Agriculture and Biofuels

Agriculture and Biofuels - Transcript

Biofuels
Biofuels
Biofuel is defined as solid liquid or gas fuel derived from recently dead biological material and is distinguished from fossil fuels which are derived from long dead biological material Theoretically biofuels can be produced from any biological carbon source although the most common sources are photosynthetic plants Various plants and plant derived materials are used for biofuel manufacturing Globally biofuels are most commonly used to power vehicles heating homes cornstoves and cooking stoves Biofuel industries are expanding in Europe Asia and the Americas Recent technology even allows for the conversion of pollution into renewable bio fuel
There are two common strategies of producing biofuels One is to grow crops high in sugar sugar cane HYPERLINK http en wikipedia org wiki Sugar beet o Sugar beet sugar beet and HYPERLINK http en wikipedia org wiki Sweet sorghum o Sweet sorghum sweet sorghum or HYPERLINK http en wikipedia org wiki Starch o Starch starch HYPERLINK http en wikipedia org wiki Corn o Corn corn HYPERLINK http en wikipedia org wiki Maize o Maize maize and then use HYPERLINK http en wikipedia org wiki Yeast o Yeast yeast HYPERLINK http en wikipedia org wiki Fermentation o Fermentation fermentation to produce ethyl alcohol HYPERLINK http en wikipedia org wiki Ethanol o Ethanol ethanol The second is to grow plants that contain high amounts of vegetable oil such as HYPERLINK http en wikipedia org wiki Oil palm o Oil palm oil palm HYPERLINK http en wikipedia org wiki Soybean o Soybean soybean HYPERLINK http en wikipedia org wiki Algae o Algae algae or HYPERLINK http en wikipedia org wiki Jatropha o Jatropha jatropha When these oils are heated their HYPERLINK http en wikipedia org wiki Viscosity o Viscosity viscosity is reduced and they can be burned directly in a HYPERLINK http en wikipedia org wiki Diesel engine o Diesel engine diesel engine or they can be chemically processed to produce fuels such as HYPERLINK http en wikipedia org wiki Biodiesel o Biodiesel biodiesel Wood and its byproducts can also be converted into biofuels such as HYPERLINK http en wikipedia org wiki Woodgas o Woodgas woodgas HYPERLINK http en wikipedia org wiki Methanol o Methanol methanol or HYPERLINK http en wikipedia org wiki Ethanol fuel o Ethanol fuel ethanol fuel It is also possible to make HYPERLINK http en wikipedia org wiki Cellulosic ethanol o Cellulosic ethanol cellulosic ethanol from non edible plant parts but this can be difficult to accomplish economically
Biofuels are discussed as having significant roles in a variety of international issues including mitigation of HYPERLINK http en wikipedia org wiki Carbon emissions o Carbon emissions carbon emissions levels and HYPERLINK http en wikipedia org wiki Oil prices o Oil prices oil prices the HYPERLINK http en wikipedia org wiki Food vs fuel o Food vs fuel food vs fuel debate HYPERLINK http en wikipedia org wiki Deforestation o Deforestation deforestation and HYPERLINK http en wikipedia org wiki Soil erosion o Soil erosion soil erosion impact on HYPERLINK http en wikipedia org wiki Water resources o Water resources water resources and energy balance and efficiency
Historical background
Humans have used biomass fuels in the form of solid biofuels for heating and cooking since the discovery of fire Following the discovery of electricity it became possible to use biofuels to generate electrical power as well However the discovery and use of HYPERLINK http en wikipedia org wiki Fossil fuels o Fossil fuels fossil fuels HYPERLINK http en wikipedia org wiki Coal o Coal coal HYPERLINK http en wikipedia org wiki Natural gas o Natural gas gas and HYPERLINK http en wikipedia org wiki Petroleum o Petroleum oil have dramatically reduced the amount of biomass fuel used in the developed world for transport heat and power However when large HYPERLINK http en wikipedia org wiki Supply o Supply supplies of HYPERLINK http en wikipedia org wiki Crude oil o Crude oil crude oil were discovered in HYPERLINK http en wikipedia org wiki Pennsylvania o Pennsylvania Pennsylvania and HYPERLINK http en wikipedia org wiki Texas o Texas Texas HYPERLINK http en wikipedia org wiki Petroleum o Petroleum petroleum based fuels became inexpensive and soon were widely used Cars and trucks began using fuels derived from HYPERLINK http en wikipedia org wiki Mineral oil o Mineral oil mineral oil HYPERLINK http en wikipedia org wiki Petroleum o Petroleum petroleum HYPERLINK http en wikipedia org wiki Gasoline o Gasoline gasoline HYPERLINK http en wikipedia org wiki Petrol o Petrol petrol or HYPERLINK http en wikipedia org wiki Diesel o Diesel diesel
