Bio-Fuels in India

Introduction:
The transport sector is one of the major emitters of greenhouse gases. According to the IEA
there is a need for a four-fold reduction of the carbon intensity of transport. Hence, the
transport sector needs a transformation - a revolution in technology, infrastructure, transport
concepts and political framework in order to achieve the goal of at least 50 % CO 2 emission
reduction by 2050.

The increasing energy use in the transport sector is adding also to the dependency of
countries on oil imports. In the reference to the scenario of the IEA World Energy Outlook
2010, the transport sector is the largest contributor to oil demand growth in non- OECD
countries, accounting for 61 % of global primary oil consumption in 2030 compared with 52
% in 2008 and 38 % in 1980. Despite the continuing improvements of the average vehicle
fuel efficiency, the sheer increase in vehicles numbers and kilometres driven, in particular in
upcoming economies, is expected to keep pushing up demand for oil in the transport sector.

To reduce the greenhouse gas emissions from the transport sector and its dependence on
imported oil to the levels as indicated above requires a true transition of the transport sector
and its energy system. The main ingredients to realise such a transition are:

- Reducing energy demand of vehicles.

- Shifting towards less carbon-intensive and carbon-neutral energy carriers.
- Shifting towards more energy -efficient or less carbon-intensive modes of transport.
- Curbing the growth of the transport demand.

Bio-Fuels:
One of the options to realise the transition of the transport sector is Bio-Fuel. The world is on
the verge of unprecedented growth in the production and use of Bio-fuels. The rising oil
prices, energy security concerns, the desire to increase farm income and a host of new and
improved technologies are propelling many governments to enact powerful incentives for the
production and use of these fuels.

Types of Bio-Fuels:
The mostly used bio-fuels in India are Bio-ethanol and Bio-diesel, both of which can be used
in existing vehicles. Bio-ethanol is currently blended with gasoline and Bio-diesel is blended
with petroleum based diesel for use in conventional diesel fueled vehicles. The Bio-ethanol is
produced from biomass such as sugar containing materials, like sugarcane, sugar beet, sweet
sorghum etc., starch containing materials such as corn, cassava, algae etc., and cellulosic
materials such as bagasse, wood waste, agricultural and forestry residues etc.

Page 1
 Bio-Fuels in India

The Bio-diesel is a methyl or ethyl ester of fatty acids produced from vegetable oils, both
edible and non-edible, or animal fat of diesel quality.

The bio-fuels are said to be of “First Generation”, if they are characterized by use of sugars,
starches or vegetable oils. All the current bio-fuels production falls into this category.
“Second Generation” bio-fuels are characterized by the use of non-food/feed, biomass feed
stocks, such as woody and cellulosic plants and waste material. The bio-fuel is said to be
“Advanced Bio-Fuel”, when it uses both the first and second generation feed stocks so long
as the final fuel results in the significant reduction life cycle GHG emissions and improved
sustainability.

Facts and Figures of Bio-Fuels:

The comparative study report for the HSD and Bio-diesel (PME)

Sr.No. Parameter HSD Petro Diesel PME Bio-diesel

01 Cetane No 45 58 – 62
02 Carbon Residue % mass 0.35 <0.05
03 Flash Point 0C 60 60 >145
04 Sulphur Content% mass 0.25 <0.0002
05 Viscosity@40 0C cSt 1.8 - 5.0 4.5 - 4.8
06 Calorific Value Kcal/kg 10700 9600
07 Density@150C kg/m3 883.0 874.0
08 Boiling Point 0C 215 – 376 >290
09 Melting Point 0C N.A. 12
10 Pour Point 6 – 18 16
Source: Website of Bio-Diesel Technologies India

The Bio-diesel emissions compared to conventional diesel :

Emission Type B100 B20

Regulated
Total Unburned Hydrocarbons -93% -30%
Carbon Monoxide -50% -20%
Particulate Matter -30% -22%
NOx +13% +2%
Non-Regulated
PAH (Polycyclic Aromatic Hydrocarbons) -80% -13%
nPAH (nitrated PAH’s) -90% -50%
Life Cycle Emissions
Carbon Dioxide (LCA) -80%
Sulphur Dioxide (LCA) -100%
Source: Document - An Assessment of the Bio-Fuels Industry in India by Joseph B.
Gonsalves at United Nations Conference on Trade and Development.

