What is biodiesel?
Biodiesel is the name of a clean burning alternative fuel, produced
from domestic, renewable resources. Biodiesel contains no petroleum,
but it can be blended at any level with petroleum diesel to create a
biodiesel blend. It can be used in compression-ignition (diesel) engines
with little or no modifications. Biodiesel is simple to use, biodegradable,
nontoxic, and essentially free of sulfur and aromatics.
How is biodiesel made?
Biodiesel is made through a chemical process called transesterification
whereby the glycerin is separated from the fat or vegetable oil. The
process leaves behind two products -- methyl esters (the chemical name
for biodiesel) and glycerin (a valuable byproduct usually sold to be
used in soaps and other products).
The Indian demand for energy is growing by leaps and bounds. India's
energy demand ranks sixth worldwide. If India continues to consume oil
at the current rate, by 2030, it is estimated that 94 per cent of the
country's petroleum requirement will have to be met by imports. This
is a scary situation.
The
annual demand for diesel in India is approximately 52 Million MT (MMT).
Even a 5% blending of Bio diesel into petroleum diesel generates a demand
for 2.6MMT of Bio diesel. Extending this to 10 % blending, which is
technically quite feasible, moves up the annual Bio diesel demand to
a staggering 5.2 MMT.
The
development of the Bio diesel industry in India is hampered by the lack
of a feasible Bio diesel policy by the Government Of India. The Bio-Diesel
Association of India (BAI), has made several representations to the
Government Of India to rationalize the import duties on imports of feedstock,
principally Palm oil, for the manufacture of Bio diesel but have not
met with any success. The selling price of Bio diesel is regulated by
Government of India which is currently Rs 26.50 per liter. If producers
are required to pay full import duty on Palm oil, then Bio diesel cannot
be produced and sold at this level.
At
present there are four plants with an aggregate capacity of 250 TPD.
Another eight plants are planned with an aggregate capacity of 1730
TPD. Unless duty rebates are made available on imported feedstock, these
plants are unlikely to produce for local usage. Some of them may enter
into toll processing arrangements for exports in which case they could
possibly import feedstock without paying any duties.
At the same time, the Government Of India has also been requested
to expedite the policy and incentives for the growing of Jatropha seeds
in the vast areas of wastelands available in the country. Out of the
55 million hectares of wasteland in the country,43 million hectares
of wasteland could be very suitable for Jatropha cultivation. One Ha
can produce 1.5 to 2MT of Jatropha oil a year. This would also ease
the pressure on edible oils for Bio diesel manufacture.
There seems to be no urgency to formulate a workable bio diesel policy
and this will inhibit the growth of this industry. Even if Jatropha
plantations are taken up seriously, the gestation period for production
to commence, is 5 years. Further, how much area can be planted on an
annual basis is to be seen. Till productivity of seeds is improved and
best cultivation practices are established, bio-diesel would not be
cost-competitive at the national level. There is a need for an incentive
pricing policy for Jatropha seed. This would be possible if there is
no taxation on bio-diesel since it is an agricultural product and only
5-10 percent blend is recommended at the moment. No taxation on bio-diesel
on the pattern of tax holidays for a period of ten years will help in
promotion of this programme. Taking all these factors into consideration,
the Bio diesel industry does not seem to be going anywhere in a hurry.
Currently, there is no significant production of Jatropha in India to
act as feedstock for the bio-diesel production. Since, India is already
a significant net importer of veg oils for edible and other non-edible
uses, there is no possibility of diverting other locally produced oilseeds
towards the production of Bio-diesel. Unless the Government Of India,
comes up with some new policy for subsidizing import duties on imported
feedstock for bio-diesel manufacture, there does not seem to be any
likelihood of significant production of bio-diesel from veg oil feedstock,
at least for the next 6-7 years. If petroleum prices were to rise once
again above the USD 70 per barrel, India may be forced to give concessionary
import duties and other incentives for the manufacture of bio-diesel
from palm oil. In this scenario there would be a distinct possibility
of increased palm oil imports, specially RBD palm olein and RBD palm
oil from Malaysia.
Even if Jatropha cultivation is a long gestation project for India,
it is imperative to take steps in that direction soon and Jatropha seems
to be the only possible non-edible oilseed which can be produced on
a large enough scale for manufacture of bio-diesel. In addition to providing
a feedstock for bio-diesel manufacture, it will also provide an excellent
opportunity for increased employment.
The order of the day is to find ways and means of increasing the supply
of feedstock material for bio-diesel manufacture. The short term needs
can be met only by palm oil imports whereas for the long term needs
Jatropha cultivation seems to be the only way forward for India.