Nevertheless before HYPERLINK http en wikipedia org wiki World War II o World War II World War II and during the high demand wartime period biofuels were valued as a strategic alternative to imported oil Wartime Germany experienced extreme oil shortages and many energy innovations resulted This includes the powering of some of its vehicles using a blend of gasoline with alcohol fermented from potatoes called Monopolin In Britain HYPERLINK http en wikipedia org wiki Grain alcohol o Grain alcohol grain alcohol was blended with HYPERLINK http en wikipedia org wiki Petrol o Petrol petrol by the HYPERLINK http en wikipedia org wiki Distillers Company Limited o Distillers Company Limited Distillers Company Limited under the name Discol and marketed through HYPERLINK http en wikipedia org wiki Esso o Esso Esso s affiliate Cleveland During the peacetime post war period inexpensive oil from the HYPERLINK http en wikipedia org wiki Middle East o Middle East Middle East contributed in part to the lessened economic and geopolitical interest in biofuels Then in 1973 and 1979 geopolitical conflict in the Middle East caused HYPERLINK http en wikipedia org wiki OPEC o OPEC OPEC to cut exports and non OPEC nations experienced a very large decrease in their oil HYPERLINK http en wikipedia org wiki Supply o Supply supply This HYPERLINK http en wikipedia org wiki Energy crisis o Energy crisis energy crisis resulted in severe shortages and a sharp increase in the prices of high HYPERLINK http en wikipedia org wiki Demand o Demand demand oil based products notably HYPERLINK http en wikipedia org wiki Petrol o Petrol petrol HYPERLINK http en wikipedia org wiki Gasoline o Gasoline gasoline There was also increased interest from governments and academics in energy issues and biofuels Throughout history the fluctuations of HYPERLINK http en wikipedia org wiki Supply and demand o Supply and demand supply and demand HYPERLINK http en wikipedia org wiki Energy policy o Energy policy energy policy HYPERLINK http en wikipedia org wiki Military o Military military conflict and the environmental impacts have all contributed to a highly complex and volatile market for energy and fuel
In the year 2000 and beyond renewed interest in biofuels has been seen The drivers for biofuel HYPERLINK http en wikipedia org wiki Research and development o Research and development research and development include rising oil prices concerns over the potential HYPERLINK http en wikipedia org wiki Oil peak o Oil peak oil peak HYPERLINK http en wikipedia org wiki Greenhouse gas emission o Greenhouse gas emission greenhouse gas emissions causing HYPERLINK http en wikipedia org wiki Global warming o Global warming global warming and HYPERLINK http en wikipedia org wiki Climate change o Climate change climate change rural development interests and instability in the Middle East
Present Scenario
India
There are two types of biofuels that are produced in India
Bioethanol
Biodiesel
Bioethaol is produced from sugarcane molasses baggasse corn etc Biodiesel is produced majorly from jatropha and ponamia
The government is promoting biofuels in a big way in the country from past few years The reasons are not difficult to fathom Petroleum product prices have been rising steadily diesel alone has become 25 per cent costlier over the last year Apart from the search for alternatives it is the need to achieve energy independence that is directing so much focus on biofuels and the crops that will help yield these oils
Currently there are many states that are providing subsidies and encouraging biodiesel production from jatropha because it is the cheapeset source of raw material that is most effective in Indian condition

