Transcript Title

Role of Bio-Diesel in the
growing energy demand
scenario in India
FEBRUARY 1 & 2, 2008, FICCI, NEW DELHI
CLIMATE CHANGE & BIO-DIESEL 2008
INDIA WILL BECOME THE THIRD LARGEST ECONOMY IN THE
WORLD BY 2030 AND HAVE THE FASTEST GROWTH RATE
India has a robust future growth position
GDP in trillion US$
FY 2030 (E)
FY 2005 (E)
US
11.7
4.4
Japan
CAGR
Percent
US
20.8
14.3
China
2.2
8.2
Germany
2.0
India
6.1
9.0
China
1.7
Japan
6.0
1.2
India
0.6
Germany
2.7
Source: World Development Indicators; Goldman Sachs, Dreaming with the BRICs: The path to 2050; IEA; UBS estimates
1.1
1
INDIA IS EXPECTED TO BE THE WORLD’S FOURTH
LARGEST CONSUMER OF ENERGY BY 2020
Potential to be fourth largest energy
consumer by 2020
Oil consumption likely to substantially
increase by 2020
Million tonnes of oil equivalent, 2020
2020 forecast oil consumption in mtpa
2891
1210
1896
655
831
285
590
583
225
368
US
China
Russia
India
Japan
185
339
Canada Germany
US
China
Japan
India
165
Russia Brazil
160
Germany
Source: IEA; BP Statistical Review of World Energy 2004; Project BRICS-Relative attractiveness of downstream markets
2
INDIA WILL HOWEVER NEED TO RELY HEAVILY ON CRUDE
IMPORTS TO SATISFY THE DEMAND FOR OIL
Million tonnes per year (mtpa)
225
182
152
113
124
190
109
Net import
80
91
32
33
44
38
35
2000
2005
2010E
2015E
2020E
73%
71%
79%
82%
Production
% imported
144
71%
• Strong demand growth expected in next 10-15 years
• Flat domestic production far from sufficient to cover demand
• Import to make up over 80% of demand by 2020
Source: FACTS 06 Fall; BP; EnergyFiles; Wood Mackenzie
3
BIO-DIESEL CAN PLAY AN IMPORTANT ROLE IN THIS SCENARIO
Drivers for biodiesel adoption
Description
• Bio-diesel can reduce crude imports by 5% in 2015 and
Supply security
through reduction
in crude imports
10% in 2020 (assuming a 10 % blending mandate and 20%
blending mandate in 2015 and 2020 respectively)
• Bio-diesel value chain can create up to 9 million jobs in rural
areas as early as 2015
Rural empowerment
• Bio-diesel production process is eligible for carbon credits
Low environmental
impact
(CERs) under Kyoto Protocol’s Clean Development
Mechanism (CDM) scheme.
• Bio-diesel is less polluting and eco-friendly than conventional
fossil fuels
4
BIO-DIESEL CAN PLAY AN IMPORTANT
ROLE IN REDUCING CRUDE IMPORTS
Million tonnes per year (mtpa)
225
182
152
113
137
80
% imported
Bio-Diesel
substitution
109
Net import
Production
172
124
91
18
32
33
44
7
38
2000
2005
2010E
2015E
2020E
71%
73%
71%
75%
76%
35
Reduction in crude imports by 5% by 2015 and 10% in 2020
(assuming a 10 % blending mandate and 20% blending mandate in
2015 and 2020 respectively) can be achieved through Bio-Diesel
Source: FACTS 06 Fall; BP; EnergyFiles; Wood Mackenzie
5
BIO-DIESEL HAS SIGNIFICANT ENVIRONMENTAL BENEFITS
Emissions are lower compared to conventional diesel
Units in per cent
20% blending of
Bio-Diesel
• Total unburned Hydrocarbons
-30%
• Carbon monoxide
-20%
• Particulate matter
-22%
• NO2
-+2%
• Sulphates
-20%
• PAH (Polycyclic aromatic hydrocarbons)
-20%
• Nitrated PAH
-50%
• Ozone Potential of Speciated
-10%
