertilizer :

Also the cultivation of land for sugarcane and oilseed-bearing crops contributes to a decrease in soil erosion and land degradation.
6.6: Good fuel properties

Ethanol has a research octane number of 120, much higher than that of petrol, which is between 87 and 98. Thus, ethanol blending increases the octane number without having to add a carcinogenic substance like benzene or a health-risk posing chemical like methyl tertiary butyl ether (MTBE). The energy content of ethanol is only 26.9 MJ/kg compared to 44.0 MJ/kg for petrol. This would suggest that the fuel economy (km/litre) of a petrol-powered engine would be 38.9 per cent higher than that of an ethanol-powered engine. In actuality, this difference is 30 per cent since ethanol engines can run more efficiently (at a higher compression ratio) because of the higher octane rating. For a 10 per cent ethanol blend the fuel economy advantage of a petrol engine is only 3 per cent. The flammability limit of ethanol (19 per cent in air) is higher than that of petrol (7.6 per cent), and likewise the auto-ignition temperature of ethanol is higher than that of petrol (366 versus 300oC). Thus, ethanol is safer than petrol due to the lower likelihood of catching fire . Ethanol’s higher latent heat of vaporization and greater propensity to absorb moisture may lead to engine starting and corrosion problems, respectively, but none of these problems have manifested in the millions of hours of running automobile engines in Brazil.

Biodiesel has good fuel properties, comparable to or even better than petroleum diesel. It has 10 per cent built-in oxygen content that helps it to burn fully. Its cetane number (an indication of its fuel burning efficiency) is 52 for biodiesel from Jatropha oil, higher than the 42 to 48 cetane number of most petroleum diesels. The esters of the long-chain fatty acids of biodiesel are excellent lubricants for the fuel injection system . It has a higher flash point than diesel, making it a safer fuel. Other advantages are the almost zero sulphur content and the reduced amount of carbon monoxide, unburned hydrocarbons and particulate matter in the exhaust. But there are a few technical issues that need to be resolved. Biodiesel has a high viscosity at low temperatures, leading to flow problems at these temperatures. For long-term storage in hot, humid conditions, ethanol may require a biocide to prevent bacterial growth.
7: CDM and Biofuel:
Clean Development Mechanism (CDM) was set up in the Kyoto Protocol with objectives of generating cost-effective emission reductions for Annex B countries and of promoting sustainable development in the host countries. In article 2 of the protocol it is categorically marked that ‘…Each Party included in Annex I, in achieving its quantified emission limitation and reduction commitments under Article 3, in order to promote sustainable development, shall:.. Go for enhancement of energy efficiency in relevant sectors of the national economy, .. Promotion of sustainable forms in light of climate change considerations..’ .
With these basic intentions, United Nations Framework Convention on Climate Change (UNFCCC) made this provision under the Article 12 of Kyoto Protocol, in which assistance will be provided to parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the convention, and to assist parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments in the first commitment period. Based on this flexible-market mechanism, Non-Annex I countries are getting benefits from project activities resulting in Certified Emission Reductions (CERs) and eventually presenting ‘real, measurable, and long-term benefits related to the mitigation of climate change’ which are ‘additional’.

Operational since the beginning of 2006, the mechanism has already registered more than 1,400 projects (59 numbers of projects are in requesting registration stage and out of the total numbers, 7 projects are being registered under forestry sector) and is anticipated to produce CERs amounting to more than 2.7 billion tonnes of CO2 equivalent in the first commitment period of the Kyoto Protocol, 2008–2012. UNFCCC, the international body of rules with an unprecedented transparency and independent control has been implementing this mechanism consistently. Till date 37 Designated Operational Entities (DOEs) are accredited under various sectoral scopes and 137 Designated National Authorities (DNAs) have been set up, out of which 35 DNAs are from Asia and Pacific Region. Applications for new baseline and monitoring methodologies (small and large) are increasing and till the last Executive Body (EB) Meeting-45, 157 methodologies have been approved .

To date no biofuel projects are included in the CDM project portfolio. The main reason is that no biofuel baseline and monitoring methodology has been approved by the CDM Executive Board, which is a necessary requirement for validation. Five such methodologies have been submitted. Other barriers include high abatement cost, additionality prove and calculation of the GHG reduction by the project. On the other hand, biofuel projects may have clear co-benefits in terms of energy security of supply, employment, natural resources and possibly air pollution. Therefore, biofuel CDM project have the potential to strengthen the sustainable development goal of the CDM, which is currently under-achieved.
Future developments in the CDM may increase opportunities for biofuels. These include a possible stronger demand for carbon credits and extension of the scope of eligible activities into sectors and/or programmes or policies.