Sugar mills are being encouraged to produce ethanol from sugarcane for blending with petrol while efforts are on to cultivate such crops as jatropha and pongamia which yield oil that can either be blended with diesel or used by themselves instead
While jatropha has clearly emerged as the preferred option for cultivation pongamia a traditional species that has been around for ages too has great potential The advantage with jatropha a bush is that it is easy to maintain and starts yielding from the fourth year while pongamia a tree requires more area and yields can be expected from the seventh or eighth year on Scientists however say that the Botanical Survey of India has identified more than 400 species of plants and trees that can yield such oils
The enthusiasm for biofuels must also be viewed against the backdrop of the country s thirst for oil about 114 million tonnes every year 75 per cent of which is imported at a cost of Rs 1 20 000 crore About 112 million tonnes of oil is consumed just by the transportation sector
Experts feel that the problem of the huge oil import bill and the price uncertainty can be mitigated by cultivating biofuel crops on the over 60 million hectares of wasteland available in the country Each hectare would yield up to three tonnes of seed from which can be extracted one tonne of oil This would translate to 30 million tonnes of oil
Even the economics of cultivating jatropha and the unit cost analysis available with banks are based on preliminary estimates by research institutes Banks are for now only willing to wait and watch and have not extended any loans for jatropha cultivation
In Tamil Nadu for example State Bank of India has only entered into an agreement with a company that wants to start contract farming of jatropha
Investors and key players
Initial studies raise optimism and investors are willing to commit money to jatropha farming and in investing in processing facilities The Indian Railways the single largest user of fuel in the transportation sector is considering an ambitious project in which it hopes to exploit the nearly 90 000 hectares available with it for farming biofuel crops such as jatropha These have the potential to solve about 50 per cent of the Railway s requirement The problem the Railways faces is the inadequate availability of seeds for it to extract oil from It buys oils at a high cost about Rs 43 a litre mainly because it is still looking at it as a pilot project according to Mr Jayantha Ghosh Chief Mechanical Engineer Southern Railway But the Railway feels that prices should be much lower
The Chennai based D1 Mohan Bio Oils Ltd which plans to invest Rs 80 crore in a biofuel project is to set up a facility to process about 24 000 tonnes of jatropha seeds a year to produce about 8 000 tonnes of oil The plant is expected to come up in January 2006 in Chengalpattu near Chennai according to Mr D Aristotle General Manager Projects The company hopes to rope in farmers through contract farming to cultivate jatropha on over 5 million hectares in 5 7 years It has launched the project in Tamil Nadu where it plans to cover 40 000 hectares Andhra Pradesh 20 000 hectares and Chattisgarh 50 000 hectares It also plans to extend the cultivation to Rajasthan Madhya Pradesh and Karnataka The company will buy back the jatropha seeds and provide technical support The initial cost of Rs 28 500 a hectare will be disbursed as loan by banks over the first three years
Growth of BioFuel Industry
A Central Government subsidy of 30 per cent or Rs 6 000 a hectare It is estimated that biodiesel prices will be marginally cheaper than diesel at about Rs 30 a litre
THE estimates of land area needed for extracting jatropha oil to replace diesel Under irrigated condition jatropha seeds output is 3 tonnes per hectare This yields one tonne of oil Current diesel consumption 40 million tonnes a year
For equivalent jatropha oil 40 million hectares would have to be brought under the crop Forty million hectares or four lakh sq km is the combined area of Chattisgarh 1 35 lakh sq km and Madhya Pradesh 3 08 lakh sq km For 20 per cent blending of diesel with jatropha oil that is for 8 million tonnes eight million hectares would need to be brought under the plant or 80 000 sq km which is 60 per cent of Tamil Nadu s land area 1 3 lakh sq km India has 6 lakh sq km of wasteland