• Plant prevents
soil erosion
helps in nutrient
replenishment of
soil
• Leaves, flowers
and barks can
be used for
medicinal
purposes
HC
6
BPCL’S EFFORTS IN THE BIO-DIESEL CHAIN
Phase 1
(till 2007)
Phase 2
(2008-09)
Phase 3
(2009-2015)
• Partnerships with State
• Initial commercial efforts
• Pilot efforts in Jatropha
Key initiatives
cultivation in BPCL owned
tracts of land across the
country
• Over 600 acres brought
under Jatropha cultivation.
for entering in the BioDiesel Value Chain in
collaboration with State
Governments and other
partners
• 100,000-200,000
acres to be brought
under Jatropha
cultivation
Governments with high
activity in Jatropha and
Pongamia cultivation for
large scale commercial
play in the Bio-Diesel
Value Chain
• Over 1 million acres to
be brought under
Jatropha cultivation to
produce 1 million tonnes
of Bio-Diesel by 2014-15
7
A FULLY INTEGRATED PLAY IS REQUIRED
FOR SUCCESS IN BIO-DIESEL
Bio-Diesel Value Chain : Business Model
Jatropha
farming
Seed
collection, oil
extraction
and
esterification
1
Farming
+
Production
+
Marketing
Integrated
play
2
Production
+
Marketing
Rationale
• The rural community in India are
lacking in perception to raise suitable
crops upon waste and barren lands.
• Union Govt. through NREGS is keen
to uplift the standards of such
farmers by encouraging them to take
up the Jatropha Cultivation Activity.
• Such Programmes can be effectively
3
Marketing
Blending
and
Marketing
implemented under the P3 model
(Private, Public, Panchayat ) with the
active involvement of established
Companies in diversified areas.
8
BIO-DIESEL VALUE CHAIN : KEY ACTIVITIES
 Identification / Allocation of waste / fallow Land in large chunks for
Jatropha Cultivation by Local Panchayat / Collector / State
Government.
 Cultivation of Hybrid High Yield Jatropha in a phased manner @ few
lakh acres per year.
 Fruit / Seed produce Collection network.
 Setting up of Oil extraction plants / Solvent extraction plants.
 Setting up of Trans-esterification Plants.
 Distribution & Logistics, Blending & Marketing of Bio-Diesel.
9
OPERATION MODEL : BIO-DIESEL BUSINESS
Saplings
developed in
nursery
Seed cake
70%
Glycerol
10%
Transesterification
Jatropha
cultivation
Bio-Diesel
30%
Installations
/Depots
Seeds (100%)
Farmers
3-4 year growing
period (20-25
year life)
Oil
extraction
Marketing
through ROs
Storage
Cost of operations +
10% of chemicals
Revenue from carbon
credits
10
BENEFITS
 Generation of Employment / Self Employment to Lacs of
families of farmers
 Huge area of waste land to be converted into productive use
 Industrialization through investment of huge capital outlay
in the State running into few thousand crores
 Alleviation of poverty in rural areas
 Soil and Water conservation
 Breaking the cycle of drought
11
BENEFITS-CONTD..
 Afforestation
 Reduction of air pollution
 Reduction of green house gases & Global warming mitigation
 Curbing rural migration
 Energy Security and Revenue generation to concerned State
 Self Reliance of energy needs
 Foreign Exchange Savings for the Country
 Rural economy improvement
12
SUPPORT FROM GOVERNMENT

