With the government having proposed 20 percent blending of biofuels by 2017, the countdown to India on way to its target to becoming self-sufficient in its energy needs has begun. Development of the biofuels industry is thus more than just the means to the end.
India started a Biofuel mission in 2003. And five years later, the government has announced a Biofuel Policy in September 2008. The policy is rightly timed with global biofuels production standing at 16 billion gallons as compared to 4.8 billion gallons in 2000. With biofuels forming less than 1 percent of the existing global fossil fuel usage, the opportunities are limitless. And India is all set to tap into the biofuels pie. Biofuels are increasingly being adopted by key industry players in response to climate change proposals and the demands of environmentally aware consumers. The growing global interest in biofuels can be gauged by the whirlwind of activity currently underway. The US Department of Energy (DOE) is set to invest more than $5.7 billion in six advanced biofuels projects at US universities to support R&D for cost-effective, environmentally friendly biomass convesiontechnologies for turning non-food feedstocks into advanced biofuels. In India too a lot of companies have plunged into action in this area--Reliance Industries, Tata Chemicals, ONGC, BPCL, HPCL, Godrej Agrovet, and Emami group are a few to name. The state governments are also not far behind. Leading by example is the state of Chattisgarh, where the Chief Minister's car itself has been running on biodiesel since 2005. HPCL has ambitious plans to undertake a "Seed to wheel" project of producing and marketing biodiesel in the state with the signing of an MoU with the state government to undertake Jatropha plantation on 15,000 hectares of land. The Hague, Netherlands-based Royal Dutch Shell, one of the world's largest distributors of first-generation biofuels, is rumored to be in the process of tapping the Indian market and even DuPont has set up a Bioenergy center in Hyderabad.
According to a report by Frost & Sullivan titled Strategic Analysis of the Indian Biofuels Industry, the Indian market is an emerging one and has a long way to go before it catches up with global competitors. A strong economy, rising incomes, and a vibrant market have given a huge boost to the transport sector, which is the fastest growing energy-consuming sector in India. These trends have made a case for biofuels in India, strengthened by the huge dependence on oil imports which comprise nearly 80 percent of our current requirements.
Biofuels thus will be critical in reducing dependence on fossil fuels, achieving greater energy security, and reducing noxious emissions. India has identified Jatropha curcas as its biodiesel bearing plant to be grown on the country's wastelands. It is to be noted that India has nearly 60 million hectares of wasteland and hence it presents a huge opportunity with several states in India including Andhra Pradesh, Chattisgarh, Tamil Nadu, Uttaranchal, Rajasthan, Madhya Pradesh, Orissa and Maharashtra witnessing frenetic activity in Jatropha plantation to help the country achieve its target of energy independence by 2012.
Movers and shakers
IKF Green Fuels Ltd formed as a subsidiary of IKF Technologies in 2005-06 started working in 2006 and has begun field operations in the current cropping season in 16 states in India including Chattisgarh, West Bengal, Jharkhand, Orissa, Rajasthan, Karnataka, Madhya Pradesh, Tamil Nadu, Andhra Pradesh, Maharashtra, Gujarat, Manipur, Arunachal Pradesh, Assam, Meghalaya and Nagaland. The parent company IKF Technologies has committed an investment of Rs 200 crore into IKF Green Fuels Ltd. Currently the company has 50,000 hectares of land under cultivation and has recently signed an MoU with the government of Madhya Pradesh where it would be investing Rs 30 crore in setting up a refinery. It is also seeking 2,000 hectares of wasteland for the cultivation of Jatropha in the state. The company has also signed an agreement with Indian Oil Corporation Ltd, R&D center, Faridabad for transferring of technology and providing technical assistance for conversion of Jatropha into biofuel. According to Vishal Rawat, President, IKF Green Fuels, "The company plans to invest Rs 2,200 crore by 2015 in both plantations and refineries to become a market leader in the field and is eyeing 15-20 percent of the market share of biodiesel by then." The company has joint ventures for Jatropha cultivation in several states. In Andhra Pradesh, it has tied up with Sigma Biofuels Hyderabad and SRECKO Indhan Ltd while in Gujarat it has a JV with Avani Vermi Compost and Biofuel, Ahmedabad.