The Figure illustrates the position of India and the European Union on the biodiesel industry growth curve India has just finished the pilot stage and is entering the incubation stage
The EU is well into the growth phase For instance the UK is setting up two plants totalling 350 000 t year capacity in 2005 alone and a few more are planned in the near future Of course the hectic growth pace in Europe is fuelled by the European Commission mandate that biofuels comprise 2 per cent of the fuel consumption by 2005 and 5 75 per cent by 2010 Diesel consumption in India is estimated at 66 91 million tons in 2011 2012 Given this figure the biodiesel required for 20 per cent blending would be 13 38 million tons Obtaining biodiesel in this amount is quite a daunting task and involves about 14 million hectares of land under Jatropha cultivation To put it in perspective the land currently under sugarcane cultivation is 4 36 million hectares India may have to import biodiesel or vegetable oil feedstock or even oilseeds
Production in India
Years biodiesel
demand projection Mt Biodiesel Blend
percentage in Mt
5 10 20
2010 66 07 3 3 6 6 13 2
2020 111 92 5 6 11 2 22 4
2030 202 84 10 14 20 28 40 56

The biodiesel production is till in nascent stage in India but the future projections from TERI report show that this is bound to change the projections of consumtion will vary depending upon the government policies followed in the future for example if the government regulates that the biodiesel mix should be 5 of total diesel consumption that the demand would be 3 3 mt compared to 13 2 mt if there is regulation of adding 20 to diesel
World Scenario
Rising world fuel prices the growing demand for energy and concerns about global warming are the key factors driving renewed interest in renewable energy sources and in bioenergy in particular Henry Ford s seemingly prescient outlook is thus becoming much more relevant 80 years on Within a global context fossil fuel consumption still dominates the world energy market
However the uncertainty in future supply potentially unsustainable patterns of energy consumption and the costs of expanding proven reserves of fossil fuels have lead many energy analysts and managers around the world to seek alternatives from other more renewable resources such as bioenergy
The steadily increasing trend of gasoline prices over time strengthens the rationale for seeking cheaper supply alternatives Biofuels already constitute the major source of energy for over half of the world s population accounting for more than 90 of the energy consumption in poor developing countries
Besides alleviating the reliance of energydriven economies on limited fossil fuel sources bioenergy has continued to receive increasing attention from those concerned with promoting agricultural and environmental sustainability through the reduction of carbon emissions an important component of climate change mitigation
Bioenergy is also considered by some to be a potentially significant contributor towards the economic development of rural areas and a means of reducing poverty through the creation of employment and incomes linking biofuel development directly or indirectly with multiple Millennium Development Goals Thus bioenergy is seen more and more as a promising and largely untapped renewable energy resource and its potential environmental and economic benefits are becoming more apparent as technological improvements continue to emerge
Large amount of biomass from forest and agricultural activities such as branches tree tops straw corn stover and bagasse from sugarcane can be utilized as feedstock for bioenergy Likewise bioethanol and biodiesel can be produced from sugar grain and other oil crops In parts of the world animal dung is processed as fuel while effluents are digested to produce biogas IEA Bioenergy 2005 Table 1 shows typical types of biofuel generated together with the energy services they supply using a number of biomass resources The development of commercial bioenergy production dates back to the use of maize for ethanol and has seen consistent growth in a few countries Ethanol is produced from maize in the United States India and China for example Moreover in Brazil 50 of all sugarcane produced out of 357 5 million tons in 2003 2004 was devoted to ethanol Szwarc 2004
Jatropha Commercial Scale Projects Under Development
Globally bioethanol production is concentrated in two countries Brazil and the United States Biodiesel production on the other hand is geographically concentrated in the EU with Germany and France leading production
The production processes used to manufacture biodiesel from its feedstock sources differs from that used for bioethanol as it relies on transesterification of oils whereas bioethanol production relies on the hydrolysis of the constituent grains and sugars of plants into ethanol under conventional technologies
Likely Investment Outlay
The interest in the Jatropha plantation primarily focuses on Biodiesel Here the key question is Will it be possible to establish the right cultivation and processing methods so that the Jatropha plant can produce a high quality fuel which can compete with petrochemical diesel in terms of price After all one key element that makes all the difference between success and failure is the cost factor in other words the potential returns
Yield is a function of light water nutrients and the age of the Plant Good planning quality planting material standardized agronomy practices and good crop management may handsomely increase the yields
ASSUMPTIONS FOR COST BENEFIT ANALYSIS
Though Jatropha starts yielding from very first year we have taken no yield for 1st and 2nd year just to ensure proper pruning and development of the plant
Crop density with 2mx2m pattern shall be 2500 plants per ha
Seeds tonnage per ha has been taken 0 0 2 5 5 0 6 25 9 6 for 1 2 3 4 5 and 6th year respectively
Intercropping has been presumed for 30 of plantation area
CDM calculation has been taken as minimum for 1000 ha plantation
Sale price of seeds has been taken on lowest side
Rate of interest has been taken as 9 per annum for 5 years
There are three ways in which an entrepreneur can enter the industry
jatropha plantation
jatropha oil extraction
biodiesel production
1 Jatropha plantation
In this model we analyse the cost and ROI on plantation of jartropha on a sall 100 HA land
Model 1 100 HA plantation
US January 2007
Year 2008 2009 2010 2011 2012 2013 2014
TOTAL HECTARES 100 100 100 100 100 100 100
Total no of Jatropha Plants 250000 250000 250000 250000 250000
Production of Jatropha seeds in ton 250 500 625 962 5 962 5
PRICES
Price per TON of Jatropha Seeds in US 140 140 140 140 140
SALES
Jatropha Seeds 35000 70000 87500 134750 134750
INTERCROP 3000 3000 3000 3000 3000 3000
Total Sales 0 3000 38000 73000 90500 137750 137750
Cost of Sales
CAPITAL COST 68000
Operative Expenses 30000 9600 24550 32300 36175 46637 5 46637 5
Maintenance Expenses 4000 4100 4200 4400 4600 4600
Total cost of Sales 98000 13600 28650 36500 40575 51237 5 51237 5
PBT 98000 10600 9350 36500 49925 86512 5 86512 5
Depreciation
Interest Expenses
NET PROFIT 98000 10600 9350 36500 49925 86512 5 86512 5