Classification of Jatropha crop under Agriculture / Horticulture / Forest Depts.

Single Window facilitation through Bio-Energy Mission Cell or Renewable Energy
Dept. created by various State Govts. in co-ordinating with all its concerned
Departments at State / District level & upto Village Panchayat level
• For smooth implementation of the entire Bio-Diesel Value Chain, and
• To ensure strong bond between Village Panchayat and Entrepreneurs
• Starting from land identification to collection of fruits from the allocated fields.

Assistance for identification and leasing on Long Term and or allocation of
Suitable land for establishment of
• Nurseries
• Demonstration Units
• Training Centres
• R&D Centres
• Seed collection Centres
• Expelling Units
• Trans-esterification Plants.
13
SUPPORT FROM GOVERNMENT - CONTD..

To extend the Transport Subsidy Scheme to facilitate the execution of this
Project to the farmers as well as the Entrepreneurs.

To render support in terms of waiving state level taxation in the best possible
manner.

To provide applicable subsides to the small industries in establishment of Oil
Expellers and Solvent Extraction Units.

To render power tariff waivers for the expelling Units, S.E. Units and Transesterification Units.

The non-edible oilseeds cannot be marketed / used / consumed directly without
a complex transesterification refining process. Therefore, the respective State

Govts. may issue an Executive Order to exempt this transaction from the
purview of the State Mandi Act, thus facilitate procurement of the non-edible
oilseeds from the farmers directly by the Entrepreneurs.
14
SUPPORT FROM GOVERNMENT-CONTD..

Assist the Entrepreneurs in bringing awareness and Farmers mobilization for
Jatropha cultivation, including development of village youths by bringing
orientation and perception regarding the plantation activity.

Ensuring implementation of Government’s Employment Guarantee Scheme and
all other relevant schemes to support farmers for Jatropha cultivation.

Convergence of various development schemes of State and Union Government
for the benefit of this activity.

Entrepreneurs to be involved in the restructuring of the existing Advisory Body
formed by various State Govts. for implementation of Bio-Diesel Value Chain in
the respective States.

