Biodiesel in India -

Mahindra & Mahindra is all set to launch its first biofuel-powered vehicles for commercial use by this year-end. The company is confident of fitting the new engines in all its existing models. The company is at the advanced test phase for B-100 (bio diesel) engines.
ICICI Bank is planning to finance Jatropha cultivation. State Bank of India, State Bank of Hyderabad and Andhra Bank have also announced plans to finance the cultivation. Government of AP proposed to implement the scheme in all the districts.

Price Policy for BioDiesel : Public sector oil firms have announced a price of Indian Rupees 25 (US$ 0.56) per liter (inclusive of taxes and duties) for procuring bio-diesel extracted from non-edible oilseeds for mixing with diesel. The program to sell diesel mixed with non-edible oil extracted from Jatropha Curcas and Pongamia Pinnata, which could reduce India's import dependence, but would take 4-5 years to launch on commercial scale. It will take time for adequate quantities of Jatropha Curcas and Pongamia Pinnata to be planted and oil extracted for mixing biodiesel in diesel.

Bio-Diesel Credit Bank : Petroleum Conservation Research Association (PCRA), www.pcra.org, launched Bio-Diesel Credit Bank. It will co-ordinate activities relating to Carbon Credit.

Field Trials : Several Field trials have been performed.

1. Indian Oil Corporation, (IOC) had placed an order of 450 kiloliters of bio-diesel in 2004, for field trials with the Indian Railways and State Roadways. IOC will be able to supplement 5% of diesel with bio-diesel by 2007.

2. The first phase of the project, by Daimler-chrysler India, in 2003-04, saw production of the indigenous biodiesel and completion of road trials on two C-Class Mercedes-Benz cars. The cars, powered by pure (neat) Biodiesel, traversed the rugged terrain of the country in April-May of 2004, and travelled over 5,900 kilo meters under very hot and humid conditions.

3. The Council for Scientific and Industrial Research (CSIR) has encouraged country's biggest truck and bus makers, Tata Motors and Indian Oil to take its biofuel project to the next stage, for testing its vehicles on bio-diesel developed from jatropha plant. Tata's company buses are running on BioDiesel for last few years.

BioFuel Policy : BioFuel policy is being prepared.

1. Centre has not yet cleared bio-fuel policy. The Center was likely to come up with a clear-cut bio-diesel policy by early 2006, after the Energy Policy Committee submited its report to the government by November 30, 2005. An in-principle approval is expected to be given by that time, which will be worked into a formal bio-fuel policy later. The report from the committee is expected to make specific proposals which will then be forwarded to the Energy Co-ordination Committee for final acceptance by the government.

2. Zero excise duty for BioDiesel : BioDiesel is classified as Methyl or Ethyl Ester of Vegetable oils. Excise duty on these is zero. However, it attracts State VAT.

3. Govt to assist, encourage states in bio-diesel production : The government will assist states promote Jatropha cultivation for increasing bio-diesel production in the country under the National Rural Employment Guarantee Scheme, the Rajya Sabha was informed on 7 Dec 2005.

4. Andhra Pradesh State Government Introduced Draft Industrial Policy : The Andhra Pradesh government has introduced a draft biodiesel policy to facilitate both investors and farmers to plant oil-bearing trees in 1.5 million acre in the next few years. Also, a risk fund of Indian Rupees 2 Billion is expected to be created, as loan to the state government, to support small and marginal farmers with maximum five acre land holding. There is also a proposal for constituting a biodiesel board, which would be an autonomous board for integrated development of jatropha cultivation and bio-diesel oil in the state. The proposed board, having legal authority, will monitor the tripartite agreement signed between the stake holders, besides assisting, encouraging, and promoting jatropha cultivation, according to the officials involved in preparing the draft policy said. Following the constitution of policy, the government is determined to promote contract farming for buyback of jatropha seeds. The minimum buy-back price will be fixed considering the different variables including the quality and quantity of the produce. A special department called the Rain Shadow Area Department has been created as a special purpose vehicle for planning, coordination, monitoring and implementation of the biodiesel program.

Production Plans : Number of companies are planning to set up new units.

