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India Could Replace Gasoline Imports With Ethanol by 2020, Study Shows

http://www.bloomberg.com/news/2011-05-18/india-could-replace-gasoline-imports-with-ethanol-by-2020-study-shows.html

By Natalie Obiko Pearson - May 18, 2011 8:00 AM ET

India, the world’s second fastest- growing automobile market, could replace gasoline imports with ethanol by 2020 if policies and infrastructure are put in place to promote the green fuel, a report said.

India can potentially harvest enough bagasse, rice husk and sugar waste to produce as much as 50 billion liters (13 billion gallons) of ethanol without relying on food crops or disrupting agricultural land-use, according to a report today by Renewable Energy Minister Farooq Abdullah.

That would be enough to replace 86 percent of gasoline demand and remove the need for imports, according to the report, done by Bloomberg New Energy Finance for Novozymes A/S, the world’s biggest maker of industrial enzymes.

Gasoline consumption is set to surge in Asia’s third- largest energy consumer as rising incomes spur demand for vehicles. Two-thirds of the country’s gasoline demand comes from two-wheeled passenger vehicles such as motorcycles, the report said.

If India doesn’t find alternatives, it could spend about $19.4 billion on gasoline imports by 2020, said the report, which assumes a crude oil price of $100 a barrel.

In contrast, the development of an ethanol industry could generate up to $20 billion of yearly revenue plus $1.6 billion in ethanol exports, it estimated.

Barriers include the lack of infrastructure to collect and transport agricultural residue and no clear targets or penalties from the government to promote development, it said.

Bloomberg New Energy Finance, which provides data and research, is owned by Bloomberg LP, the parent of Bloomberg News.

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at [e-mail].

To contact the editor responsible for this story: Reed Landberg at [e-mail].