Indian Biofuel Programme

Policy initiatives and

Challenges

19.09.2018

Sandeep Poundrik Joint Secretary (Refinery) Ministry of Petroleum & Natural Gas Government of India

India at a glance

17.8% of the world’s population Improving urbanization rate

India becomes 3rd largest economy in the world by GDP on PPP basis. Expected to grow at a CAGR 7.5-8.4% through 2040

3rd highest in energy consumption

Average energy consumption growth has been 5.3% p.a.; Projected to increase further at a CAGR of 4.9% by 2022

Present energy consumption/capita is 606 KGOE: •1/12th of North America’s per capita energy consumption

•1/5th of European Union consumption •1/3rd of global average

Key Energy Drivers

0

Population Energy intensity & emissions

Increased accessibility, Electricity capacity additions

Value Addition by sectors

Transportation Mix Socio-Economic

factors

High GDP growth rate

Urbanization

Income improvement

India : Prospective Energy Landscape by 2040

Ø  Largely dependent on traditional fossil fuels and inching towards gas economy

Ø  Rising import dependency is an area of concern

1,1%

0,1%

0,5%

2,0%

3,7%

6,1%

24,4%

46,9%

19,0%

1,4%

1,9%

0,8%

1,0%

5,1%

7,1%

23,9%

58,9%

5,0%

0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0%

Nuclear

Solar

Wind

Hydro

Renewables and Clean

Natural gas

Oil

Coal

Biomass/Agriculture/waste

ENERGY MIX

2040 2015

749MToE 2132MToE

55,2%

49,0%

88,0%

53,1%

45,8%

42,2%

78,9%

30,3%

0,0% 20,0% 40,0% 60,0% 80,0% 100,0%

Overall

Natural Gas

Oil

Coal

IMPORT DEPENDANCY

2040 2015

Fuel Energy Mix (MToE) – All Sources

170

215

46

151

183

510

351

1256

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2040

Renewables & Clean Energy Natural gas Oil Coal

Ministry of New &

Renewable Energy

Ministry of Petroleum & Natural Gas

Department of Scientific & Industrial Research

Department of

Biotechnology

Ministry of Housing &

Urban Affairs

Policy & R&D support on Waste/ Agriresidues to BioCNG/ Biogas

Policy support on Waste/ Agriresidues management & Waste to energy projects

Supports R&D initiatives in Bioenergy sector

Various Ministries

working for Bioenergy in

India

Policy & R&D support for Biofuels in

transport sector & utilization of

wastes for Biofuel generation

Supports R&D initiatives

Why Biofuels for India

BIOFUELS

Waste Management

Better remuneration to

Agriculture sector

Renewable, Environmentally

cleaner fuel

Reduces fossil fuel dependence & import

bill

Background - Biofuels National Policy on Biofuels promulgated in 2009

Increasing blending of biofuels is an important strategy for import reduction

and reduce pollution

Development of advanced biofuels important from perspective of reduction

of crop burning and managing municipal solid waste

Global Developments & Technological Advances in last decade warranted

need for enhancing scope of Biofuels.

Government of India promulgated “National Policy on Biofuels – 2018”

Goal

§  Indicative target of 20% blending of

ethanol in petrol and 5% blending of

biodiesel in diesel by 2030

§  Additional Income to Farming Community – Price Stabilization

§  Import Reduction

§  Waste Management

§  Boost to rural economy by creating employment opportunities

Categorization of Biofuels

“Basic Biofuels” - 1G Ethanol & Biodiesel Advanced Biofuels – 2G Ethanol, Drop-in fuels, BioCNG, Biomethanol, Biohydrogen, DME

Widening Feedstock Base for ethanol production

•  Sugarcane Juice •  Sugar containing materials such as

sugarbeet, Sweet Sorghum •  Starch containing material such as

Corn, Cassava •  Damaged food grains •  Food grains during surplus phase

Creation of N a t i o n a l B i o m a s s Repository

Ban on import & Export of Biofuels

VGF Scheme of around U S D 7 0 0 m i l l i o n e n v i s i o n e d f o r 2 G Ethanol Biorefineries