b OIL PRODUCTION
The economic scale for cost of bio diesel production is determined taking into account the amount of raw oil extracted from a seed to be 30 The output of the raw oil from the extraction unit is a key determining factor for deciding the capacity of the transesterification unit The cost of the extraction stage is based on the capacity of the extraction plant which in turn is based on the seed yield
Together with the oil by products of the production are
Press cake
Residual of sedimentation process
The Press cake has mineral contents of nitrogen 6 phosphorous 2 75 and potassium 0 94 similar to chicken manure the press cake can be used as organic fertiliser An application of 1 ton press cake is equivalent to 200 kg of mineral fertiliser NPK 12 24 12 In the present calculation the price for the press cake is taken lowest possible 42 ton The estimated price for 1 ton of residual is 120 US ton which is used for making washing soaps
SEEDS SELF PRODUCTION OR PURCHASING
Now question is that seeds should be purchased or own produced
We have analysis in both scenario and found the in scenario of own seeds the ROI is just 3 times in comparison of seeds purchasing
Owning the Plantation could bring a higher yield justified by an intensive cultivation a strict control of the investments i e fertilising and the personnel
Purchasing the seeds does not allow planning in an extremely detailed way but the rather uncertain and unforeseeable Market trend might make the consideration not so crucial
Following are the analysis of cost return of SVO production
FOR A PLANTATION SIZE 1000 HA
SCANERIO I OIL EXTRACTION
With Purchased seeds
SCANERIO II OIL EXTRACTION
With own seeds

CAPACITY 3000 TON YEAR

CAPACITY 3000 TON YEAR

CAPITAL COST 250 000 00
CAPITAL COST 250 000 00
Required tonnage of seeds 9625
Required tonnage of seeds 9625
Oil Production 3000
Oil Production 3000
Press Cake 6000
Press Cake 6000
Residual 500
Residual 500
PRICE
PRICE
Oil Production 550 00
Oil Production 550 00
Cake 42 00
Cake 42 00
Residual 120 00
Residual 120 00
SALES
SALES
Oil Production 1 650 000 00
Oil Production 1 650 000 00
Cake 252 000 00
Cake 252 000 00
Residual 60 000 00
Residual 60 000 00
TOTAL 1 962 000 00
TOTAL 1 962 000 00
COGS
COGS
Seeds 140 00 1 347 500 00
Seeds 50 00 481 250 00
Crushing Expenses
45 000 00
Crushing Expenses
45 000 00
Utility
30 000 00
Utility
30 000 00
H S
30 000 00
H S
30 000 00
Personnel
15 000 00
Personnel
15 000 00
TOTAL 1 467 500 00
TOTAL 601 250 00
Gross Profit 494 500 00
Gross Profit 1 360 750 00
Depreciation 10 00 25 000 00
Depreciation 10 00 25 000 00
Interest 9 00 22 500 00
Interest 9 00 22 500 00
PBT 447 000 00
PBT 1 313 250 00
Taxes 30 00 134 100 00
Taxes 30 00 393 975 00
NET PROFIT 312 900 00
NET PROFIT 919 275 00
ROI 1 2516
ROI 3 6771
US January 2007
c JATROPHA BIODIESEL PRODUCTION
The final stage of bio diesel production is the transesterification stage in which raw oil is transesterified to bio diesel which is methyl or ethyl ester based on whether methanol or ethanol is used in the production process The capacity of the transesterification plant is dependent on the amount of raw oil that has to be transesterified into bio diesel The capital cost of the transesterification plant depends on its capacity This affects the economics of the bio diesel production process differently Larger the yield of bio diesel better the economic viability of its production In the transesterification stage the by product generated is glycerol which is 8 10 of the raw oil by weight
Hence we have analysis the COST BENEFIT of BIODIESEL PRODUCTION in the context of oil produced from seeds purchased as well as purchased loading the cost of oil production as detailed below
SCANERIO I Oil from purchased seeds
SCANERIO II Oil from own seeds 1000 ha Plantation
CAPITAL COST
CAPITAL COST
PLANT CAPACITY T Y 3000
PLANT CAPACITY T Y 3000
P M 350 000
P M 350 000
L B 50 000
L B 50 000
TOTAL 400 000
TOTAL 400 000
PRICES RAW MATERIALS
PRICES RAW MATERIALS
Jatropha crude oil per ton Produced 401 00
Jatropha crude oil per ton Produced 112 25
Cost of Methanol per ton of Biodiesel 20 00
Cost of Methanol per ton of Biodiesel 20 00
Potassium hydroxide per ton of Biodiesel 60 00
Potassium hydroxide per ton of Biodiesel 60 00
Utilities per ton of Biodiesel 10 00
Utilities per ton of Biodiesel 10 00
PRICES
PRICES
BIODIESEL 700 00
BIODIESEL 700 00
Glycerol 700 00
Glycerol 700 00
Revenue CDM Biodiesel 10 00
Revenue CDM Biodiesel 10 00
SALES
SALES
BIODIESEL 2 100 000 00
BIODIESEL 2 100 000 00
Glycerol 210 000 00
Glycerol 210 000 00
Revenue CDM Biodiesel 30 000 00
Revenue CDM Biodiesel 30 000 00
TOTAL 2 340 000 00
TOTAL 2 340 000 00
COGS
COGS
OIL 1 203 000 00
OIL 336 750 00
Personnel
45 000 00
Personnel
45 000 00
Methanol 60 000 00
Methanol 60 000 00
Potassium hydroxide
180 000 00
Potassium hydroxide
180 000 00
Utilities
30 000 00
Utilities
30 000 00
Equipment Maintenance
6 000 00
Equipment Maintenance
6 000 00
TOTAL 1 524 000 00
TOTAL 657 750 00
Gross Margin 816 000 00
Gross Margin 1 682 250 00
Other Expenses
Other Expenses
Placing into operation
15 000 00
Placing into operation
15 000 00
Advertising Promotion 5 000 00
Advertising Promotion 5 000 00
Interest Expense 9 00 36 000 00
Interest Expense 9 00 36 000 00
OTHERS
6 000 00
OTHERS
6 000 00
Depreciation service life 10 years 10 00 35 000 00
Depreciation service life 10 years 10 00 35 000 00
Total Other expenses 97 000 00
Total Other expenses 97 000 00
PBT 719 000 00
PBT 1 585 250 00
Taxes Incurred 30 00 215 700 00
Taxes Incurred 30 00 475 575 00
NET Profit 503 300 00
NET Profit 1 109 675 00
ROI 1 26
ROI 2 77