Page 2
 Bio-Fuels in India

Comparison of emissions from 22 % ethanol (E22) and 100 % hydrated ethanol (E100) with
legal limits:

Legal Limits, India (Euro III,

Emission Type E100 E22
Bharat III)
Total Unburned Hydrocarbons 0.20
0.15 0.13
(g/km)
Carbon Monoxide (g/km) 0.65 0.76 2.3
Particulate Matter (g/km) 0.02 0.08
NOx (g/km) 0.34 0.45 0.50
Aldehydes (g/km) 0.02 0.004
Evaporatives (g/test) 1.6 0.86
Sulphur Dioxide (g/km) 0 0.064
Source: Document - An Assessment of the Bio-Fuels Industry in India by Joseph B.
Gonsalves at United Nations Conference on Trade and Development.

Carbon dioxide Emission, Life Cycle Analysis:

Life Cycle Analysis, from well to wheels, shows that ethanol has the lowest CO 2 emissions
among major transportation fuels.

Rationale for the Bio-Fuels in India:

Page 3
 Bio-Fuels in India

The main reasons for the Government of India to support bio-fuels are Energy Security,
Socio-economic and environmental benefits. During 2008-09, the domestic production is
33.51 Million Metric Tonnes (MMT) and imports are 128.16 MMT. The Indian economy is
expected to grow at a rate of 8 % per annum and petroleum products are projected to rise.
Hence there is a growing need for energy security as any disturbance in the supply of the
petroleum fuels or increase in petroleum prices can have a negative impact on the growth of
Indian economy. Indigenously produced bio-fuels are being considered as one of the options
to partially substitute the petroleum fuels and reduce dependence on imported fuel.

Bio-Fuel Production in India – A Special Case:

As per the study by the German Development Institute on Bio-fuel in India, the
developmental effects are positive for Bio-fuel in India. This is a special case for India
because of the far reaching consensus that production of the bio-fuel will be promoted only
on the basis of the non-edible oil seeds on marginal lands. Hence this reduces the risks of
crowding out food production and rising prices for edible oil. In addition to this, cultivating
the tree-borne oil seeds on degraded lands stabilize the soil and also create carbon sinks and
also production requires low inputs which further serves to improve the carbon balance.

As per the study there are more than 13 different ways of organizing the value chain, ranging
from cultivation on large plantations to the contract farming agreements, social forestry
projects and farm based production for rural electrification. Depending on the value chain
chosen the differences would be in terms of food security, climate change, natural resources
management, economic sustainability, participation and empowerment and income
generation.

Bio-Fuel Production in India – Issue of Economic Viability:

Although there are lot of opportunities for the Bio-Fuels in India, the current issue of
economic viability hinders the growth. The important reasons for the issue are:

• Heavy subsidization of the prices of the conventional diesel. This act hides the negative
environmental externalities of diesel on the price.

• As per the research, most of the oil bearing trees are wild plants. The expectation that oil
bearing trees, especially the Jatropha, which was thought to give good yields on the
marginal and dry lands without inputs of irrigation, fertilisers and pesticides has not
materialised. The yields on the fertile farm lands are higher but the return on the
investments is lower for tree-borne oil seeds.

Hence in these conditions without government subsidies, only the niche markets such as the
oil extraction for the chemical industry, CDM funded projects and reproduction of seedlings
are only economically viable.