Premium pricing & tax incentives for Advanced Biofuels

I n c r e a s e d R & D support & support for feedstock generation & growers

Highlights of National Policy on Biofuels- 2018

•  Focus on UCO for augmenting Biodiesel supplies •  Agriculture residues , MSW, Plastics and Biodegradable Industrial waste as feedstock

for Advanced Biofuels

Biofuels: 3-Pronged Approach

•  Bio-diesel Blending Programme

•  1st Generation Ethanol (thru Molasses route)

•  Advanced Biofuels

–  2nd Generation Ethanol –  Waste to Drop-in fuels, –  Bio-CNG, –  Biomethanol etc.

Biodiesel : Demand vs Installed Capacity

Parameter Quantity (In Million Litres)

Diesel consumption, Year 2016-2017 91970

Biodiesel requirement @ 5% blending 4600

Installed Capacity 1570

Requirement for additional Biodiesel generating capacity

3030

Policy & Progress - Biodiesel

•  Aug, 2015 – Direct procurement of Bio-diesel allowed for bulk consumers

•  Aug, 2015 - Retailing of HSD blended with Biodiesel (B5) started

•  June, 2017 – Retailing of B100 allowed for the limited purpose of blending with HSD

•  Biodiesel procurement quantity by OMCs increased from 11 Million litres (2015-16) to 56.1 Million litres in 2017-18

•  LOI quantity for 2018-19 is 86 Million litres

•  GST on Biodiesel reduced from 18% to 12%.

Used Cooking Oil (UCO): A potential source of Biodiesel

•  Presents ample opportunity for Biodiesel production.

•  Use of UCO in food chain is a health hazard.

•  More than 23 MMTs of edible Oil being consumed annually in India.

•  UCO generated from Eateries/ Restaurants could be diverted for Biodiesel production.

•  Important Strategy covered under New Policy

Parameter Present Qty

(Million Lit)

Qty by 2022

(MillionLit)

Projected MS Consumption (18-19) 36000 44040

Ethanol (10% blending) 3600 4404

Ethanol available - Molasses Route 1500 1800

Ethanol Deficit 2100 2604 Source: PPAC- 2015-16

Ethanol – Demand Supply Status

Ethanol Procurement Growth Chart

*Contracted Quantity for Ethanol Supply Year 2017-18 – 1500 million liters

154

380

674

1110

665

1450*

0200400600800

1000120014001600

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

*Expected Quantity for Ethanol Supply Year 2017-18 – 1450 million liters

Expected Quantity for Ethanol Supply Year 2018-19 - 2250 million litres

EBP: Initiatives by Govt./ MoP&NG Ø  Ethanol procurement route from B heavy molasses, direct sugarcane

juice, damaged food grains & surplus food grains opened to augment supplies.

Ø  Procurement Process by OMCs made simpler

Ø  Upward revision of ethanol prices on yearly basis

Ø  Reduction of GST from 18% to 5%

Ø  Notification for mass emission standards issued for flexi fuel vehicles running on E85, E100 or ED95 to enable manufacturers to develop flex fuel vehicles.

Advanced Biofuels

Probable answer to limited availability

of conventional Biofuels

Advanced Biofuels as a tool for - 1. Emissions reduction 2. Waste management 3. Income generation

Second Generation (2G) Ethanol

§  Government, in Dec 14, allowed procurement of ethanol produced from cellulosic and lignocelluloses materials including petrochemical route, subject to meeting the relevant BIS standards.