Here we can see that the ROI on
Availabilty of Factors of Production
Since feedstock is the single largest cost component in biodiesel production Jatropha being considerably less expensive feedstocks give producers a significant cost advantage over producers of soya rape corn
The inputs of Jatropha Farming are
Land field crops hedges
Labor Crop plantation Crop maintenance harvesting processing
Machinery tractor Power tiller digger etc
Material Planting material growing media
A detailed evaluation of the crop cultivation cost and following identification of a range of product selling price from which it will be convenient to purchase the seeds will help to determine the choice If the farmer will judge the price so interesting to start to cultivate Jatropha owning the land will be not necessary
This means it is possible for a farmer and farming company to have contract Production of Seeds In such a relationship the farmer provides the land and the infrastructure to farm with whilst the farming company provides the rest If the value of production exceeds the cost the surplus is shared at an agreed rate A long term relationship is established and that risk is moved and accepted over a long period that the land must be leased for at leas a period of 20 years period
Locations concentration of industries
The various locations for Jatropha Plantation in India
200 districts in 19 potential states have been identified on the basis of availability of wasteland rural poverty ratio below poverty line BPL census and agro climatic conditions suitable for jatropha cultivation Each district will be treated as a block and under each block 15000 ha jatropha plantation will be undertaken through farmers BPL
1 Andhra Pradesh
Adilabad Anantapur Chittoor Cuddapah Kurnool Karim Nagar Mehboob Nagar Nellore Nalgonda Prakasam Visakhapatnam Warrangal
2 Bihar
Araria Aurangabad Banka Betiah West Champaran Bhagalpur Gaya Jahanabad Jamui Kaimur Latehar Muzzaffarpur Munger Nawada
3 Chhattisgarh
Bastar Bilaspur Dantewada Dhamtri Durg Jagdalpur Janjgir champa Kanker Kawardha korba Mahasaund Rajnandgaon Raipur Raigarh Surguj
4 Jharkhand
Bokaro Chatra Daltenganj Devgarh Dhanbad Dumka Garhwa Godda Giridih Gumla Hazaribag Jamshedpur Koderma Pakur Palamu Ranchi Sahibganj Singbhum East Singbhum West
5 Gujarat
Ahmedabad Amerli Banaskantha Bhavnagar Junagarh Jamnagar Kutch Rajkot Surendranagar Surat
6 Goa
Panaji Padi Ponda Sanguelim
7 Himachal Pradesh
Bilaspur Nahan Parvanu Solan Unna
8 Haryana
Ambala Bhiwani Faridabad Gurgaon Hisar Jind Jhajjar Mohindergarh Punchkula Rewari Rohtak
9 Karnataka
Bijapur Bellary Bangalore Belgaum Chikmagalur Chitradurga Daksina Kannada Dharwad Gulbarga Hassan Kolar Mysore Raichur Tumkur Udupi
10 Kerala
Kottayam Quilon Trichur Thiruvananthapuram
11 Madhya Pradesh
Betul Chhindwara Guna Hoshingabad Jabalpur Khandwa Mand Saur Mandla Nimar Khargaon Ratlam Raisena Rewa Shahdol Shajapur Shivpuri Sagar Satna Shahdol Tikamgarh Ujjain Vidisha
12Maharashtra
Ahmednagar Aurangabad Amrawati Akola Beed Buldana Dhule Nasik Osmanabad Parbhani Pune Ratnagiri Raigad Thana Yavatmal
13 Orissa
Bolangir Cuttack Dhenkanal Ganiam Gajapati Jajapur Koraput Keonjhar Kalahandi Nowrangpur Nawapra Phulbani Puri
14 Punjab
Ferozpur Gurdaspur Hoshiarpur Patiala Sangrur
15 Rajasthan
Ajmer Alwar Barmar Bilwara Bikaner Churu Chittorgarh Jaisalmer Jodhpur Kota Sikar Sawai Madhopur Udaipur
16 Tamil Nadu
Coimbatore Chenai Dharmapuri Erode Madurai Perigar Salem Tirunelvelli Vellore
17 Uttar Pradesh
Allahabad Agra Balia Bulandshare Bhadohi Baharaich Chhitrakut Deoria Ferozabad Faizabad Ghazipur Hardoi Jaunpur Jhansi Kausambi Lalitpur Mainpuri Partapgarh Raibareli Sultanpur Shahjahanpur
18 Uttaranchal
Chamoli Dehradun Pithoragarh Rishikesh Udhamsingh Nagar Uttrakashi
19 West Bengal
Balurghat Barasat Burdwan Cochbehar Darjeeling Hoogly Howrah
Key Success Factors
As Jatropha and other non food oil crops are poised on the cusp of commercialization Jatropha investors have stepped up their efforts to develop a viable source of Biodiesel and some are already well on the road to success Following Are the Key Strategies to Successful Jatropha Investments
KEY Strategy 1 Choosing the best location for Jatropha Projects