1. Costal Energy Limited is an Indian Public Limited Company in the process of setting up a Large State of Art Bio Diesel Production Plant in India. The Company is on schedule to go full scale Commercial Production by July, 2007. It is setting up a one hundred thousand Tons per annum Bio Diesel plant in Falta SEZ, Kolkata, West Bengal. It is embarking on a mission to setup a large Bio Diesel plant using proven world class technology adhering to International standards. The Bio Diesel produced by us will be to EN & ASTM specifications only. Our fully automated plant will be located in Falta Special Economic Zone, Kolkata West Bengal, India.

2. Cleancities Biodiesel India Limited is an Indian Public Limited Company in the process of setting up a Large State of Art Biodiesel Production Plant in India.The Company is on schedule to go full scale Commercial Production by July,2007. Cleancities Biodiesel India Limited is setting up a Two hundred fifty thousand Tons per annum Biodiesel plant in Visakhapatnam SEZ, Andhra Pradesh.

3. Kochi Refineries Ltd (KRL) is setting up a pilot plant with a US firm to extract biodiesel from rubber seed oil. An R&D exercise, the company proposed to look at the feasibility of the project and would initially have a pilot plant set up with a daily capacity of 100 liters. The company has initiated studies into the availability of rubber seed oil from neighboring Tamil Nadu, especially from the Nagercoil belt.

4. Another Kochi-based company, TeamSustain Ltd, a division of US-based Dewcon Instruments Inc, is in talks with a US firm for setting up a biodiesel plant in Kochi.

5. Pune-based Shirke Biohealthcare Pvt. Lld., is setting up a refinery, with a capacity to process 5,000 liters biodiesel per day from Jatropha oil. The refinery will also produce 1 MW power from the oil cake, apart from natural gas which will be used to run the power plant.

6. Renewable energy company Bhoruka Power Corporation Ltd, has received a grant of US$ 100,000 from the US government to conduct a detailed feasibility report for a bio-diesel project in State of Karnataka. The study envisages use of Neem or Pongamia non-edible oilseeds for production of bio-diesel as well as power.

7. The Southern Online Biotechnologies Limited, which is setting up a bio-diesel project in Andhra Pradesh, has signed MoU with several government bodies and non-governmental organisations, for procuring raw material like Pongamia Pinnata (Karanja or Kanuga) and Jatropha seed. The oil extracted from this seed is used to produce bio-diesel. The company is setting up the bio-diesel project at an estimated cost of Indian Rupees 150 million at Choutuppal in Andhra Pradesh, with technology from a German company, Lurgi. The plant capacity is 30 tons per day or 10,000 tons per annum. It would require around 100 tons of seeds per day. The annual requirement of seeds is around 32,000 tons. As the current availability of seeds in the state is less than 4,000 tons, company will use other raw materials like acid oils, distilled fatty acids, animal fatty acids and non-edible vegetable oils like neem, rice bran etc,

8. Jain Irrigation System Ltd, has plans to set up a Indian Rupees 480 million large-scale commercial bio-diesel plant, with a capacity of 150,000 tons per day in Chattisgarh by 2008. R&D work is being carried out in a 3 tons per day biodiesel pilot plant at Jalgaon, built at a cost of Indian Rupees 5 million. This will be followed by another bio-diesel plant with a capacity of 10 tons per day at Jalgaon. The current concern in the biodiesel industry is finding adequate farmland to make sure our industry receives a regular supply of feedstock.

9. Nova Bio Fuels Pvt. Ltd, has set up a Indian Rupees 200 million, biodiesel plant with a capacity of 30 tons per day in Panipat in 2006. The plant would also supply glycerine to local pharma companies.

10. Naturol Bioenergy Limited is setting up an integrated biodiesel facility in Andhra Pradesh. The 300 tons per day biodiesel plant will come up in the port town of Kakinada at an estimated cost of Indian Rupees 1.4 billion and would be a 100 per cent export-oriented unit. It is now going in for Backward Integration with Jatropha Plantation.