§  Environmental benefits by avoiding crop residue

burning, remunerative income to farmers for crop wastes, Crude import substitution, rural employment opportunities

§  Indian technology licensors – DBT-ICT & Praj Industries

Progress so far

NOFOODorFUELdebateasitisproducedfromagriresidues

Agricultureresiduearecurrentlybeingburnedwhichcanbeusedtomakecellulosicethanol

2500-3000CrorelitersofEthanolcanbeproducedfromthissurplusbiomass,cateringto20%EBP

SurplusbiomassinIndia:120-160MMT/annum*

OilPSUsarenowinprocessofsettinguptwelve2GEthanolBiorefineriesin11States

Pre-commercialplantswithcapacityof400-450tons/dayatestimatedcostofUSD125–150Millionseach.

Groundbreakingofatleast3projectsexpectedthisyear

Technologiesoffirstfewprojectsfinalized

2G Ethanol: Policy support & other Opportunities

§  Off-take assurance to 2G Ethanol suppliers for 15 Years already provided by OMCs.

§  VGF Scheme under consideration: ü  Create 2G Ethanol capacity of 1000 million ltrs/ annum

ü  Support 10 demonstration plants based on novel 2G Technologies

ü  Bring down cost of production of 2G Ethanol & spurt establishment of more Commercial scale Biorefineries

§  Pockets of Surplus Biomass availability

§  Willingness to adopt foreign Technologies demonstrated on commercial/ pre-commercial/ demonstration scale.

Bio-CNG from various sources

Surplus Agri-residue 20 MMT

32%

Spent wash / Press Mud

2 MMT 3%

Municipal Solid Waste 5 MMT

8%

Sewage Treatment Plant

10 MMT 16%

Recoverable Cattle Dung

25 MMT 41%

Estimated Bio-CNG potential : 62 MMT ; Estimated Bio-fertilizer potential- 370 MMT

2. BioCNG – Recent endeavours

•  Bio-CNG from agriculture residues, industry waste, spent wash etc. is presently been undertaken by few Private Stakeholders.

•  Notification issued by MoRTH for testing & exhaust emissions of vehicles running on Bio-CNG. This allows manufacturers to manufacture & sell vehicles fueled by Bio-CNG.

•  MoU signed by IOCL on 15.1.18 for setting up 400 Bio-CNG plants in Punjab in next 5 years.

•  BharatBiogasEnergyLtd.,Ahmedabad•  14000cum/dayBiogasplantwhichincludes

CowFarm,BiogasProjectandOrganicManuremanufacturingUnit

Other Advanced Fuels opportunities: Methanol, Drop-in fuels etc.

•  Exploring possibility of blending methanol in Gasoline and enhancing methanol production capacity.

•  Methanol production being explored from Stranded gas fields.

•  Technology developed by R&D units and Industries for converting Biomass, MSW etc. into Drop-in fuels meeting Indian fuel standards.

•  Recently, a test flight on Bio-jet fuel run by Spicejet Airways in India (IIP technology producing fuel from Jatropha seeds)

Impediments to Biofuel leap in India

•  Lesser interest of producers during lower crude price phase

•  Feedstock - Consistent supply, suitable supply chain mechanisms, smaller land holdings

•  Logistical challenge of collating smaller quantities & its market determination

•  Reluctance of technology providers to share technology performance indicators with investors

•  Bringing stakeholders on board for implementing the decisions is time consuming. (Automobile manufacturers, States etc.)

Opportunities for Biofuels in India

•  Clear vision for Biofuel deployment over next 12 years.

•  Rising Crude prices

•  Lower GST on Biofuels

•  Offtake commitment by OMCs / Periodic procurement tenders floated by OMCs

•  Simpler processes for setting up Biofuel based projects

•  Biofuel support mechanisms such as VGF scheme, differential pricing etc. in pipeline

Way forward

•  Incentives on Biofuel blending in fossil fuels.

•  Financial support to first few Advanced Biofuel plants for bringing in Commercial viability

•  R&D support to institutions

•  Incentives to feedstock growers.

•  Stringent penalties on flouting laws relating to biofuel blending & feedstock generation programmes.

THANK YOU