Determining knowing where to place your Jatropha project is critical and requires a holistic view of certain key criteria for site selection These include agro climatic conditions availability of labor logistical consideration and local legislation and others Land identification is a pre requisite to development of a Project plan and to meet this requirement Pre feasibility Study Feasibility study is required to be get carried out from the competent experienced agency
KEY Strategy 2 Getting the best business plan formation
This formulation of business plan need in depth specialists form each field
KEY Strategy 3 Getting the best planting stock material
The planting material is the only factor which may lead to a disaster if you fail to adopt the best
KEY Strategy 4 Adopting Best Practices in Jatropha Agronomy
The Jatropha Curcas L plant is an energy species but it needs to be domesticated as a tree crop for widespread commercial cultivation application In order to achieve commercial perfection it is crucial to understand the crop s requirements predict its possible interactions with the environment develop packages of practices for industrial cultivation
KEY STRATEGY 5 Scaling Operations Organization Strategies for Jatropha as per local conditions
One of the critical issues at the heart of many investors is commercialization of Jatropha and it isn t as easy as merely increasing the size of operations There are many considerations involved in setting up a commercialized operation and at the heart of it is sustainability for long term returns
KEY STRATEGY 6 Exploring the intercropping Operation Strategies for couple oil crops as per local conditions
There are many considerations involved in planning for intercropping system for extra income There is need of adopting the couple oil crop technology for more oil per ha without extra inputs
KEY Strategy 7 Going Socially Responsible Environmentally Carbon Positive for Jatropha Projects
Jatropha s major plus point is in its ability to grow on land that is usually not attractive for conventional agriculture Jatropha is easy to establish grows relatively quickly and is hardy and drought tolerant The plant is by it very nature environmentally friendly and has the ability to reclaim non arable land in arid and semi arid areas These qualities also make this an ideal plant for development in the poorest regions in the world
KEY Strategy 8 Mapping Global Biofuel blending specifications demand for Jatropha Oil
Jatropha has the potential to serve as fuel to power automobiles combined heat and power CHP plants and cooking stoves just to name a few At this critical stage in Jatropha s development investors need to understand the evolving market for Jatropha oil and biodiesel and capitalize on them Alternative uses for Jatropha Oil will go a long way towards providing long term returns sustainable development in the areas within which they work
KEY Strategy 9 Complete Utilization of Jatropha Curcas L including biowaste seedcake
An under explored revenue stream for Jatropha is the utilization of the byproducts and the rest of the plant Some of the major drawbacks include the toxicity of the plant which renders much of the plant unfit for animal consumption
KEY Strategy 10 Evaluating Risk for a Realistic view of Jatropha Project Potential for long term forecasting
Investors need to explore ways to make their Jatropha projects a low risk venture with attractive returns However this assessment also needs to be realistic to ensure future returns and to attract private investors to their Jatropha projects
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
Salient features of the National Biofuel Policy are as under
An indicative target of 20 by 2017 for the blending of biofuels bioethanol and bio diesel has been proposed
Bio diesel production will be taken up from non edible oil seeds in waste degraded marginal lands
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
Bio diesel plantations on community Government forest waste lands would be encouraged while plantation in fertile irrigated lands would not be encouraged
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
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
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 approx 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 Districs 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
CAN BIODIESEL WORK IN INDIA
India has tropical advantage
Enormous waste lands cheap farm labour
Biodiesel in india can be success story
India has tropical advantage
