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    South Asia
     May 18, 2006
'Wonder plant' to fuel India
By Siddharth Srivastava

NEW DELHI - Runaway crude oil prices have lent new urgency to India's quest for alternative and renewable fuels, and biofuels, especially biodiesel using the jatropha plant and, to a lesser extent, ethanol, are increasingly being seen as an appealing option.

Recently, private sector giant Reliance Industries Limited (RIL) set aside US$500 million to set up a biodiesel refining plant and earmarked 200 acres of land at Kakinada in Andhra Pradesh as a pilot project to cultivate jatropha shrubs.

Jatropha, a tree originating in the Western hemisphere (species name Jatropha curcus), produces fruit which, though inedible, contains a nut with a very high oil content; once extracted, the oil

can be used as a fuel without further refining. The RIL facility, near the existing 33 million tonne per annum crude oil refinery at Jamnagar, Gujarat, is expected to be ready by 2008. 

Last month, venture capitalist Vinod Khosla set off an exponential rise in the share price of a mid-sized Pune-based company, Praj Industries, by buying a 10% equity stake. Praj is a technology leader in ethanol production.

According to Khosla, ethanol as an alternative to petrol (gasoline) would break even in the US at crude price levels of $35 per barrel (prices are currently hovering around $70 and many are predicting they will soon breach $100). Khosla notes that "E85" (a blend containing 85% ethanol and 15% gasoline) is far less polluting than gasoline.

In February, global energy major British Petroleum (BP) announced that it would invest $9.4 million in biodiesel production in India. The 10-year project aims to cultivate 8,000 hectares of wasteland with jatropha to produce 9 million liters of biodiesel every year.

Allaying fears that the cultivation could affect farm produce, BP vice president Phil New said, "Because Jatropha is drought-resistant and can grow on marginal land, it offers the possibility of an economically, socially and environmentally sustainable contribution to energy security challenges in India."

The Indian government has identified 39 million hectares (almost 100 million acres) of land suitable for growing jatropha, cheerily termed "the wonder plant" by Rajasthan state's "Center of Excellence for Jatropha Biodiesel Promotion".

The government claims that, if fully exploited, the said 100 million acres could produce biodiesel that can substitute for 20% of the country's diesel consumption in five years, far higher than the present 2%. Jatropha cultivation is part of a $300 million biodiesel program, in which plant oils are blended with regular diesel.

Indian Railways, one of the biggest diesel guzzlers, has planted jatropha on thousands of acres of land along rail tracks. The railway is preparing a "bio-locomotive" to run on August 10, International Biodiesel Day.

India is not alone in tapping biodiesel's potential. Across the world, there is a search for crops that can help reduce dependence on imported oil. Palm oil, sugar cane, coconuts, castor oil and even cow dung have been explored as alternatives. Ethanol (typically mixed with gasoline) is distilled mostly from corn in the United States and sugarcane in Brazil and Asia. Biodiesel comes mostly from rape seed in Europe, vegetable oil in the US and oil palm, coconut oil or jatropha oil in Asia.

In the US, a $40 million biodiesel refinery, probably the country's largest, will be built in Grays Harbor County, in western Washington state. Seattle-based Imperium Renewables is aiming to open the facility by the end of next year and produce as much as 100 million gallons of the plant-based fuel annually - a big boost to the incipient industry, now struggling to break even.

The investment followed the Energy Freedom legislation passed in the state earlier this year, which made it mandatory that 2% of all diesel used in Washington be biodiesel by 2008. The US Department of Agriculture says biodiesel can reduce carbon emissions by 78%.

Both India and China are seriously looking at Brazil's success with alcool, as ethanol is called in Portuguese. Brazil is estimated to save $50 billion per annum in terms of petroleum imports. India, like Brazil, has large tracts of land under cane cultivation. Both the Chinese and Indian governments are extending tax incentives to make biofuels economically feasible. China has set itself a goal of generating 30 gigawatts (GW) of installed power generation capacity using renewable sources within the next 15 years.

Europe has dominated the biodiesel industry to date, accounting for 90% of global production. The EU produced 2.4 million tons of biofuels in 2004, amounting to 0.8% of EU gasoline and diesel consumption. Of this, ethanol made up 0.5 million tons and biodiesel 1.9 million tons. The EU has ruled that all fuels should contain 5.75% biofuels by 2010.

Experts, however, warn that over-enthusiasm about biofuel cultivation could affect agricultural production for human consumption and result in famines in areas of scarcity and drought. The balance needs to be right, especially for a country such as India which has shown anemic increases lately in agricultural production and productivity.

But there is no doubt that fast-growing countries such as India and China need to act fast, given spiraling domestic fuel demands. After China, India has the fastest-growing motor vehicle industry in the world, currently totaling over 8 million vehicles sold per year (including passenger cars, utility vehicles, commercial trucks, and two- and three-wheeled vehicles).

Booz-Allen Hamilton and McKinsey has estimated that the Indian domestic passenger car market of 1 million (70% of which are currently small cars) will double by 2010 and cross 3.5 million by 2015.

In China and India, with populations of 1.3 billion and 1.1 billion, respectively, fewer than 10 in 1,000 driving-age inhabitants currently own a car. Yet purchasing power in these two countries continues to rise, as shown by projected 2006-2020 GDP annual growth forecasts of 5.5% for India and 5.2% for China.

The developments related to biodiesel are concomitant with efforts to develop other renewable energy sources. There have been recent big-ticket announcements by the Indian wind-energy firm Suzlon Energy, which said it planned to invest $60 million in a factory in the eastern Chinese port city of Tianjin. The company has also acquired Belgium's Hansen Transmissions International NV, one of the largest wind energy and industrial gearbox manufacturers in the world, for $500 million.

India's Planning Commission, in its draft integrated energy policy, has estimated power generation capacity requirement reaching 627,088 MW in the year 2031, up from the present capacity of 130,000 MW. It is estimated that wind, small hydroelectric and biomass sources have the potential to generate 80,000 MW of this.

Siddharth Srivastava is a New Delhi-based journalist.

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China gets energized over ethanol (May 4, '06)

Beijing's new driving spirit (May 4, '06)

Malaysia sets store in biodiesel (Jan 31, '06)


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