BioDiesel
in India is virtually a non-starter. There are many reasons for that.
The Main Reasons are non-availability of vegetable oil and government's
policies.
1.
Non Availability of Oil
• In India Edible oils are in short
supply, and country has to import upto 40% of its requirements (It is
now partly offset by Bumper Crop of Soy). Hence prices of edible oils
are higher than that of Petroleum Diesel. Due to this, these are not
viable and use of non-edible oils was suggested for BioDiesel manufacture.
• Even though the consumption of Edible
oils in India is high, the availability of used cooking oil is very
small as it is used till the end.
• Indian Culture uses vegetable oil
lamps for lighting in homes and in temples (like candles in other cultures).
When prices of edible oil shot up, some people turned to a bit cheaper
non-edible oils. The requirement of this sector is more than 15 million
tons (BioKerosine). Since seeds can be collected and crushed in a small
scale in far flung villages, the use of non-edible oils for lamps is
picking up very fast. This is the best way of use for millions of Rural
Indians. This is depriving BioDiesel industry its supply of oil.
• All over the world Edible oils are
used for manufacture of BioDiesel. These are Rape seed in Europe, Soy
in Americas and Palm in South East Asia. Rape seed and soy are used
for its deoiled meal as cattle feed and oil is not that important. Hence
these were in excess, and had to be disposed off at lower prices. Hence
initially it was a viable raw material for BioDiesel manufacture and
a lot of manufacturing units came up based on these oils. Now excess
oil is committed, and fresh sources need to be developed.
• Collection of non-edible oil seeds
is a manual operation, and for large BioDiesel plant it is a logistical
nightmare. In a day, a person can collect upto 80 kilograms of seeds,
which can produce 20 to 23 liters of oil. The collection is done for
3 months, once or twice a year. For a 100 tons per day (8 million gallons
per year) plant, you need 15,000 people to collect it. Collecting and
organizing such a large manpower is a challenge.
• The price of Seeds of Jatropha is
currently very high because most of it is used for plantation purposes.
At this price, the manufacturing cost of BioDiesel is 3 times the pump
price of Petroleum Diesel."
• Most of the edible oils used currently
are Stable (do not get rancid). These do not decompose much on storage.
Hence these are prefered for Trans-Esterification Process. Non-Edible
oils are not that stable, and need a lot of pre-treatment adding to
the cost of manufacture of BioDiesel. If these are used as lamp oil,
even oils with 50% free fatty acids can be used.
• The use of lamp oil is increasing
rapidly in India, as there is no electrical power supply for 10 to 14
hours a day in rural areas. Soon people will face shortage of these
oils for lighting purposes.
• Cottage soap industry can use vegetable
oils with high free fatty acid contents. Since prices of edible oils
have doubled, many soap manufacturers in unorganized sector are using
these oils as these are a bit cheaper.
• There are billions of other trees
(Karanj, Mahua, Neem), all over India, with oil bearing seeds. Traditionally
Karanj (Pongamia Pinatta) is planted along the highways. Petrol Pump
owners along the highways, should be encouraged to collect the Karanj
seeds. Neem (Azadirachta Indica) is planted everywhere for purification
of air. Mahua (Madhuca Indica) and Sal ( Shorea robusta) grows wildly
in Forests. Collection and processing mechanism for these seeds is not
yet developed. Hence a most of these seeds lie on the ground (and ultimately
get converted into BioFertilizer).
2. Government's Policies
• Government of India started BioFuel
mission in 2003, but it announced BioFuel Policy on 11th September 2008.
The Union Cabinet in its meeting gave its approval for the National
Policy on Biofuel prepared by the Ministry of New and Renewable Energy,
and also approved for setting up of an empowered National Biofuel Coordination
Committee, headed by Prime Minister of India and a Biofuel Steering
Committee headed by Cabinet Secretary.
Ministry of New and Renewable Energy has been given the responsibility
for the National Policy on Biofuels and overall co-ordination by Prime
Minister under the Allocation of Business Rules. A proposal on "National
Policy on Biofuels & 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 Shri Sharad Pawar, Union Minister of Agriculture, Food & Public
Distribution. After considering the suggestions of Planning Commission
and other Members, the Group of Ministers recommended the National Biofuel
Policy to the Cabinet.
Salient features of the National Biofuel Policy are as under:
1. An indicative target of 20% by 2017 for the blending of biofuels
- bioethanol and bio-diesel has been proposed.