Enormous waste lands cheap farm labour
Biodiesel in india can be success story
Annual growth rate 6 compared to world average of 2
Oil pool deficit Subsidies Rs 16 000 crores Rs 18 440 crores 1996 97
Current per capita usage of petroleum is absymmaly low 0 1 ton year against 4 0 in Germany or 1 5 tons in Malaysia
Even Malaysia s figure would be beyond our paying capacity
Our domestic production would meet only 33 of demand at the end of 10th plan and only 27 by 2010 11
Investment in biofuels make strong economic sense
India with just 2 4 of global area supports more than 16 of the human population and 17 of the cattle population
India is one of the largest importers of edible oil
Where do we find the oil for biodiesel
A sustainable source of vegetable oil is to be found before we can think of biodiesel
LIMITATIONS
Despite the apparent success of bioenergy production in many countries other countries have been reluctant to take a more aggressive approach towards bioenergy development due to the existence of institutional financial or political constraints Several factors could contribute towards this hesitancy to adopt these technologies including
a a lack of understanding among policymakers of the potential benefits
b the neglect of biofuel within the national political economic and social agendas thereby preventing its integration into energy statistics and national energy planning c the prevailing regulatory institutional and legal restrictions that
discourage the development of biomass energy
d the inattention of forestry and agricultural agencies towards the development management and use of biomass energy resources and
e the lack of policy attention paid to the introduction and distribution of modern efficient and clean
Our Analysis Conclusion
From a entrepreneurs point of view we have tried to analyse this industry as a prospective investment opportunity We have found this to be a profitable business venture Following summarises our analysis
The current manufacturing cost of ethanol and biodiesel in India is
about Rs 21 litre 0 46 litre about the same as petrol and diesel This puts biofuels in a favourable position especially as the cost of petroleum is expected to continue its upward trend
The work done up to now in biodiesel development in India includes development of high oil yielding varieties of Jatropha plantation of Jatropha by government sponsored agencies setting up of pilot plants on transesterification successful trial runs on locomotives and road vehicles using 5 per cent biodiesel blend and organizing seminars to expand awareness of the biodiesel programme
So far no commercial transesterification plants have been installed However two plant projects have secured financial backing and are on their way to implementation
The main problem in getting the biodiesel programme rolling has been the difficulty in initiating the large scale cultivation of Jatropha Farmers do not consider Jatropha cultivation is rewarding enough To alleviate this problem confidence building measures need to be taken The government should clearly formulate its policy and explain to the farmers that their role is vitally importance to the success of the biodiesel programme The government should establish a minimum support price for Jatropha oilseeds to assure farmers of timely payments
The other main issue is the lack of infrastructure in seed collection and oil extraction In the absence of infrastructure and available oilseeds it will be difficult to persuade entrepreneurs to invest in transesterification plants Finally there is the problem of glycerol utilization The by product glycerol is about 12 per cent of the biodiesel produced and is of about 88 per cent purity If no alternative means are quickly devised for utilizing glycerol its price will plummet due to excess supply





f
g
m
n








7
8
D
E

a








h

j
Ff
Ffc
Ffg
Ff





B
Ff




Ff
Ff



kd
Ffb
Ff
Ff
FfQ
Ff
Ff
B
h
h
B
h
h
h
ho
B
ho
B
ho
B
ho
B
ho
ho
h
ho


F


nd transesterification plants are under way The industry is in the incubation stage but large scale Jatropha cultivation and the infrastructure for oilseed collection and oil extraction must be established before the industry can be placed on a rapid growth track In the meantime imports could help as could income generated from the sale of certified emission reductions from biodiesel projects approved by the CDM executive board