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Biofuel, essentially, is fuel derived from biomass or organic material, such as sugarcane or corn, which stores energy from the sun in the form of chemical energy. This stored chemical energy is then converted into biofuels that play a key role in the reduction of greenhouse gases.

The gay abandon with which crude oil prices have scampered up the slope of a scary price curve has in the past few months triggered heated debates in the aviation circles over three interlinked issues. The first one is whether the rising aviation fuel prices ought to be passed on to the passenger or be absorbed by the airlines through an exercise of ever-diminishing margins. In India, the Minister of Civil Aviation has accentuated the debate by averring that air travel is no longer a luxury but a necessity. An analogous extension of his argument is that the Ministries of Petroleum and Finance ought to act decisively on rising fuel prices so that the aviation industry does not repeat the disaster of the early 1990s when a number of newly established private airlines fell like nine pins. The second one is about biofuels augmenting or replacing fossil fuels, even in the aviation industry and the third, related debate is about the trade-off between production of biofuels and food.

That the rise in the cost of aviation fuel is worrisome is recognised by the government, the airlines and passengers. On an average, airfares have been hiked every six weeks or so in the last year. Airline losses in India are mounting and the big boom in the industry is threatening to slow down. The situation may reach a point of no return unless some action is taken soon. However, from the political point of view, doing something about it is difficult. Petrol and diesel prices are election-sensitive issues for the government, which has its eye on the next polls. Therefore it is convenient to pass on the lion’s share of the responsibility of any increase in crude prices to the aviation sector. While the prices of petrol, diesel, kerosene and cooking gas have been reasonably stable, the price of aviation fuel has been constantly rising. The most optimistic prognosis for crude oil price per barrel is $50 (Rs 2,133) by end 2008, which seems to be wishful thinking or misplaced optimism as a majority of analysts and researchers do not see prices falling in the near future. Indeed, Goldman Sachs forecasts a $200 (Rs 8,530) per barrel within two years. While spikes in oil prices have occurred in the past, this sustained and high rate of price rise has intensified the search for alternatives and biofuels, being the next best thing to fossil fuels, are not a close second.

It is easy to get misled by the above remarks into thinking that the biofuel initiatives that have been put into place in the past and are being accelerated now are driven by the need to find a cheaper alternative to aviation fuel. Indeed that was perhaps never a consideration at all and has only now started exercising aviation fuel producers and policy makers. The evolution of biofuels has been spawned basically by the need for greener fuels and sustained by policies allied to energy, transportation, agricultural, trade and environmental issues.