11. An Indian Rupees 9 million biodiesel plant, is coming up in Ganapathipalayam village, about 20 km away from Pollachi. KTK German Bio Energies India, is all set to commence commercial production of biofuel. The plant will use rubber seeds for extraction biodiesel.

12. Biodiesel extracted from Pomgamia Pinatta (Karanj) seeds, was commercially launched in Pune in January 2006. The fuel has been produced and marketed by Pune-based Mint Biofuels, Though the plant initially had a capacity of 100 litres per day, it was scaled up to 400 litres per day. The company will set up a Indian Rupees 300 million plant at Chiplun, which will have a capacity of producing 5,000 tons of fuel per day. Plans are afoot to increase the capacity of the plant to 1,00,000 tons within a period of four years.

13. British Petroleum on Feb. 2, 2006, declared that it will fund a $9.4 million project in India to see if biodiesel can be produced from a non-edible oil bearing crop. The project by The Energy and Resources Institute (TERI), in the southern state of Andhra Pradesh will study the feasibility of producing biodiesel from the crop Jatropha Curcas. The 10-year project will cultivate around 8,000 hectares of wasteland with the crop and install equipment needed for seed crushing, oil extraction and processing, to produce 9 million liters of biodiesel per year. The project will also include an environmental and social impact assessment. TERI will run the project's daily operations.

President of India Planted Jatropha Saplings in Mughal Gardens of Rashtrapati Bhavan (Presidential Palace) : Dr. A.P.J. Abdul Kalam has planted Jatropha sapling in Mugal Gardens of Rashtrapati Bhavan. To begin with 800 plants are being planted for educational purposes to promote the use of herbal plants for extracting oil from which bio diesel can be produced. This is being done in collaboration with G.B. Pant Agricultural University, Pantnagar and National Botanical Research Institute, Lucknow. A demonstration of Agricultural implements being operated by bio-diesel was also made before the President. President of India Dr. A P J Abdul Kalam always emphasizes on plantation of Jatropha Curcas.

Every State Government is taking steps to promote Jatropha Curcas and Pomgamia Pinatta.

1. Chhattisgarh : The government has planted in 2005, 80 million saplings of jatropha, a source of bio-fuel, as the state attempts to tap non-conventional energy sources. It has set a target of cultivating jatropha plantations in one million hectares in 2006, covering 20,000 hectares in the first phase. The government would work with NGOs for starting 350 jatropha nurseries, each spread over a maximum of 500 hectares, in 2005.

2. Andhra Pradesh : State has taken the lead in Jatropha Plantation. The state government has set up a separate department for bringing into productive use the 728,000 hectare cultivable wasteland available for cultivation of Jatropha plantation for production of bio-diesel. The state government is drawing up a roadmap, which will see the involvement of oil majors like Indian Oil Corporation (IOC) and Reliance Industries, to make the state the biggest producer of bio-diesel. It is planning to bring between 4 and 5 million acres of land in seven to eight districts of the state under biodiesel plantations and ensure that micro-irrigation is used in a big way in these areas. This will change the ecology of the area.

3. Tamil Nadu : Underutilised lands could turn into fertile farms and farmers can be assured of a price for their produce. This is a project to produce 100 per cent biodiesel from jatropha. D1-Mohan Bio Oils Limited (a joint venture of Mohan Breweries and Distilleries and U.K.based D1 Oils Plc) plans to bring one lakh hectares under jatropha cultivation in Tamil Nadu. Indian Overseas Bank signed an agreement with Coimbatore based Classic Jatropha Oil (India) Ltd for promoting cultivation of jatropha curcas in Tamil Nadu under contract farming. Classic Jatropha Oil, a subsidiary of Tirupur based major knitwear exporters, has been involved in developing the Jatropha cultivation for a long time.

India's vehicular pollution is estimated to have increased eight times over the last two decades. This source alone is estimated to contribute about 70 per cent to the total air pollution. With 243.3 million tons of carbon released from the consumption and combustion of fossil fuels in 1999, India ranked fifth in the world behind the U.S., China, Russia and Japan. India's contribution to world carbon emissions is expected to increase in the coming years due to the rapid pace of urbanisation, shift from non-commercial to commercial fuels, increased vehicular usage and continued use of older and more inefficient coal-fired power plants.