However, Biofuel Based CDM projects are possible under forestry. Currently, three projects are in validation in UNFCCC under this category, which have used approved baseline and monitoring methodologies of UNFCCC under the sectoral scope 14. All of these projects are of Jatropha Plantation projects.

7.1: Eligibility of Biofuel crops under forestry domain of UNFCCC:
Articles 3(3) and 3(4) of the Kyoto Protocol establish the eligibility of different activities relating to the land-use, land-use change and forestry (LULUCF) sector under the Kyoto Protocol . It limits the eligibility of LULUCF projects under the CDM to afforestation and reforestation:
These activities are defined as follows:
“Afforestation” is the direct human-induced conversion of land that has not been forested for a period of at least 50 years to forested land through planting, seeding and/or the human-induced promotion of natural seed sources.
“Reforestation” is the direct human-induced conversion of non-forested land to forested land through planting, seeding and/or the human-induced promotion of natural seed sources, on land that was forested but that has been converted to non-forested land. For the first commitment period, reforestation activities will be limited to reforestation occurring on those lands that did not contain forest on 31 December 1989.
Therefore, afforestation is the conversion of land that has not contained a forest for at least 50 years to forested land. Reforestation, on the other hand, is the conversion of land that was not forested on 31 December 1989 to forested land. That indicates that the lands, selected for forestry project activities shall be degraded or waste lands, which will not have suitable for agricultural activities or other economic activities, and therefore, opportunity cost is Zero.
Project participants in forestry projects must demonstrate that the land that is the project site meets the eligibility criteria in either the afforestation or reforestation definition above. This process is known as ‘demonstrating the eligibility of lands’.
Project participants in afforestation and reforestation (A/R) projects must demonstrate that:
• the land on which the project activity is proposed to be carried out is not currently forested (i.e. the land is ‘eligible land’); and
• the proposed project is a valid afforestation or reforestation project activity.
In order to demonstrate that the land is ‘eligible land’, project proponents must:
1. Demonstrate that the land at the moment the project starts does not contain forest by providing transparent information that:
1. Vegetation on the land is below the forest thresholds (tree crown cover or equivalent stocking level, tree height at maturity in situ, minimum land area) adopted for the definition of forest by the host country as communicated by the respective Designated National Authority [DNA]; and
2. All young natural stands and all plantations on the land are not expected to reach the minimum crown cover and minimum height chosen by the host country to define forest; and
3. The land is not temporarily unstocked, as a result of human intervention such as harvesting or natural causes (EB 35, Annex 18).
Afforestation and reforestation activities involve the conversion of land that is not forested to land that is forested. For this purpose, forest is defined in 16/CMP.1, Annex, paragraph 1(a) as follows:
“Forest” is a minimum area of land of 0.05-1.0 hectare with tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metres at maturity in situ. A forest may consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground or open forest. Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest (16/CMP.1, Annex, paragraph 1(a)). To define forest, India has adopted- minimum land area: 0.05 ha; 20% crown cover and minimum 3 meters height at maturity.
Based on this definition, therefore, it can be inferred that biofuel crops like jatropha and Pongomia is eligible under forest project activities of UNFCCC. One important point in this project is that, forestry project shall be implemented only in waste or degraded or degrading lands and there cannot be any shift from the pre-project activities, if the lands were under agricultural and forest covers. This clause of UNFCCC’s guidelines restricts the project proponent to divert ‘fertile’ lands under CDM forestry projects.
7.4: Carbon credit potential:
It is estimated that for forestry projects with biofuel crops like Jatropha and Pongomia, annual average yield of carbon credit shall be 9-12 Certified Emission Reductions [CERs] per hectare per year. However, it will depend on the species of crops and land conditions. This carbon credit shall be valid for 60 years, if the project opts for renewal crediting period, or alternatively, the project will be valid for 30 years, if the project opts for fixed crediting period. A brief description of the project activity is given in the following section.
7.5: Haryana Based Plantation project:
This project activity is part of the first registered CDM project of forestry sector from India, in which Biofuel component has also been added very recently. The UNFCCC registration number of this project activity is 2345.
The lands to be planted in the proposed small-scale Afforestation/reforestation [A/R] CDM project activity are located in the western belt of Haryana at the north-eastern fringe of the Indian Thar Desert. The project area is affected by aeolian (wind blown) sand, and is the degraded part of croplands spread across these eight villages, comprising of 369.5 ha belonging to 227 farmers; which is generally left fallow. Impacted by limited precipitation (100-200mm annually) and shifting sand dune, the cropping intensity on these degraded croplands is barely one crop every three years as against the normally two crops annually on the surrounding good croplands (as per the Participatory Rural Appraisal findings). The cultivation and shifting sand dunes prevent the potential natural regeneration of forest in this area.