Page 4
 Bio-Fuels in India

Policies at Central and State Levels:

Concrete policies with respect to the bio-fuels already exist at the central and state level. In
2008, the government of India adopted a National Bio-Fuels Policy. This policy emphasizes
the need on the research and development of bio-fuels and establishes the incentives on the
demand side to increase the blending of bio-fuels. There are also centrally sponsored schemes
to promote the plantations. The most important scheme is National Rural Employment
Guarantee (NREG) which guarantees payment for the work to rural employed people up to
100 days.

The states also adopted more or less similar packages. The states use different incentive
schemes and specific strategies for the development of Bio-Fuels. For example, Uttarakhand
launched a bio-diesel program to create employment and regenerate degraded forest land.
This is characterized by a high degree of regulation, allowing only one company to
participate in the program by entering into a public-private partnership with it. Andhra
Pradesh on the other hand focuses on the promotion of the plantations on specific private land
by emphasizing on linkages with the private entrepreneurs.

Highlights of National Bio-Fuel Policy, 2008:

• Strategy and Approach:

The issue of fuel vs. food security is not relevant in Indian context because of the
utilization waste and degraded forest and non-forest lands only for cultivation of shrubs
and trees bearing non-edible oil seeds for production of bio-diesel.

Plantations supported through a Minimum Support Price for the non-edible oil seeds used
to produce Bio-diesel. This is to ensure a fair price to the farmers.

Research, development and demonstration will be supported to cover all aspects from
feedstock production and bio-fuels processing for various end-use applications.

• Plantations:

Quality seedlings will be raised in the nurseries of the certified institutions and
organizations identified by the states for distribution to the growers and cultivators.

The National Rural Employment Guarantee Program (NREGP) covers the employment
provided in plantations of trees and shrubs bearing non edible oilseeds.

• Processing:

Mandatory blending of the ethanol with gasoline is specified in 20 states and 4 union
territories. The blending has to follow the protocol and certification process, and conform
Page 5
 Bio-Fuels in India

to the BIS specification and standards, for which an appropriate mechanism and required
facilities have to be set up by the OMCs and the processing industry.

Oil Marketing Companies (OMCs) can bank the surplus of the Bio-fuels left after blending
of bio-diesel and bio-ethanol because of the fluctuations in the availability of the bio-fuels.

• Pricing:

For pricing the bio-diesel, the entire value chain has to be considered from production of
oil seeds, extraction of the bio-oil, its processing, blending, distribution and marketing.
The Minimum Purchase Price (MPP), for bio-diesel by the OMCs will be linked to the
prevailing retail diesel price. The MPP for bio-ethanol will be based on the actual cost of
production and import price of bio-ethanol. The MPP, for both bio-diesel and bio-ethanol
will be determined by the Bio-fuel steering committee and decided by the National Bio-
fuel Coordination Committee.

• Financing:

Plantation of non-edible oil bearing plants, the setting up of oil extraction and processing
units for production of bio-diesel and creation of any new infrastructure for storage and
distribution would be declared as a priority sector for the purposes of lending by financial
institutions and banks. The other sources of funding are multi-lateral and bi-lateral and the
carbon financing opportunities can also be explored on account of avoidance of CO2
emissions.

The 100 % FDI participation is allowed for the bio-fuel technologies and projects and not
for plantations, provided bio-fuel is for domestic use only.

• Financial and Fiscal Incentives:

As bio-fuels are derived from renewable biomass resources the plants are eligible for
various fiscal concessions and incentives that are available to the New and Renewable
Energy Sector from the central and state governments.

Bio-ethanol enjoys concessional excise duty of 16 % and bio-diesel is exempted from

excise duty.

• Research & Development:

As per the policy, intensive R & D work would be undertaken in the areas of:

1. Bio-fuel feed stock production.

Page 6
 Bio-Fuels in India

2. Advanced conversion technologies.

3. Utilisation of by-products.

Grants would also be provided to academic institutions, research organizations, specialized

centres and industry undertaking research development and demonstration projects.

• International Co-operation:

According to the national priorities and socio-economic development strategies and goals,
the international scientific and technical cooperation in the area of bio-fuel production,
conversion and utilisation will be established.