Major Players in the Field

1. D1 Oil plc. : A UK producer of green fuel, Newcastle-based D1 Oil plc, has 10,000 hectares of the crop planted in India and its target of 267,000 hectares by the end of 2006 is on track.

2. Reliance Industries Ltd. to enter Bio-Fuel : Reliance Industries Ltd (RIL) is planning to enter the bio-fuel segment in a big way. To begin with, the company has earmarked 200 acres of land at Kakinada in Andhra Pradesh to cultivate jatropha, which can yield high quality bio-diesel. The area of cultivation will be increased to many thousands of acres depending on the progress of the project. The project is being implemented by Reliance Life Sciences, a subsidiary of RIL.

3. Godrej Agrovet plans Indian Rupees 5 billion for bio-fuel projects : Godrej Agrovet Ltd is planning to invest over Indian Rupees 5 billion, for jatropha and palm oil cultivation in the states of Gujarat and Mizoram. The company would cultivate jatropha or palm oil according to the nature of the waste land in these states. According to industry sources, Godrej Agrovet would invest Indian Rupees 2.5 billion for bio-fuel plant cultivation along with the palm oil processing and plant cultivation project in Gujarat while it would invest Indian Rupees 2.5 billion for both jatropha and palm oil cultivation in Mizoram. Godrej would be cultivating both jatropha and palm oil in an area over 10,000 acres in Mizoram as per the fertility of the land. The company is also in the process of setting up mills in Walia (Gujarat) at an estimated cost of $ 10 million.

4. Emami group is planning to set up a bio-diesel plant at Haldia, at cost of Rs 1.5 billion. This will be the first large bio-diesel project undertaken in the organised sector in West Bengal, and would initially use palm oil as basic raw-material instead of jatropha. Its capacity would be one lakh tonne per annum and commercial production is expected to begin by early 2008.

5. Several smaller Indian companies are already working towards developing bio-diesel. Companies like Nandan Bioagro and Labland Biotech have tied up with British oil company D1 Oils to produce jatropha and trade in it. The company will encourage hundreds of farmers to cultivate the crop under an arrangement with the company.

A jatropha seed contains 27 to 31 per cent extractable oil. A jatropha plantation over 100,000 hectares is expected to yield 250,000-300,000 tons of crude jatropha oil per annum. It is estimated that an initial 100,000-hectare jatropha farm will yield revenues of $100 million per annum. Reliance is also in talks with Maharashtra, Gujarat, Andhra Pradesh and Rajasthan Governments, to get access to land for contract farming.

Biodiesel will have a pronounced impact on edible oil prices : Prices of both palm and soy oils will firm up in the coming months, with demand for biodiesel alone grabbing at least six million tons of oils despite the slower growth of the economy.

Rising crude prices : The rising crude oil prices will lead to higher usage of vegetable oils and fats as alternative fuel. If the price of crude is more than US$ 60 per barrel, any food material can be economically converted into BioFuel. Demand for bio-fuels will invariably increase, it is expected that the demand for bio-fuel from vegetable oils and fats will shoot up to 3 million tons a day.

Most of the plants in South East Asia, are based on Palm Oil. This has raised the crude palm oil price and some companies are re-evaluating the viability of the projects.
Crude Palm Oil futures have gone up from 1,300-1,500 ringgit to a new higher range of 1,400 to 1,600. As the period October to February advances, prices will creep towards the upper end of this range. Crude de-gummed soy oil would be in the range of $460-500 per ton free on board, while RBD palm olein will be in the $400-450 band and crude palm oil will be between $370-420 free on board.

Malaysia and Indonesia are the world's largest producers and exporters of palm oil, while Brazil and Argentina are among the top soy oil producers. From mid-2006, the use of soy oil for biodiesel will have a pronounced impact on prices, and the total biodiesel capacity coming on stream by the end of 2006/07 will require 1.6 million tons of soya oil. Edible oil imports by India, the world's leading buyer, in 2005/06 could remain flat at around 5.65 million tons, but imports of soy oil will go up at the expense of palm oil.