2. Bio-diesel production will be taken up from non-edible oil
seeds in waste / degraded / marginal lands.
3. The focus would be on indigenous production of bio-diesel
feedstock and import of Free Fatty Acid (FFA) based such as oil, palm
etc. would not be permitted.
4. Bio-diesel plantations on community / Government / forest
waste lands would be encouraged while plantation in fertile irrigated
lands would not be encouraged.
5. Minimum Support Price (MSP) with the provision of periodic
revision for bio-diesel oil seeds would be announced to provide fair
price to the growers. The details about the MSP mechanism, enshrined
in the National Biofuel Policy, would be worked out carefully subsequently
and considered by the Bio-fuel Steering Committee.
6. Minimum Purchase Price (MPP) for the purchase of bio-ethanol
by the Oil Marketing Companies (OMCs) would be based on the actual cost
of production and import price of bio-ethanol. In case of biodiesel,
the MPP should be linked to the prevailing retail diesel price.
7. The National Biofuel Policy envisages that bio-fuels, namely,
biodiesel and bio-ethanol may be brought under the ambit of "Declared
Goods" by the Government to ensure unrestricted movement of biofuels
within and outside the States. It is also stated in the Policy that
no taxes and duties should be levied on bio-diesel.
• Oil companies have declared their
own BioDiesel Purchase Policy. These companies offer a price of Rs.
26.50 per liter of BioDiesel, which is less than half the current manufacturing
cost of BioDiesel.
• Large patches of land are required
for plantation of Jatropha. Government holds large tracts of land as
Forest Lands and Revenue lands. In some states, like Chattisgarh, these
are leased to State owned Oil company like IOC.
• UP Jatropha mission of Uttar Pradesh
is a Joint venture of BPCL, Nandan Biomatrics and Shapoorji Pallonji
and is supported by UP Government. Presently, they are going to tie-up
with every Panchayat (Local Body) of selecetd Districs to plant Jatropha
on Panchayat lands. Jatropha seeds will be bought back by BPCL in long
run. Operation of this mission may be very slow due to Government's
and Panchayat's involvement and because it is implemented through National
Rural Employment Guarantee Scheme. IOC is also planning to enter in
UP as well as some others. Individual farmers are ready to plant Jatropha
in their useless and waste lands and want buy-back agreement like contract
farming with good price (But price offered is generally very low). Bundelkhand
has lots of waste land (600,000 - 700,000 hectares) which are best suited
for Jatropha and on the other hand Districts of Eastern UP have saline
and waste lands which are also suitable for plantation.
Corporate Strategy Suggested for Big Indian Companies
Many Big Companies have their grass root plants in rural areas. They
have a big fleet of Vehicles, and they consume large quantities of Diesel
Oil for their Diesel Engine Vehicles and Diesel (Electric) Generating
Sets. These companies also have many activities for Rural Development.
They can combine Rural Development Activity to get Oil (and BioDiesel)
for their captive use. Here is a suggestion.
1. They should Start buying seeds of Karanj, Mahua, Sal and Neem
from local people around their unit and from Adivasis staying in Forests.
Local NGOs and Self Help Groups should be encouraged for the same. Since
seeds of these plants are not used much for plantation, the prices of
these seeds are reasonable. If these seeds are bought at factory gate
for Rs. 10 per kilogram, oil extracted from it can cost Rs. 30 per liter
(considering sale price of seed cake).
2. This will develop a supply chain. This then can be expanded
to district level and then to state level.
3. The seed cake is more valuable than oil. BioGas can be produced
from it, and it can be used as fuel in factory. Almost 50% of the weight
of seed cake is converted into BioGas, which is a clean fuel.
4. The fermented seed cake can be sold to local people for convertion
into BioFertilizer. BioFertilizers will be most sought after soil nutrients
in future.
5. There are many BioDiesel producers in the country, which are
facing shortage of raw material. These can convert the Company's oil
into BioDiesel, and give BioDiesel back to the company, on contract
basis. Conversion cost for a small scale BioDiesel plant is around Rs.
7 per liter. Hence it will be cheaper than Petroleum Diesel.
6. Since it is used captively by the company, it need not be
sold at unremunerative price to oil companies.
7. This will start like a movement (similar to Milk revolution
by Amul and NDDB) and will spread rapidly.
8. It is a win-win situation for all.
9. If the company has to offer a price that is more than Rs.
10 per kilogram, the extra expences incurred will not exceed even 1%
of the entire fuel bill of the company.
Some companies have shown interest in this model for further action.
Your views and suggestion on this model are appreciated.