Companies are also importing palm oil from countries such as Indonesia and Malaysia, only to switch to feedstock based biodiesel, given the fact that it takes 3-4 years for the crop to give substantial yields. Naturol BioEnergy, an integrated Oleo Chemical Complex near Kakinada port in South India has a capacity to manufacture 100,000 tons per annum of biodiesel. The company started commercial production with palm oil as feedstock in April 2008 (the first lot of 9,188 tons was shipped in June 2008 and the second lot is expected to be shipped shortly). It has an advanced plant technology partnership with De Smet Ballestra Group (Belgium) and a multi-feed stock plant with ability to use nearly 20 percent cheaper fatty acids vis-à-vis standard norm of 5 percent (nearly $650 compared to $1050 for palm oil) which it plans to increase it to nearly 40 percent levels through process enhancements. The company has capabilities to convert crude glycerin into pharmaceutical grade adding approximately $100 per ton of biodiesel to the revenues.
Bhaskar Chalsani, Managing
Director, Naturol stated, "Our future strategy would be to de-risk the business model through process enhancements and backward and forward integration resulting in expansion of current unit economics from nearly $155 per ton of biodiesel to $450 per ton of biodiesel." We expected to record a turnover of Rs 790 crore with EBIDTA margins around 32 percent in FY2012, he shared. "We are exploring possible partnerships with oil majors, oil distributors and plantation firms in India and Africa for energy crops. We have mandated fund raising to an investment bank to help us raise about $150 million in next 12 months from Private Equity (PE) funds for scaling as well investments in plantations for energy crops," Chalsani shared.
Hyderabad-based Nandan Biomatrix Ltd (NBL), which was set up in 1999, is an integrated natural solutions provider offering a wide array of services to include medicinal plant cultivation and processing, bulk extracts, nutraceuticals, Jatropha plantations, and production of biodiesel. NBL is strong with IPRs in the fields of nutraceuticals and biofuels and has applied for patents for improved hybrids of Jatropha. The company has a research target of producing Jatropha hybrids capable of yielding 5 million metric ton of oil per hectare per annum. It has identified catchment areas in India, Bangladesh, Myanmar, Malaysia, Indonesia, the Philippines, Thailand, Australia and a few of the countries from Africa and South America, wherein large scale plantation of Jatropha is being undertaken. The company has a state-of-the-art research center and resource center spread out over thousand acres of area to do extensive research and come out with hybrids which are high yielding and have high oil content and has close to 40 scientists working towards achieving its R&D roadmap which the company has laid for itself for the next 10 years.
UK-based D1 Oils Plc and British Petroleum Ltd entered into a 50:50 joint venture in October 2007 to make more sustainable biodiesel feedstock available commercially through the planting and cultivation of Jatropha curcas globally and aim to invest $160 million globally over the next five years. The partnership aims to combine D1 Oils' unique experience in the plant science and commercial planting of Jatropha for the production of biodiesel with BP's commercial strength, fuels technology expertise and access to major international fuel markets. Today the company has its presence in 14 countries and focuses on Jatropha cultivation in South East Asia, Africa, and India. It plans to plant some 1 million hectares by 2011, with an estimated 300,000 hectares per year thereafter.
