WHAT IS BIODIESEL ?  It is diesel made from plant oils or animal fats

by process of trans-esterification of alkyl ester of fatty acids.

  Edible oils like soybean oil, rapeseed oil, palm sterin are used for manufacture of biodiesel.

 Oils obtained from non-edible oilseeds such as Jatropha, Pongamia, Mahua etc are also used as feed stock.

Why Bio-diesel?  Fossil diesel is fast depleting and there is

need sooner than later to find alternate fuel.

 With dire need for reducing emission levels , there is no choice but to substitute fossil diesel with Bio-diesel. Even 5% blend of bio-diesel with fossil diesel is stated to reduce emission levels by 15% to 16%.

What is the status of production in India?

 India is net importer of edible oils. Nearly 50% to 60% of edible oil consumed here is imported. So there is no possibility of using edible oils for biodiesel production and sacrificing ‘Food ‘for ‘Energy’.

 Hence, by necessity, we have to look for non-edible oils for biodiesel production. Pongamia, castor, jatropha , mahua, etc are the most talked about non-edible oils for biodiesel production.

What is the status of production in India?

 India consumes 40 million Tons of diesel annually. Even 5% substitution with biodiesel implies need for 2 million Tons of biodiesel

 Riding on the wave of initial enthusiasm, processing capacities were created for biodiesel production in last 5 years. As against estimated 1.2 million tons of processing capacities available currently per annum, utilization is hardly 5% . This is mainly due to non availability of feed stock and high cost of production.

How short are we on raw material side?

Considering the most suitable non-edible oilseed like Jatropha that has 35 to 37% of oil content, 5.5 million Tons of seeds is required to produce 2 million Tons of biodiesel ( to achieve 5% blend ). At realistic yield levels ( about 1 MT per Acre ), it requires 5 million Acres of plantation. The current plantation area is 0.60 mn Acres. Hence , to achieve the first step of a 5% blend , we need to scale up the plantation area 10 times more than what it is today , which, however, can yield seeds only after 4 years.

Constraints in production & procurement of non-edible oilseeds

  -These are grown in waste lands / tribal areas. Collection of these seeds is a manual exercise involving high labor cost. Subsequent transportation to expelling units and thereafter transporting the expelled oil to locations of Biodiesel production units is unviable both economically and logistically.

  -Seeds like jatropha , which is highly recommended for use in biodiesel production, were initially stated to yield 4 to 5 Kgs per plant in a year, but actually has a low yield of about 1 to 1.5 Kgs per plant. There are no high yielding varieties of Jatropha available as yet, though R & D is in progress at several Universities and R&D centers.

Constraints in production & procurement of non-edible oilseeds

  -Seeds like jatropha , which is highly recommended for use in biodiesel production, were initially stated to yield 4 to 5 Kgs per plant in a year, but actually has a low yield of about 1 to 1.5 Kgs per plant. There are no high yielding varieties of Jatropha available as yet, though R & D is in progress at several Universities and R&D centers.

  -Much of the seeds produced are either going for R&D or for making saplings for new plantations.

Constraints in production & procurement of non-edible oilseeds

  -Currently, due to logistical problems and also unviable rates, growers in villages themselves expel the oil, with the aid of small equipments and use the oil for their own domestic use like in lamps, domestic pumps etc. In fact, this trend is reported to be on the increase. It works economically well for them in place of power and other fuels.

  -Cost of cultivation is high owing to low yields and also the long time taken for fresh yields on new plantations.  

Constraints faced by production units of bio-diesel

 -Availability of raw material is erratic and inadequate.

 -No fundamentals for cost variations.

 -No basis for finished goods pricing. Always linked to domestic diesel price, which is fluctuating and depends on import prices.

Constraints faced by production units of bio-diesel

 -Burden of taxes. VAT ranges from 4% to 15% from State to State.

 -No clear directives on retailing. Delivery to Oil companies to be given at

specified depots, which implies further transportation cost.