The purposes of the A/R CDM project activity are as follows.
• To earn carbon credits from growing of trees to be planted, under the CDM provisions of Kyoto Protocol;
• To help in mitigation of global warming by planting trees for sequestration of atmospheric carbon dioxide;
• To improve the local environmental condition of soil through increasing the water holding capacity of the lands, increasing the humus in soil and also stabilizing the sand dunes, by converting the marginal and degraded croplands into forested lands;
• To increase income, provide employment opportunities, and as a result to alleviate poverty of local communities.

To realize the objectives mentioned above, 369.5 ha of mixed forests is in the process of establishment, using tree and biofuel crop species, i.e., Eucalyptus hybrid, Acacia nilotica, Dalbergia sissoo, Zizyphus mauritiana, Prosopis cinerari etc. and it has a suitability for Jatropha curcas and Pongomia Sp. This combination of trees and biofuel crops, is mainly to ensure a sustainable income to the farmers, so that farmers could get income from biofuel as well as expect long term income from timber woods and fruits of Zizyphus too.
The project activity is a pilot project activity of its kind in the state of Haryana. Both the Project Developer (Haryana Forest Department) and the local farmers (Project Participants) expect that the success of the proposed small-scale A/R CDM project activity will promote A/R CDM activities in lands of low agricultural productivity in the state of Haryana and beyond in the country. They are also of the view that it will contribute to poverty alleviation, biodiversity conservation and prevention of soil erosion, thus contributing to sustainable development.
During the field investigation it is found that the project area, which is located in the north eastern fringe of the Great Indian Thar Desert, having been affected by mildly shifting sand dunes, is, for most part, a degraded cropland. The climate is arid, characterized by dryness and extremes of temperature. The mean daily maximum temperature during May and June, which is the hottest period, varies from 42º C to 47º C and winter temperature ranges between 2º C to 20º C. Precipitation is very low with average annual rainfall ranging between 150-200 mm. All these factors contribute to occurrence of droughts in the area in summer and in the months of October and November. Frost is also common, usually occurring during the months of January and February. The area is also vulnerable to high velocity wind storms during the months of May and June. Flood occurrences are not common in the area.
Desert or sandy soil is dominant in the area which is windblown and light in color. There is no perennial river in the area and Ghaggar is the only river flowing from north to west through the central part of the Sirsa district. During the rainy season its water is diverted into the southern canal flowing through these villages. Apart from this natural source of water supply which is available only during the rains there is a network of canals spread over these villages originating from the Bhakra Canal. These canals are not passing through the project area.
The old natural forests in these areas vanished in the nineteen fifties due to the sudden increase in population on account of the influx of refugees in the aftermath of partition. It has emerged during the PRA that the migrants from Pakistan, who had temporarily settled in these villages, had cleared the vegetation for meeting their fuel needs as also for selling for earning livelihood. Subsequently agriculture has been practised on most of these lands and presently, the proposed project lands have the status of degraded and degrading croplands, affected by shifting sand dunes, with a few scattered trees. The natural trees species available in the area are Jand (Prosopis cineraria), Beri (Zizyphus mauritiana), Jaal (Salvadora oleoides), Reru (Acacia lucophloea), Kair (Capparis decidua), Kikar (Acacia nilotica), Pipal (Ficus religiosa) etc.
Field visits, interactions with the villagers and forest department records do not show the presence of any endangered and rare species in the project area. Blue bulls are a common wild animal in the district. There is no nature reserve in the vicinity of the project area. These lands currently have very low biodiversity.
Therefore, it can be noted that the project activity does not make any conflict with ‘the ongoing agricultural operations’ on fertile lands, as the lands, covered under the project activity is severely degraded or degrading in nature. It would be worth mentioning that this is an important eligibility condition of forestry CDM project, which depicts that the project is additional and cannot be established without CDM revenues. As discussed, above, it is also planned that once the fertility conditions of these lands will be enhanced; it could be converted to agricultural lands or agro forestry operations. Eventually, it will eradicate the generally perceived notion on ‘food Vs Fuel’ crisis. To validate this statement, farmers were asked about the alternative and current uses of those lands. Farmers were unanimous in expressing that the degraded land provided for the proposed small-scale A/R CDM project activity yields a poor crop that also only after rains which occurs once in 3 to 4 years . They also agreed that there was no potential use of this degraded land as it is a matter of loss whenever they have invested money to get crops from these. Interestingly, stakeholders from all the participating villages categorically said that they don’t have any other alternative for the degraded land provided for the proposed small-scale A/R CDM project activity other than waiting for rains and risking investment to get crops from it after 3 to 4 years.
The net anthropogenic GHG removals by the sinks as a result of the proposed small-scale A/R CDM project activity are anticipated to be 231,812tonnes of CO2 equivalent during the crediting period (from 2008 to 2027). Besides, there will be substantial income from the fruit trees, present in the project activity as well as from the Jatropha and Pongomia seeds/biodiesel.
The oil yield per hectare for Jatropha is among the highest for tree-borne oil seeds. The seed production ranges from about 0.4 tons per hectare per year to over 12 t/ha. There are reports of oil yields as high as 50 per cent from the seed. Typically, the seed production would be 3.75 t/ha, with oil yield of 30-35 per cent, giving net oil yield of about 1.2 t/ha. – Being rich in nitrogen, the seed cake are an excellent source of plant nutrients.