Its Indian subsidiary, Gurgaon-based D1BPfuelcrops India Pvt Ltd has two joint ventures-one with Williamson Magor (for the seven North-Eastern states and certain states in the East), a leading tea producer and another with Mohan Breweries in the South. In Chattisgarh, UP, Rajasthan and MP, the company is present on its own. The company currently has 150,000 hectares of plantations in India till date in Chattisgarh, UP, Rajasthan, MP, Tamil Nadu and Jharkhand and is having trial runs in Andhra Pradesh and Orissa. It expects to commence the production from 2009 for some plantations (given the fact that the crop starts yielding from third year onwards) and is expecting to have an area of 300,000 hectares in next two years with a target of 220,000 hectares by 2009 said Samiran Das, CEO of D1BPfuel crops India. Elaborating on the business model of the company, he said, "In India the objective of the company is to steer clear of the food fuel debate (hence Jatropha) and focus on wastelands instead. The company will get into contract farming and not buy or lease land. We want to work with the community-the farmers, the government and the panchayats. We want to ensure a revenue flow for the owner of the land (farmer) who is not able to grow anything on the land and thus promote rural empowerment and sustainable development. We offer the farmer technical expertise to grow the crop and buyback the crop from the farmer." The company is now in the process of getting into the next stage which is manufacturing and hence is looking at producing substantial amount of crude oil which it says would depend upon the produce. "We are planning to set up refineries in the next step of setting up the supply chain. We have planned to set up the first two expelling units in the North-East in 2009 after doing our supply chain analysis," added Das. The size of the plant may vary depending on the yield ranging from Rs 30-50 crore to Rs 150 crore, he added.
Southern Online Biotechnologies Ltd (SBT) ventured into the biofuels business in 2005 and has established its biodiesel unit at Samsthan Narayanpur Village & Mandal, Nalgonda District in Andhra Pradesh with 40,000 liters per day capacity with an investment of Rs 25.72 crore. It commenced the sale of biodiesel from July 2007 and has been supplying to various well reputed customers like IDEA Cellular, L&T, Airtel, Kirloskar Oil Engines, Toyota Kirloskar and Giatech. The company received an order from Andhra Pradesh Road Transport Corporation (APSRTC) for the supply of 300,000 liters of biodiesel per month to its 12 depots in Hyderabad and Secunderabad to use in their buses of 23 depots out of the 252 depots. SBL is expecting orders for other depots of APSRTC and RDSO (Division of Indian Railways). The Indian Railways RDSO, Lucknow, has already started purchasing the biodiesel from the company. Indian Railways has also called for tenders to procure 1.40 lakh liters per day for which the company has received the offer for 400 kl per month biodiesel supply for SCR depots. SBT plans to upgrade the current biodiesel unit from 12,500 TPY (tons per year) to 25000 TPY, over a period of three years. It is in the process of setting up a unit of 250 tons per day capacity at Vizag as domestic/EOU/SEZ to have presence in the global market also. The project cost of the proposed biodiesel plant is Rs 90 crore.
Royal Energy Ltd incorporated in July 2003 headquartered in Mumbai is a renewable energy company of the RK Agarwal Group. The company has one of the largest ethanol plants in India today, having a capacity of 150 KL per day. The company is now embarking on a biodiesel project that will involve setting up of a multi-feedstock based plant of 300 TPD each, in Maharashtra. On full commissioning the total production capacity of the company would be about 0.7 MTPA of biodiesel, equivalent to about 1.7 percent of the current diesel market size in India. According to Syed Saheeruddin, Manager-International Business, Royal Energy Ltd, "The company is yet to start Jatropha cultivation. About 5,000 acres of land has been allotted against 12,500 acres in Dhar district, MP, and 500 acres in Patan district of Gujarat as a prototype for Jatropha cultivation. Plantation will be started in November 2008 after acquiring the allotted land. We plan to make investments of Rs 800 crore for Jatropha cultivation."
Several industrial groups have also diversified into the biofuels sector looking at the potential that it represents. Emami Group has begun operations at its palm biodiesel plant in Haldia. Initially, Emami Group plans to produce 300 tons of biodiesel a day and 1,000 tons of palm oil a day. Later in the year, soya and rice brain oil will also be added as feedstocks. The 40-acre plant in West Bengal was set with an investment of Rs 150 crore for creating a production capacity of 100,000 tons of biodiesel a year. For feeding the biodiesel plant with adequate supply of feedstock, the company is looking at entering into Jatropha cultivation over an area of 100,000 acres in West Bengal, Orissa and Andhra Pradesh later this year. Reliance Industries has also ventured into biofuels with Reliance Biofuels Private Ltd, a 100 percent subsidiary of Reliance Life Sciences. The company is working with villagers in 14 districts across five States, which include Khammam and Nizamabad in AP; Nanded, Parbhani and Hingoli in Maharashtra; Bilaspur and Bastar in Chattisgarh; Junagarh and Vyara in Gujarat and Dewas, Shajapur, Chhindwara, Seoni and Mandla in Madhya Pradesh testing intercropping of Jatropha and pongamia (non-edible fuel crops) along with a diverse set of food crops including corn, mango, medicinal plants and vegetables in its research and development farms.