• Imports and Exports:

Import of the bio-fuels would only be permitted to only to the extent necessary and will be
decided by the National Bio-fuel Coordination Committee. Duties and taxes are levied on
the imports so as to ensure that domestic bio-fuels are not costlier than bio-fuels.

Export of the bio-fuels would be decided by the National Bio-fuel Coordination

Committee (NBCC) and export would be permitted only after meeting the domestic
requirements.

• Institutional Mechanisms:

The responsibility of policy and overall coordinating concerning bio-fuels has been given
to the Ministry of New and Renewable Energy (MNRE) under the allocation of the
business rules.

• National Bio-fuel Coordination Committee:

This committee meets periodically to provide overall coordination, effective end-to-end

implementation and monitoring of bio-fuel programmes.

The committee consists of the Prime Minister of India, deputy chairman of planning
commission and other members are from the ministries of New and Renewable Energy,
Rural Development, Agriculture, Environment and Forests, Petroleum and Natural Gas,
Science and Technology.

The committee is chaired by Prime Ministry of India. The convenor of the committee is
the secretary of MNRE.

• Bio-fuel Steering Committee:

This committee provides effective guidance and oversees implementation of policy on a

regular and continuing basis.

Page 7
 Bio-Fuels in India

The committee consists of cabinet secretary, and secretaries from the ministries of
Finance, Rural Development, Department of Agricultural Research and Education,
Ministry of Environment & Forests, Ministry of Petroleum & Natural Gas, Department of
Science & Technology, Panchayati Raj, Department of Biotechnology, Planning
Commission, Department of Scientific & Industrial Research, New & Renewable Energy.

The coordinating ministry for both the committees is Ministry of New and Renewable
Energy.

Benefits of Bio-Fuels:
• The new employment opportunities are generated for raising, reaping and processing of
bio-fuel crops.

• Bio-Fuels can be used as fuel for motive power applications in energy deficit rural India
and for decentralised distribution generation (DDG) of electricity and for.

• Regeneration of degraded forest-lands and greening of wastelands, thereby preventing

land degradation and then by helping in eco-restoration.

• Reduces the vehicular pollution and Green House Gas emissions helping for the better
ment of environmental performance. The use of bio-fuels in vehicles results in reduction
of SO2, articulate matter, CO2, etc.

• Bio-Fuels help in the global climate change and helps in reducing the CO2 content because
the plants and trees that serve as feedstock for bio-fuels require CO2 to grow.

• Bio-Fuels quickly biodegrade in water. This reduces the threat that gasoline poses to
waterways and groundwater. Hence because of this reason spills or leaks of the bio-fuels
do not constitute an environmental hazard.

• Bio-Fuels provide energy security to nations and also strengthen the balance of trade
between nations.

• Bio-Fuels help preserve natural resources. For example, for every unit of energy needed to
produce bio-diesel, 3.24 units of energy are gained – nearly four times more than diesel.

• Bio-diesel may not require any engine modification. It can be blended with diesel to
improve the efficiency of the engine without hassles. The vehicles using bio-diesel will
have very low idle stating noise. Bio-diesel has a cetane number of over 100 which means
that vehicle can be started coldly with low idle noise.
• Bio-diesel is easy to transport and store because of the high flash point at 2660 F. This
means that it cannot form a combustible mixture unless it is heated above the boiling point
of water.

Adverse Effects of Bio-Fuels:

Page 8
 Bio-Fuels in India

• Bio-fuels brought corporate control over the agricultural farms by converting the crop
fields into fuel farms threatening the people’s food security and sending food process high.

o For example, In Mexico, Maize is used as a bio-fuel crop. So, this raised the prices
and has given birth to the new slogan “Crops for humans or crops for cars?”.

• As of now there is a less importance on these bio-fuels but once the urban middle classes
and auto industry get the cheaper, “eco-friendly” fuels there would be large transition of
farmlands into spaces for bio-fuels which would be a total disaster.