Government policy on biofuels

The Government Of India started Bio-fuel mission in 2003. A Bio-fuel policy was drafted in 2006.

A National Bio-fuel Policy was announced only in September

2008.

Salient features of the Bio-fuel Policy  An indicative target of 5% blend initially, to

be progressively increased to 10% and to 20% blend by 2017.

 Bio-diesel producing non-edible oilseeds to be grown in waste / degraded / marginal /forest land ( meaning, no land used for food production can be used for growing non-edible oilseeds).

Salient features of the Bio-fuel Policy  Focus would be on indigenous production of

feed stock. Import of Free Fatty Acid was prohibited, ; no import of duty rebate would be provided, as it hinders promotion of indigenous plantation of non-edible oil seeds which provides employment in rural areas.

 scrapping taxes and duties on bio- diesel and declared goods status being conferred on bio-diesel and bio-ethanol. Declared goods status would mean that the two would attract a uniform central sales tax or VAT rate rather than varied sales tax rates prevalent in states.

Salient features of the Bio-fuel Policy  National Bio-fuel Coordination Committee

headed by the Prime Minister with seven member ministers is constituted while also giving its nod for setting up Bio-fuel Steering Committee.

The Steering Committee would be chaired by the Cabinet Secretary which, along with the National Bio-fuel Coordination Committee would be serviced by the Ministry of New and Renewable Energy. Besides, the Ministry of Panchayati Raj would also be included in the Steering Committee.

Salient features of the Bio-fuel Policy  A sub-committee, comprising the Department of

Biotechnology and the Ministries of Agriculture, New and Renewable Energy and that of Rural Development under the Steering Committee would aid research on bio-fuels.

 Minimum Support Price ( MSP) for non edible oilseeds used for bio-diesel will be announced with provision for periodic revision, so as to provide fair price to growers. MSP fixation mechanism will be worked out by the Bio-fuel Steering Committee.

Salient features of the Bio-fuel Policy

 Minimum Purchase Price ( MPP) for purchase of bio-diesel by Oil Companies will be fixed, linked to retail diesel price.( However, in the case of bio-ethanol it is linked to import price of bio-ethanol and domestic cost of production)

 Policy envisages free movement of bio-diesel between States and no taxes and duties levied on bio-diesel.

 Financial Incentives for R & D.  Financial support and Incentives for plantation.  Financial support and Incentives for processing

units.

 Can these initiatives bring about the desired results?

  India has 55 mn hectares of waste land. 70% is owned / controlled by State or Central Governments. In order to produce 2 mn MTs of biodiesel, ( to achieve 5% blend level), we need to utilize just over 10% of this waste land, provided other logistics are worked out.

 High yielding varieties of Jatropha through R&D can further improve yields and lower the cultivation costs.

Can these initiatives bring about the desired results?

  Incentive mechanism to both cultivators and processing units can bring in financial feasibility to both.

 Capital investment in bio-diesel units needs long term funding. It is estimated that nearly Rs 18,000 crores are needed to create capacities to meet the 20% blend target. A unit’s ability to service such long term loans can be achieved only though higher capacity utilization , which again depends upon raw material availability and lower cost of production.

Future outlook  Policy guidelines on Bio-fuels have

addressed the fundamentals rightly, but success depends on the efficiency in implementation.

 - Burden of substantial compliance / implementation of the policies rests on departments of State or Central Governments.

Future outlook

 Private enterprises who have set up the units either as pilot projects or on a commercial scale have taken a lot of risk and preparedness to face the uncertainties. Existing capacities, which are estimated at 1.2 mn MT s can easily scale up to 2 mn MTs to achieve 5% blend targets, if fundamentals are corrected as per policy.

Future outlook

 Let us be optimistic and perform our part of the responsibilities

( either as processors or plantation developers) and prepare

ourselves to achieve the results we look for when the time turns

right.

BIOFUELS

ALL THE BEST

&

Thank you.