Biofuels: An opportunity for Investors
It's not just IT that's on Bill Gates mind these days. Cascades Investments LLC, Bill Gates' personal investment vehicle, is backing Sapphire Energy, a start up working towards a commercial-scale facility to produce oil from algae. Well known investor, Vinod Khosla is one of the leading proponents of biofuels and has backed Brazilian Renewable Energy Company (Brenco) and also made investments in Segetis, founded by former Soviet scientists Sergey and Olga Selifonova, to develop renewable chemical products. Khosla is also a minor stakeholder in Pune based Praj Industries that is a biofuel technology provider and equipment maker. The sector is surely rewarding for an investor, said Rajeev Mantri, executive director, Navam Capital, a Kolkata-based private investment firm focused on early stage investments in emerging technologies, "For an investor, the opportunity lies in the size of the market. Think of all the thousands and thousands of liters of liquid fuel consumed by cars, planes, commercial vehicles and industrial equipment. If you can capture even a small portion of that market, it's a potentially huge killing. The payoff justifies the pursuit."
However in India most of the biofuels projects are funded through bank financing. "Initially there was not enough support on microfinancing our project to farmers, but gradually seeing our commitment and dedication, some financial institutions became positive. All nationalized banks are now financing Jatropha based projects. For the first time we got a national insurance company (United India Assurance) to insure Jatropha crops," added Dr Alok Adholeya, Director, Biotechnology and management of Bioresources, TERI. YES bank extended a term loan facility to Nandan Biomatrix Ltd (NBL) and farmers associated with NBL for cultivation and other agricultural expenses according to Ajay Desai, Senior Vice President & Head Agri, Rural and Social Banking (ARSB), YES Bank. However given the fact the biofuels sector is still at a nascent stage, India is yet to see venture capital flow. Rajeev Mantri said, "Building projects through bank financing is not a viable or sustainable approach since the projects are too risky for banks to finance, especially in the current scenario of high interest rates. Moreover, it takes a lot more than just money to get a new technology to market. What we need is venture capital and private equity money flowing into the sector, like it has in the US, for it to really develop into a viable industry."
Next generation technology
While feedstock (Jatropha, pongamia for biodiesel and corn and sugarcane for ethanol) based biofuels comprise the first generation biofuels, second generation biofuels refer to cellulosic ethanol, algal biodiesel, biohydrogen etc. that are more sustainable. They are arousing considerable interest in the US and EU owing to growing sustainability concerns and market demands for improved process efficiencies and greater feedstock production yields. As leading venture capitalist and biofuels proponent Vinod Khosla addresses the Algae Biomass Summit in Seattle next month. In India research is still underway. Only recently, Hyderabad based the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) received a funding of $1.5 million for a three-year biofuels research-for-development project from The International Fund for Agricultural Development (IFAD) of the United Nations. The project will facilitate farmers and entrepreneurs to utilize sweet sorghum stalks and cassava roots in producing ethanol, and seeds of Jatropha in producing biodiesel. The Inter-Center project, involving ICRISAT, International Center for Tropical Agriculture and some national bodies, is aimed at popularizing the cultivation of sweet sorghum in the Philippines, China, Mali and India.