7.6: Expected outcome of the project:
The expected outcome of this ongoing project could be summarized in two major headings, viz., enhancement of soil fertility and poverty alleviation. A brief illustration is presented below.
7.6.1: Soil Fertility:
It is an established fact that Jatropha and Pongomia are suitable for preventing soil erosion including Jhum fallows. Jatropha is not a competitor of any crop rather it increases the yield. Moreover, due to mycorrhizal value in Jatropha roots it helps in getting phosphate from soil boon for acid soil and improves the soil fertility throughout their life cycle. The oil cake is rich in nitrogen, phosphorus and potassium finds very good organic fertilizers. The leaves provide plentiful organic matter and increase the microbial activity including earthworms, which is an indication of ecological improvement of site. The soil fertility enhancement and nutrient uptake has also be exhibited by the regression analysis, which indicated highly significant (P<0.001) linear relationships between Nitrogen [N] uptake and Magnesium [Mg] (R2 = 0.74; DF = 78), Ca (R2 = 0.62; DF = 78) and K (R2 = 0.53; DF = 78) uptake. Based on multiple regression models, N and Mg uptake accounted for most of the Jatropha and pongomia seeds yield increases observed. Because of the low N contributions, increases in Jatropha yields were largely attributed to improved availability of base nutrients, particularly Mg. Moreover, the soil sample collected after and before commencing the project activity depicted a positive correlation and could be inferred that the project activity has been improving the soil fertility as well as increasing the water holding capacity in comparison to the pre-project activity.

7.6.2: Poverty Alleviation:
In analyzing ‘poverty alleviation’ the present paper has considered only ‘income generation’ as an important parameter. This was due to the direct relationship of this selected parameter to the communities and the project.
It is found that the project activity has a positive correlation with the income generation to the farmers and there is 57% increase in the annual average income of households, related to the project activity. This income has been resulted from the crop husbandry operations as well as from the non-timber harvests of the plantation.
The data obtained was categorized broadly in two groups i.e., Agricultural and non-agricultural. Non-agricultural group included all the income generating activities except farming practices in the field. On the basis of monthly per capita income three groups were also formed; Better off, Poor, Very poor. The categorization was based on income sufficient to meet the basic necessities of life that is $1 per day per capita. The respondent whose monthly income per capita was Rupees 1800 or above were considered better off as these respondents were seen to have easy access to the basic needs of life. The respondents whose per capita monthly income was below Rs. 1800 and above Rs. 1000 were categorized as poor, while very poor were the respondents having per capita income less than Rs. 1000. Difference of means test was applied to see the significant impact of biofuel plantation activities on these aforementioned groups. For this, mean value of two variables was compared and paired T-test was used. Correlation and regression analyses were also used with the help of Statistical Procedure.

