Biodiesel in 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.

New Diesel Cars are Hitting the Road Everyday

1. Non Availability of Oil

   • In India Edible oils are in short supply, and country has to import up to 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 up to 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 preferred 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 Districts 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.

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 conversion 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 expenses 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.