• India’s plan to increase the domestic production of bio-fuels will put its water resources at
risk. This may also undermine the ability of the country to meet future food and feed
demands. Bio-fuel production needs a lot of water and this could threaten the ground water
and river systems.

International Best Practices in Transportation Sector:

• Mandatory Laws: The nations of the American continent have mandated in the laws to
run the vehicles on the mixtures of ethanol.

• Vehicle Design Modifications: To realize the maximum benefits from the ethanol, the
vehicle engines should have a high compression ratio. Hence, the vehicle engines are to be
designed accordingly. In Brazil, the cars are modified to make the engines suitable for a 25
% ethanol blended fuel. In United States, the cars are modified for the 10 % blends.

• Production of Ethanol from Cellulose: The cellulosic ethanol is primarily produced

from cheaper sources of cellulose like poplar trees, Switch grass and straw. These grasses
consume less urea and have natural ability to resist insects and diseases. Hence ethanol
produced from these grasses will produce lesser green house gas emissions when burnt in
the internal combustion engines than any other natural or fossil fuel. This has been
recently proved. A company named AE Bio-Fuels have applied for patent for the
technology to produce cellulosic ethanol. The production of this cellulosic ethanol will
have minimum impact on the food chain. It also reduces the cost of production because of
the wastes such as corn stover and straw. The technology used reduces the processing
costs because of the use of low cost enzymes.

• Maintaining Fuel Quality: The quality can be maintained by executing a monthly or

quarterly fuel analysis programs for safekeeping of fuels, by adhering to the standard
program directives, by referencing to the cold weather performance and other special
needs. For example, in U.S, the fuel quality is specified by American Society for Testing
of Materials (ASTM) for fuels by giving names as ASTM D975 (generic diesel), ASTM
D396 (heating oil), ASTM D 6751 – 07 a (bio-diesel) etc.

Page 9
 Bio-Fuels in India

• Transportation of Bio-Fuel: The aluminium, carbon steel or stainless steel containers are
to be used during transport. The seals and hoses are to be compatible with the bio-fuel.
Insulation determination should be done if the transportation is done in the winter months.
Placards specifying the hazardousness are not required because the flashpoints of the bio-
fuels are above 200 oF.

• Storage of Bio-Diesel: The bio-diesel is stored in the tanks of aluminium, steel,

fluorinated polyethylene, fluorinated polypropylene, Teflon and fibreglass. Proper fuel fire
tests are to be conducted to decide the extinguishing equipment. The pastes like Kolor Kut
and Sar Gel can be used for detecting water in the bio-diesel and bio-diesel blends. Proper
color marking system should be established to designate the tanks and piping which
carries the bio-diesel. For example, In U.S, API RP 1637 colour marking system has been
established for bio-diesel and associated blends.

• Cold Weather Blending Guidelines: The bio-diesel has to be blend with the 50 %
kerosene, prior to introducing it into the final fuel mixture. It is to be made sure that
kerosene is above 45 oF. The details regarding the cold filter plugging point , the cloud
point and the pour point of the generic

diesel fuel product are to be known prior to blending. Higher blending speeds are to be
sought through gravity distribution or mechanical agitation, which can be as high as 650
gallons per minute. The least expensive techniques like sequential blending can be used.

• Taxes and Incentives: A number of tax incentive programs have been implemented
which will benefit the bio-fuel industry. For example, in U.S, the programs are giving
“Volumetric Tax Credit”, “Small Agri-Biodiesel Producer Tax Credit” (for the production
of bio-diesel from vegetable oils and first use animal fats), “Alternative Fuel Refueling
Infrastructure Tax Credit” (for the installation of certain qualifying fueling infrastructure
that dispense alternative fuel, including bio-diesel blends B20 and higher).