According to Suprotim Ganguly, Deputy Director, Biofuels and Energy efficiency, CII, "Conventional technologies have capacity as well as productivity limitations, so we need to build our muscle on the technological front. The productivity of algae is higher than the normal conventional feedstocks and has lesser dependency on politically debated resources like water and land. The technological initiatives by R&D institutes need to be brought under a single umbrella to spearhead the development of such second generation biofuels." CII has put forward a Nine-point recommendation to Sharad Pawar and Vilas Rao Muttemwar in June this year advocating setting up of a second generation biofuels fund to support all such research. It has also suggested setting up of four regional bioenergy centers to fund need based research. "If India is not prepared for second generation technology, we stand to lose," he added. Research is also being done on cellulosic ethanol, informed Dr RP Singh, senior scientist with CSIR. "Under one of the NMITLI projects sugarcane bagasse has been successfully fractionated using Steam Explosion Process into cellulose, hemicellulose, and lignin in highly pure form which are then converted to simple sugars and then to ethanol . These three can also be recovered from other cellulose-rich feedstock like wheat straw and jute sticks, which are abundantly available in India since this process is generic in nature. NMITLI has established a pilot-scale facility which is operational. The ultimate long-term objective is to substitute petroleum products as a base for many industrial goods with renewable biomass. The project is being carried out through a network of research institution in the public domain and CSIR is in the process of expanding the project further," he said.
Work is also being done at improving the quality of current feedstocks such as Jatropha and looking at alternate feedstocks. "At TERI we are also working on packaging the technology, plant varieties, doing genetic modification, conventional breeding so that we soon have more varieties which give us higher yield, high oil content, tolerant to salinity so that the future is insured in terms of a better crop. So in the first generation, we are looking for the next generation feedstock. As far as second generation technologies are concerned, India has a great deal to do," said Dr Alok Adholeya, Director, Biotechnology and management of Bioresources, TERI.
National Biofuels Policy: Challenges and expectations
On September 11, 2008 Union Minister of Agriculture, Food & Public Distribution, Sharad Pawar announced the long awaited Biofuel policy. He stated that the policy prepared by the Ministry of New and Renewable Energy (MNES) was approved by the Union Cabinet in its meeting. A proposal on "National Policy on Biofuels and its Implementation" was prepared after wide scale consultations and inter-Ministerial deliberations. The draft Policy was considered by a Group of Ministers (GoM) under the Chairmanship of Union Agriculture Minister Sharad Pawar and after considering the suggestions of Planning Commission and other Members, the Group of Ministers recommended the National Biofuel Policy to the Cabinet. An empowered National Biofuel Coordination Committee, headed by the Prime Minister of India and a Biofuel Steering Committee headed by Cabinet Secretary has been set up.
Most of the companies are toeing the line when it comes to planting Jatropha on wastelands. Samiran Das, CEO, D1BPfuelcrops India Pvt Ltd, said, "We are not encroaching on food security by targeting wastelands for Jatropha production and are also involving the rural poor into the growth story by empowering them to grow biofuel crops. Even if we are able to grow Jatropha on 10 million hectares of land, we shall be able to blend 5-10 percent of biodiesel and reduce imports." Agrees Dr Alok Adholeya, Director, Biotechnology and Bioresources management, TERI "We need to engage our wastelands and achieve rural employment without encroaching on food security. We need to look at additional areas of cultivation and improve production." The Biofuel policy aims at scrapping taxes and duties on biodiesel and declared goods status being conferred on biodiesel and this is good news according to CS Jadhav, Director, Marketing, Nandan Biomatrix, "Declared goods status would mean that biodiesel would attract a uniform central sales tax or VAT rate rather than varied sales tax rates prevalent in states This new bio fuel policy tries to solve lot of the issues faced by the bio fuel industry especially with regard to the blending mandate for various oil marketing companies and the uniformity of taxes."
However, the challenges too have their share. Many see the target to achieving a 20 percent blend of biodiesel by the year 2017 as too ambitious. "At this rate the requirement of biodiesel in 2017 would be 16.72 MT and the area required under various biodiesel plantation would be around 35 million acres (Assuming yield of 1.6 tons per acre and oil recovery as 30 %). To bring in 35 million acres under bio fuel plantations, lot of effort is required from various Government Departments, financial institutions and private entrepreneurs. Research has to be done to increase the productivity of bio fuel crops per hectare of land, says C S Jadhav, Director, Marketing, Nandan Biomatrix.