The average monthly per capita income of very poor households increased from Rs. 572 to Rs. 864. This proportionate increase was 51%. While average monthly per capita income of poor households increased from Rs. 1221 to Rs. 1628 and the increase was 33%. The average per capita income (monthly) of better off households, increased from Rs. 2595 to Rs. 2940 and this increase was 13.5%. Critical observation shows that percentage increase in per capita income of very poor is higher than that of the poor and better off households. It implies that very poor households got maximum benefit from the project activity.
The overall impact on per capita income was also positive. It increased from Rs. 1221 to Rs. 1628 and overall percentage increase was 33%. The results revealed highly significant impact of project on per capita income.

Regression analysis is used to observe the relationship between dependant and independent variables. Here, a very simple regression model is used to see the dependency of changed income on project activity. Regression analysis of change in consumption against change in income showed that consumption is a function of income. Change in income will lead to change in consumption. Co-efficient of change in income is positive and reveals that one rupee increase in income will increase consumption by 0.14 rupees. Value of R2 is positive and 49% showing that change in consumption depends on change in income. It is observed from the values in the Table: 7and Table: 8 that increase in income is a function of plantation activity. It is highly dependent on the project activity as positive sign of coefficient of project shows that increase in plantation by one rupee brings change in income by 0.13 rupees.

Table: 6: Correlation Analysis

Table: 7: Regression analysis of change in income against Project activity

Table: 7: Regression analysis of change in consumption against income

8. Summary and Conclusion:
Therefore, it can be summarized that biofuel crops will play an extremely important role in meeting India’s energy needs. The current manufacturing cost of biodiesel in India is about Rs. 21/litre ($0.46/litre), about the same as petrol and diesel. This puts biofuels in a favourable position, especially as the cost of petroleum is expected to continue its upward trend. As discussed above, biofuels offer several significant benefits including:

• Reduced emission of pollutants such as carbon monoxide, unburnt hydrocarbons, particulate matter, polycyclic aromatic hydrocarbons (PAH) and nitrated PAH. Biofuels contain virtually no sulphur.
• Reduced emission of the greenhouse gas carbon dioxide, which contributes to global warming. For every ton of petrol or diesel substituted by ethanol or biodiesel, the net emitted carbon dioxide is reduced by about 3 tons.
• Increased employment. Every $11,000 invested in the ethanol industry produces a job, as compared to $220,000 in the petroleum industry. By 2007, the first phase of the National Biodiesel Mission will generate an estimated 127.6 million person days to plant, 36.8 million person days to collect seeds and 3,680 person years for running the seed collection and oil-extraction centres.
• Energy security and decreased dependence on oil imports by diversifying energy supply.
• Improved social well-being. A large part of India’s population, mostly in rural areas, does not have access to energy services.

The enhanced use of biofuels in rural areas is closely linked to poverty reduction as greater access to energy services can:
• improve access to pumped drinking water;
• reduce the time spent by women and children on basic survival activities (gathering firewood, fetching water, cooking, etc);
• allow lighting for increased security and the night time use of educational media in school and home study; and reduce indoor pollution caused by firewood use, together with a reduction in deforestation.
• Increased nutrients to the soil and decreased soil erosion and land degradation resulting from the cultivation of biofuel feedstock crops.
• Good fuel properties. The octane number of ethanol is 120, much higher than that of petrol, which is between 87 and 98. The cetane number of biodiesel is at least 51.

Similarly, biofuels plantation under CDM is a successful model as this type of project activity does not make any conflict with ‘the ongoing agricultural operations’ on fertile lands, as the lands, covered under the project activity is severely degraded or degrading in nature. It would be worth mentioning that this is an important eligibility condition of forestry CDM project, which depicts that the project is additional and cannot be established without CDM revenues.
In conclusion, the biofuel industry is in the incubation stage, but large-scale Jatropha cultivation and the infrastructure for oilseed collection and oil extraction must be established before the industry can be placed on a rapid-growth track. In the meantime imports could help, as could income generated from the sale of certified emission reductions from biodiesel projects approved by the CDM executive board.

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