• Formation of Accreditation Commission: The accreditation commission should be

formed to audit fuel producers and marketers in order to improve the quality of the bio-
diesel production and handling throughout marketing channels. It should issue a certificate
like “Certified Bio-Diesel Marketer”, a seal of approval for the marketers if they meet all
the requirements of fuel accreditation requirements. For example, In U.S there is a
commission called “National Bio-Diesel Accreditation Commission” which does all the
above said activities. The seal of approval it provides gives an assurance to engine
manufacturers, as well as customers, that the bio-diesel marketed by the companies meets
the ASTM standards for bio-diesel.

My Suggestions for Development of Bio-Fuels in India:

• The critics claim that production of bio-fuel will lead to food security and seizure of
common lands by corporate investors, putting livelihoods at risk. This seizure can be
Page 10
 Bio-Fuels in India

reduced by strictly following the guidelines set by the government and frequently
conducting the checkups and penalising the corporate investors.

• As of now the Govt. of India heavily subsidizes the conventional diesel, keeping it
artificially low. Hence these subsidies are hiding the real scenarios. Instead of subsidizing
the diesel, it would help the development of bio-fuel production if the funds are diverted
and more funds are allocated.

• The policy makers, instead of making concrete policies, should allow some changes to be
implemented as per the situations and conditions in the states.

• As there are different value chains, the policy makers must consider them and use them for
maximising the potentials and minimising the risks.

• The alliances are to be properly formed between the government programs, local
communities and companies to get the exact estimates of the unutilised or underutilised
land reserves for productive use, which contributes to the rural development.

• Some of the seeds used for the bio-fuel plantations require a lot of time and fertilisers to
grow. The use of more fertilisers will increase the emissions. Hence biotechnological
improvements should take place in this field to fight against these issues.

• The successful development of advanced bio-fuels technologies, using the non-food bio-
mass feed stocks, could help overcome the barriers and achieve the sustainable cost-
effective bio-fuels with low CO2 .

• Introduction of futures in trading of raw material required for the production of bio-fuels
may reduce the problems of the price fluctuations.

• Educating the people about the importance of bio-fuels. This education can be imparted to
the people through rallies, TV Shows, Banners etc. The introduction of the lessons on Bio-
fuels for the high school children will also have a great impact.

Conclusion:
The bio-fuels will play an extremely important role in meeting India’s energy needs. The
current manufacturing costs of ethanol and bio-diesel are almost same as the petrol and
diesel. This puts the bio-fuels in a favourable situation as the costs of fossil fuels are expected
to rise continuously. Apart from the costs the bio-fuels provide social, environmental and
financial benefits to the society. As of now there are some issues of the lack of research and
development, infrastructure, gaps in policies, higher subsidization of conventional fuels,
Page 11
 Bio-Fuels in India

improper designs in vehicles etc. which hinder the growth of bio-fuels. Once these issues get
solved and the transition takes from the incubation stage to growth stage, bio-fuels will take
up the whole market and we can see India as a “Clean and Green” country.

References:
1. Bio-Diesel in India – Value chain organisation and policy options for rural development –
A study by German Development Institute.

2. Bio-Fuel a view from India by P.V. Sateesh, Director of Deccan Development Society,
Andhra Pradesh.

3. Bio-Fuel threatens China India water supply-National Rural News

4. Roadmap Background Information: Bio-fuels for Transport by IEA

5. An Assessment of the Bio-Fuels Industry in India by Joseph B. Gonsalves at United

Nations Conference on Trade and Development.

6. Bio-Fuels: The key to India’s Sustainable Energy Needs by M.P Ram Mohan & Linoj
Kumar, TERI, India.

7. Bio-Fuels for Sustainable Transportation by U.S Department of Energy by the National

Renewable Energy Laboratory.

8. Bio-Diesel Fuel Management Best Practices for Transit – by U.S Department of

Transportation.

9. Bio-Fuels for Transportation: A Climate Perspective by Pew Center Global Climate

Change.

10. Website - http://universalbiofuelsltd.com/

11. Website - http://www.biodieseltechnologiesindia.com/

Page 12