Facilitates formulation of Policies for Jatropha crop Insurance and also involve
Banking Institutions to arrange soft loan to farmers.
15
THANK YOU !
16
BACK - UP
17
POTENTIAL RURAL IMPACT ON INCOME AND JOBS CAN BE HIGH
2015 substitution
level*
Land under
cultivation
Per cent
Million Acre
5
3.8-5 (3-4.5%)**
10
7.5-10 (9-11%)**
20
15-20 (18-21%)**
Rural economic impact Multiplier
(Rs crore)
effect
Total
Rural impact
Income
Jobs
Rs crore
Million
3,375***
2
6750
4.5
6,750***
2
13500
9
13,500***
2
27,000
18
Maximum blending
without any engine
modification
* Fossil diesel demand 75 million metric tonnes
** Percentage of 35-40 million hectares of wasteland that can be used for plantations
*** Based on ~Rs.5-6 per kg of seeds contracts signed by blenders with farmers
18
3 ENABLING INTERVENTIONS ARE REQUIRED TO
MAKE BIO-DIESEL A THRIVING INDUSTRY IN INDIA
1 National Board for development and execution of fuel policy
– Policy on blending proportion of Bio-Diesel
– Approach to creating “Bio-Diesel fund” to manage against crude fluctuations
– Models of possible tri-partite contracts between farmers/villagers, the
government, and the private producers (processors/blenders) that could be
adopted to make significant acreage of Government owned wastelands for
cultivation
2
Public private partnership involving State Governments
– On R&D on seed productivity-Create a dedicated Bio-fuel seed resource at
Department of Bio-technology
– Certification of seed quality and other farming standards
– Ensure close involvement of Panchayats to gain farmer confidence
3 Farmer insurance and financing and purchase guarantees
– Coordinate policies to finance marginal farmers for wasteland cultivation
*Source: Interviews, press searches
19
FURTHER, INDIA CAN CATER TO THE GLOBAL BIO-DIESEL
DEMAND TO EARN SIGNIFICANT FOREIGN EXCHANGE
Bio-diesel
demand
India’s
share
Tonnes million Per cent
8-93
20-30
Required
supply
Implied forex
inflows/savings
Million tonnes Rs crore
1.5-3
3,500-7,0002
EU (2010-11)
Domestic
1
3-4
100
2-3
04
3-4
0
7,000-9,500*
Rs.13,00017,000 crore
foreign
exchange
opportunity
0
Japan
1. Based on 5% blending at a diesel demand of 65-70 MMT
2. Based on Rs 18 sale price per litre
3. Net of EU internal production
4. Early indications are that Japan is likely to tie-up with Brazil for bio fuels
20
OIL WILL CONTINUE TO BE A KEY
SOURCE OF ENERGY EVEN IN 2020
Primary energy consumption by fuel
Quadrillion BTU1
40.4
34.1
29.1
24.0
22.2
9.2
9.0
0.5
4.5
1.2
0.6
5.0
10.0
0.8
10.2
1.0
0.9
10.5
8.3
3.9
6.5
7.8
2002
2005
Solid waste &
biomass
Nuclear, hydro2 &
renewables
Oil3
Natural Gas
2.8
Oil will
contribute
to at least
25% of total
energy
supplies
even in
2020
2.0
1.3
7.1
10.5
Total
9.9
2010
11.8
2015
14.5
Solid Fuel4
2020
1 1 quadmillion BTU = 2.61 BSCFD of gas equivalent
2 Hydro includes geothermal renewables include solar, wind and tide, wave and ocean energy
3 Oil consumption includes international marine bunkers
4 Solid fuel consumption and imports include net imports of coke
Source: DRI-WEFA World Energy Service forecasts
21
JATROPHA PLANTATION : COST BREAK-UP : WORKING SHEET- I
Employment generation and costs for Jatropha plantation (in Rs. per hectare)
COST (Rs.)
S. No.
Employment in person days Year
Item
1st
1
Site preparation i.e. cleaning and levelling of field - 10 MD
2
Alignment and staking - 5 MD
3
2nd
3rd
1st
2nd
1000
-
-
10
500
-
-
5
Digging of pits (2500 Nos.) of 30 Cm3 size @ 50 pits per MD - 50 MD
5000
-
-
50
4
Cost of FYM (including carriage) 2 Kg. per pits during 1st year (2 MT) 1
Kg. per pit during second year onwards @Rs.500/MT
2500
1250
1250
5
Cost of fertilizer @ Rs.6 per kg (50 gm. Per plant during 1st year and 25
gm from 2nd year onward) and 2 MD for each application.
950
575
575
6
Mixing of FYM, insecticides fertilizers and refilling of pits @ 100 pits per
MD 25 MD
2500
2500
7
Cost of plants (including carriage) 2500 Nos. during first year and 500
Nos. of plants during second year for replanting @ Rs.2.5 per plant
6250
8
Planting and replanting cost 100 plants per MD for 1st Year @ 25 MD
and 5 MD in 2nd Year, respectively
9
3rd
-
-
-
-
-
-
2
2
2
2500
25
25
25
1250
-
-
-
-
2500
500
-
25
5
-
Irrigation - 3 irrigation during 1st and one irrigation during 2nd year @
Rs.600/- per irrigation
1800
600
-
5
2
-
10
Weeding and soil working 10 MD x 1 time for 1st year & 10 MD X 3 times
for 2nd years
1000
3000
-
10
30
-
11
Plant protection measure
300
-
-
1
-
-