According to Vishal Rawat, President, IKF Green fuels Ltd," We already have our capabilities developed as far as bioethanol is concerned, but not in biodiesel. The decision to bring biofuels under declared goods is welcome but the policy has to be clear on contract farming as well." Pricing is another issue. Oil companies have declared their own biodiesel Purchase Policy. These companies offer a price of Rs 26.50 per liter of biodiesel, which is not going well with manufacturers alike.
According to Dr Alok Adholeya, "There has to be a workable purchase policy that takes into account the feedstock growers. The buy back price of Rs 26.50 is practically not right. There has to be a commitment from the government to purchase biodiesel on a price that will be on a parity basis. A higher price might affect food production where biofuel crops might compete with food crops." Subsidies are another concern. "We are waiting for the support price for Jatropha and the feedstock. The plantation of Jatropha is a long-term investment and production starts only after the third year of the crop and hence there should be provisions of soft loans to farmers and incentives to companies to set up refineries," echoed Vishal Rawat. "If a wasteland is being engaged for cultivation, subsidies should be provided on the resources end to encourage private players," added Dr Adholeya. He also feels that lack of blending regulations and an ambiguous export policy are some of the grey areas that need to be looked into to create transparency. However CS Jadhav is quite positive about the future. "India has major projects and within the next 5-10 years renewable sector would be the biggest industry in India and in the world and will be more organized and structured. After the success of information technology and biotechnology, energy would be the next big industry."
Shalini Gupta with inputs from Jahanara Parveen and Nayantara Som
"We aim to have 15-20 percent share of the biodiesel market by 2015,"
-Vishal Rawat, President, IKF Green Fuels
How many refineries do you have? Any plans for expansion?
The company has a refinery at Udaipur with a capacity to process 3,000 liters of biodiesel per day for trial and demonstration purposes. We are looking at the expansion of that refinery as well as setting up of more refineries in Vidharbha, Gujarat and Meghalaya. The capacity would be dependent on the captive area.
When do you expect to start commercial production?
We expect to start it by 2011. We expect full-fledged commercial production to start by 2015-16 since by then we would have a fully-developed refining capacity and plantations. We expect the size of the industry to be close to Rs 80,000-l00,000 crore by 2017.
How are you funding the plantations?
We have an agreement with HDFC bank for a credit line of Rs 20 crore on an all India basis for the farmers to undertake contract farming for IKF Green Fuels Ltd. We also have got a preliminary approval from Buldhana Urban Cooperative Credit Society (Maharashtra) for extending a credit line of Rs 50 crore for Jatropha cultivation. We are targeting 10,000 hectares in Maharashtra by the end of this year. We are also in advanced stages of talks with the Punjab National Bank and Cooperation Bank for a similar arrangement.
Are you looking at any acquisitions?
We are looking at acquiring a proprietorship concern in Rajasthan. It has around 10,000 hectares of existing plantation and an assured credit line of Rs 10 crore. The deal is almost finalized. We have also put up a proposal to Rajasthan fuel development authority for allotting 10,000 hectares which will take some time.
What is the progress made on R&D?
We already have 26 different varieties of Jatropha and we have collected the planting material from different sources. We are setting up a 200 hectares research farm in Ahamgaon in Maharashtra and looking at tie-ups with agricultural universities as well.
"We have a pipeline of 20 patent applications on different aspects of Jatropha,"
-CS Jadhav, Director Marketing, Nandan Biomatrix
Can you elaborate on your R&D?
NBL has over four years of lead in R&D for biodiesel and the first in the world to apply for four patents (PCT) on Jatropha. We have a pipeline of 20 patent applications in various stages on different aspects of Jatropha. We are also the first company to have insurance for Jatropha crop from National Insurance Company Ltd. We have a collaborative research program with ICRISAT, Malaysian Agriculture Research & Development Institute (MARDI), Malaysia and Institute of Oil and Oil Plants (IOOP), Vietnam.
Where are you cultivating Jatropha and on how much land?
