BIOFUELS – IF ONLY THE GOVERNMENT AND THE COUNTRY CAN MOVE FORWARD
The present spiral in international crude oil prices to a very high level of $60 per barrel has upset the economics and calculations of the Government and the industries to a considerable extent. With the demand for petroleum products increasing steeply around the world and the prospects of increase in the production of crude to match the demand not being bright, it appears that the price of crude oil would remain at this high level for long time to come. There is a crisis in the energy front confronting the world and sooner the Government of India and the country would realize the full impact of this crisis, it would be better for the long term interests of the country. The crude oil crisis is not a simple matter of raising the price of diesel and petrol by a few rupees per litre once in a while, but it is a much more basic and serious issue.
This situation certainly increases the need for finding substitutes for petroleum products and also reducing the consumption to the level possible in a very urgent manner.
USA and several European countries are already working towards substituting petroleum fuel and Europe is targeting to reduce the consumption of petroleum fuel atleast by around 5%, by substituting with biofuel by the year 2010. Towards this end, massive biofuel projects are being planned and set up and the Governments in Europe and USA are extending substantial tax concession and other incentives to increase the production and use of biofuel.
While India’s urgency to substitute the use of petroleum products by biofuel such as Jatropha based fuel is as high as USA and Europe, if not more, the biofuel project in India is still largely in the discussion stage. It should be possible for the Government and the country to move ahead in the biofuel field, if only the concepts and the strategies can be clearly defined, understood and worked out. The subject has to move rapidly from the bureaucrats’ tables to farms and fields and shopfloors.
While the advantages of the Jatropha biofuel in India such as the massive employment opportunities in the agricultural field and substitution of imported crude by using Jatropha is well understood and appreciated, the problem is the lack of long term strategies and clear directives on the part of the Government of India, keeping in consideration some basic problems of the biofuel industry.
The Government has to make up its mind and make clear policy announcements as soon as possible with regard to a few of the critical factors that presently appear to be the stumbling blocks in the progress of the biofuel industry in India. Such clear cut policy announcements are vitally necessary at this stage to give confidence to the multitude of agriculturists and industrial entrepreneurs in the country to proceed with the projects with enthusiasm and forward planning.
The problems and the appropriate strategies can be described as below.
Problems:
The Jatropha vegetable oil has to be subjected to a chemical process known as transesterification to enable blending of the transesterified oil with petroleum diesel for running the automobiles. In the process of transesterification of Jatropha oil, large quantity of glycerine would be produced as by-product. The demand for glycerine is presently not so high and therefore large production of glycerine could create disposal problems.
In the production of vegetable oil from Jatropha, cake would be produced, which cannot be used as cattle feed and therefore, does not have significant value addition.
In the cultivation of Jatropha, agricultural farmers have to get atleast Rs. 4 per kg of seed to make it economically worthwhile for them. Based on the present parameters of operations, if the farmers were to be paid Rs. 4 per kg of seed, the cost of production of Jatropha biofuel would be well over Rs. 50 per litre, which would be an unacceptable level.
Suggestions for strategies :
The need is to supply Jatropha biofuel at a price acceptable to consumers, which could be well below the present prevailing price of diesel. To do so, there are two requirements.
a. Reduce the cost of production of Jatropha biofuel
b. The Government of India should reconcile itself to provide subsidy in the sale price of Jatropha biofuel, which is the practice around the world now.
There is immense scope for reducing the cost of production of Jatropha biofuel and very urgent technology studies are required and steps have to be initiated to revise and optimize the operating parameters as further discussed.
a. Important raw material for transesterification of Jatropha is Methanol. Due to huge global capacity creation for methanol now, based on natural gas, particularly in middle east countries, there is definite possibility of fall in international prices of methanol substantially in coming years. This would immensely help the Jatropha biofuel project. Government of India should take immediate steps to acquire stake or set up methanol based projects in middle east countries, where there is immense availability of natural gas, for the purpose of meeting the Indian requirement of methanol for the biofuel project in future at favourable price.
b. The cake generated during the production of Jatropha vegetable oil cannot be used as animal feed, but can be used as biomass for power generation. The techno-economic feasibility for such power project based on Jatropha cake has to be quickly established by conducting necessary studies. The production of transesterified vegetable oil requires fuel for energy generation and the cake based biomass project can meet the requirement, thus reducing the cost of production.
c. Glycerine has a limited market now and the feasibility of producing bulk feedstock chemical from glycerine has to be examined urgently. It may be technically feasible to produce petrochemicals like propylene from glycerine, which if achieved, can create huge demand for glycerine and also meet the Indian petrochemical feedstock requirement to a considerable extent.
d. While the production of transesterified Jatropha for the purpose of blending with diesel requires high investment and lead to high cost of production, Jatropha vegetable oil as such can be used for running tractors and low speed oil engines in rural areas and for lighting purposes. This would considerably reduce the consumption level of petroleum fuel immediately. The Government has to introduce some thoughtful schemes in this regard.
Recommendation :
Without loss of time, the Government should ask the private sector to set up research and development centers for biofuel and extend attractive incentive schemes and rewards for achieving quick results. The Government should create a national euphoria for biofuel, so that organized and total attention can go to this sector, which appears to be the only way toward off the impending crisis on the crude oil front.
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