24300
9675
4325
133
64
27
1215
483.75
216.25
7
4
2
Grand Total:
25515
10158.75
4541.25
140
68
29
Per acre cost (GRAND TOTAL / 2.5)
10206
4063.5
1816.5
Say
10200
4060
1850
Sub total:
Contingency (approx. 5% of the above)
Total for 1st Year & 2nd Year
Total for 1st Year to 3rd Year
14260
16110
22
BIO-FUEL PLANTATION & PROJECT COST PROJECTIONS
Sr.
No.
Particulars
Unit
price
(Rs.)
AMOUNT TO BE PAID
TO
FARMERS ON
PER ACRE BASIS
FOR PLANTATION /
UPBRINGING FROM
GOVT. SCHEMES
16110
1
Land Area to be planted
during the year (in
acres)
2
Total Plantation Cost
year-wise to be funded
by State Govt. from
various
ongoing
schemes
such
as
NREGS etc. (Rs. in
crores)
-
Ist yr.
2007-08
2nd yr.
2008-09
3rd yr.
2009-10
4th yr.
2010-11
5th yr.
2011-12
6th yr.
2012-13
Remarks
1 lakh
2 lakhs
2 lakhs
2 lakhs
2 lakhs
1 lakh
10 lakh
acres
161.1
322.2
322.2
322.2
322.2
161.1
1611
23
JATROPHA COST OF CULTIVATION
PER ACRE IN NORMAL SOILS : SHEET - II
Sr.
No.
Particulars
Unit price (Rs.)
Ist yr.
2nd
yr.
3rd
yr.
4th
yr.
5 th
yr.
6 th
yr.
7 th
yr.
8th yr.
onwards
1
Planting material
1000 plants/acre
Causality replacement
Land Clearing
Pit preparation &
Transplanting
Manures & Fertilizers
Weeding and Soil
working
Watering etc
(The per Acre cost
breakup under 11
subheads as per planning
commissions format
submitted separately in
Sheet no. I)
11150
3850
1900
-
-
-
-
-
2
Pruning
200
200
200
250
250
250
250
250
3
Harvesting
-
-
300
500
500
500
500
500
11350
4050
2400
750
750
750
750
750
Total cost of cultivation
-
* Total cost of cultivation for Jatropha in Normal soils for the first three years including Pruning /
Harvesting is @ Rs.17800/- per acre
** Additional Cost to be incurred for Plantation in the first year on
** Sodic Soils is Rs. 4000.00
** Rocky Soils is Rs.3950.00
24
SODIC & ROCKY SOIL TREATMENT
SODIC SOILS:
For making Sodic Soils suitable for the cultivation of Jatropha curcas
Gypsum has to be added for amending the soil. Gypsum should be
added @ 10 tons/acre. For that in addition to the cost of cultivation of
Jatropha in Normal soils Rs.4000.00 per acre has to be incurred
additionally to improve the soil condition.
ROCKY SOILS:
For making Rocky Soils suitable for the cultivation of Jatropha
curcas in addition to the cost of cultivation of normal soils extra cost
@ Rs 3950/- per acre has to be incurred for the pit preparation and
soil mixture.
25
REVENUE EARNINGS TO THE FARMERS: SHEET - III
Sr.
No.
Particulars
Unit price
(Rs.)
Ist
yr.
2nd
yr.
3rd
yr.
4th
yr.
5 th
yr.
6 th
yr.
7 th
yr.
8th yr.
onwards
7064
2664
1600
-
-
-
-
-
REVENUE TO THE
FARMER FROM ONE
ACRE JATROPHA
PLANTATION
1
Benefit through NREGS
In Rs.
2
Yield (Kg.)
3
Crop value in Rs.
*
Rs.6/kg seed
-
-
500
1000
2000
3000
3000
3000
-
-
3000
6000
12000
18000
18000
18000
18000
Total in Rs.
7064
2664
4600
6000
12000
18000
18000
Yearly Earning to
Farmers on per acre
cultivation
7064
2664
4600
5250
11250
17250
17250
17250
The earning to the farmer in first 3 years is considered from NREGS based on only labour component works out to
Rs. 11328/- .i.e. the computation of benefits through NGER excludes items 4, 5 & 7 given in Sheet I.
26
** If the cost of plantation material / manure etc. as well as labour cost is reimbursed, to the farmers under
NREGS / Other schemes the in the first three years, and thereafter the earning to the farmer is based on crop yield,
then the farmers earning is estimated at Rs 11,350/- in the first year and Rs.4050/- in the second year, Rs.4900/- in the third year,
Rs 5250 in the fourth year, Rs 11250/- in the fifth year, with a regular income of Rs.17250/- per acre / per annum from sixth year
onwards as under.
Rupees Per Year Per Acre
1
Yearly Earning to Farmers on per acre
cultivation if the total labour and
material cost is reimbursed to the
farmers for the first 3 years
2
Earning from the Crop Yield excluding
the cost of Pruning / Harvesting
TOTAL : Yearly Earning to Farmers on
per acre cultivation
11350
11350
4050
4050
2400
-
-
-
-
-
2500
5250
11250
17250
17250
17250
4900
5250
11250
17250
17250
17250
State Governments may kindly consider reimbursement of cost of sapling material and labour, by suitably
extending their existing schemes for Jatropha Cultivation for first three years of Rs.11350/- + 4050 + 2400 =
Rs.17800/-, first Rs.10,000/- from NREGS & Rs.7,800/- from Horticulture / Other Schemes currently operating in
the State for Mango / Guava and other Agricultural / Horticultural items.
27