NBL aims to be the largest integrated biodiesel producer in India with an annual production capacity of 2.5 million metric tons. NBL plans to bring 800,000 hectares under Jatropha cultivation in five years across the states of Tamil Nadu, Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Rajasthan and Uttar Pradesh. We have already brought 30,800 hectares under Jatropha plantation.
What is the company's business model?
NBL has developed an integrated bio refinery business model for Jatropha encompassing R&D, propagation, cultivation and processing of Jatropha seeds including setting up of oil expellers, solvent extraction units and bio refineries. In every state, Nandan works with the state government through the support of the state nodal agency and also a local resource partner for better liaison and decentralized operations. Nandan appoints franchisees in various districts to take care of the district operations. NBL provides technology and training to the franchisee and the franchisee in turn will offer training and services to the farmers for the development of Jatropha fields. The franchisee procures Jatropha seeds from farmers on behalf of Nandan. We plan to appoint 200 franchisees by next year.
Do you have any JVs?
We are the only biodiesel company in India to form a joint venture with Bharat Petroleum Corporation Ltd and Shapoorji Pallonji-Bharat Renewable Energy Ltd (BREL) for Uttar Pradesh. BREL plans to bring 400,000 hectares under Jatropha plantation. In Orissa, we are implementing about 8,000 hectares of plantation in Orissa with the help of OREDA (Orissa Renewable Energy Development Agency). In Jharkhand through our Resource Partner KGVK (Krushi Gram Vikas Kendra, an NGO of Usha Martin) we have already initiated Jatropha cultivation.
Getting clearance on ethanol from different states is a painstaking activity for the manufacturers
-Suprotim Ganguly, Deputy Director, Biofuels and Energy efficiency,CII
CII's national committee on Biofuels along with Rabobank conducted a detailed study of the Biofuels sector in India (both bioethanol and biodiesel) and put together a strategy paper on "Sustainable Biofuel policy for India" with inputs from companies, stakeholders an experts suggesting steps and policies to foster sustainable development in the sector. We find out more in conversation with Suprotim Ganguly, Deputy Director, Biofuels and Energy efficiency, CII.
What are the challenges being faced by the biofuel companies?
Industry is facing a short supply of feedstock. Currently the installed capacity for biodiesel is 1.2 MMT (million metric ton) and nearly 4 million hectares have been planted with non edible feedstocks (mainly Jatropha, Pongamia etc). But with the plantations not yet on the commercial way and the feedstock supply not being in place the yield is not assured. Hence how is it going to cater to the demand is questionable. Most of the plants are making biodiesel from palm fatty acid imported from Malaysia, Thailand etc. and then exporting it to international market.
How important is the pricing?
A clear roadmap needs to be chalked out to structure the price and indicative market. CII's National committee on Biofuels is doing a study with MNES and Tariff Commission to come up with a realistic price of biodiesel which would be a helpful research document for the steering committee to be formed with the enactment of biofuel policy. The factors driving the price would be international crude oil price along with adopting a cost plus approach. There is a word of caution here as well. The pricing has to be such that the farmer is not enticed into fuel crop production, thus diverting from food to fuels.
What were some of the suggestions made by CII to be included in the policy?
Getting clearance on ethanol from different states is a painstaking activity for the manufacturers, so we suggested single window clearance to the companies. We also suggested that there is a big opportunity in developing the rural economy through biodiesel production where small scale industries can sustain themselves through it. We are working with MNES on these lines. We are also planning to collate success stories such as those of Chattisgarh and disseminate them in other states saying that this is the model and promote it. The state is not only offering biodiesel at an affordable price, they are also using it in their transport systems with higher blends with absolutely no problems.
What does the government need to do in order to ensure a thriving biofuels industry?
The resource allocation for feedstock cultivation has to be clearly defined and there has to be strict implementation along with the political will to do so if the government is serious about the roadmap that it has charted for itself. The loopholes have to be plugged in. There has to be consistency irrespective of government change to give a clear cut vision to the stakeholders and investors to position their resources accordingly in the sector. GoI and corporates can also explore an opportunity on fulfilling the country's biodiesel needs from countries which have a developed a capacity for biodiesel production like Brazil, Thailand and Malaysia.