All over the world crude oil and other liquids produced from fossil fuels are refined into many petroleum products, like Motor spirit (MS) & High Speed Diesel (HSD) that people use as automotive fuel. There has been high growth in consumption of these fuels (MS & HSD) with manifold increase in number of vehicles using these fuels which has directly resulted in increase in the numerous retail outlets dispensing MS & HSD in India. In order to reduce air-pollution, both LPG and CNG being environment friendly fuels are now quite prevalent also as fuel for automobiles. Various public sector undertakings (Oil Manufacturing Companies) and some private companies in the said field have already put up number of Retail Outlets dispensing LPG and CNG for fuelling of motor vehicles in the country. However, there is still a great need for usage of alternate fuels like Biofuels instead of the usual fuels that have been used till date.
Govt. of India, under its Policy on Biofuel, has introduced use of Biofuels such as Ethanol & Biodiesel to be used as automotive fuel in mixtures with gasoline (MS) and diesel (HSD) respectively. In fact, Gasoline (MS) world over is the most consumed product. Diesel is also widely used in diesel engines of heavy construction equipments, trucks, tractors, buses, boats, trains and some automobiles. We all are aware that conventional or fossil fuel resources are limited, non-renewable and are polluting the environment and hence, these need to be used prudently. On the other hand, renewable energy resources are indigenous, non-polluting and virtually inexhaustible. India is endowed with abundant renewable energy resources. Therefore, their use is being encouraged in every possible way by the government by formulating specific policies in this regard.
Biofuels are produced through cotemporary biological processes such as agriculture and anaerobic digestion, and is different from fuels produced by geological process involved in formation of fossil fuels. Globally, Biofuel is classified into three categories – Ethanol (made from corn and sugarcane), Biodiesel (made from vegetable oils and liquid animal fats) and Hydro-Treated Vegetable Oil (HVO). In 2013, out of the 30.8 billion gallons of Biofuel produced, 23 billion gallons was Ethanol whereas Biodiesel accounted for 22.3% and HVO for 2.7% of the entire production. It has been estimated that global Biofuel production will reach 65.7 billion gallons per year (BGPY) by 2021. In such a scenario, Ethanol & Biodiesel have become available for commercial use in India.
Ethanol is produced from fermenting the sugars or starches in feedstock like corn, wheat and sugarcane. Globally, more than 20 million vehicles are running on either pure ethanol or a blend of 85% ethanol and 15% gasolene. Octane rating for ethanol is higher than that of gasoline. Higher octane fuels are more resistant to preignition which allows them to be used in an engine with higher compression ratio. U.S. and Brazil dominate the ethanol production market while other global producers of Ethanol are Argentina, Canada, China & India. Recently, in India few transport buses have been deployed which run on ethanol being used as a substitute for petrol.
Biodiesel is derived from reacting fats like vegetable oil with methanol (solvent). It can also be manufactured from waste cooking grease with minimal equipments even in a garage. The chemical structure of Biodiesel is distinctly different from that of petroleum diesel which is composed of carbon & hydrogen, whereas Biodiesel also contains oxygen. Due to the composition, Biodiesel possesses slightly inferior physical and chemical properties as compared to Petroleum Diesel since it freezes at a higher temperature as compared to Petroleum Diesel. Even though it is inferior in composition yet Biodiesel is produced and used in numerous countries around the world and it is most commonly used in the European Union. China too is a significant user of Biodiesel and satisfies its demand by importing it from Indonesia and Malaysia.
Hydro-Treated Vegetable Oil (HVO) has emerged as an attractive alternative to Biodiesel in recent years. HVO is produced by reacting Hydrogen with Vegetable Oil Stock in a process called “Hydro treating” which is a common process in the petroleum industry. This hydro treated biodiesel is chemically equivalent to petroleum diesel and so it can be used in diesel engines of motor vehicles in any concentration without much modification. However, the capital cost involved in a hydro treating equipment is much higher than the equipments required in producing Biodiesel. Hence, the process requires large scale production for it to be economically viable for the producer. HVO is produced primarily in Europe, Singapore and U.S. Despite, the high production cost, HVO production & use is growing at a faster pace than any other Biofuel in the world.
The government had mandated oil companies to blend 5 percent of Ethanol in Petrol in 2016. However, the nation wise average of ethanol blending stands at 4.02% as on 1.10.2018 as per data compiled by Indian Sugar Manufacturers Association (ISMA). Under the Ethanol Blending Programme Government has now asked OMCs to target 10% blending of Ethanol with petrol by 2022 and that could lower fuel price by Rs.3 per litre. Ethanol, for the purpose of blending with Petrol in India, is sourced from sugarcane. One of the largest two-wheeler manufacturing company in India showcased a motorcycle that can run on 100 percent Ethanol and other such Companies have followed suit by manufacturing two-wheelers which use Ethanol as their fuel. However, the most important development in the area of usage of Biofuels was when on August 26, 2018 a commercial plane from the fleet of Spice Jet Airlines took off from Dehradun and landed in Delhi using Biofuel for undertaking the said journey. It made Spice Jet Airlines, the first commercial airlines to use Biofuel which was made in India, at the Indian Institute of Petroleum, Dehradun and had clearance from DGCA. In addition to the above, small and medium enterprises have started buying Biodiesel and selling it to individual consumers and progressive farmers for supply of energy to brick kilns, backup power diesel generators and the like. Analysts have predicted that Biodiesel production requires an investment of INR 20 Lakh to INR 20 crores in India yielding a profit margin of up to 15% in this industry. In a bid to augment supply of environment friendly fuel, the government has recently allowed private manufacturers of Biodiesel to sell it directly to consumers like Indian Railways for blending it with Petroleum Diesel in running of locomotives. Till date, only state-owned oil firms and those private firms who were investing Rs 2,000 crores or more in oil infrastructure were allowed to retail Petrol and Diesel. Biodiesel, which is to be blended in Diesel before being used to run automobiles, too was clubbed under this rule. Under this Policy, Oil Manufacturing Companies (OMC) were to buy Biodiesel, meeting fuel quality standard prescribed by the Bureau of Indian Standards (BIS), at a uniform price, as decided by the OMCs from time to time, for blending with HSD to the extent of five percent, at identified purchase centres across the country. As the price of diesel is already deregulated and determined by the market, there is no economic justification in preventing private Biodiesel manufacturers, their authorised dealers and JVs of OMCs authorised by the Ministry of Petroleum & Natural Gas from selling Biodiesel directly to consumers subject to the fact that the product meets the prescribed BIS standards and norms.
Ethanol as well as Methanol (a solvent used for extraction of Biodiesel from Jetroffa leaves) are listed as Inflammable substances under the Inflammable Substances Act, 1952 and therefore a licence for storage & dispensing of the same thereof is obligatory under the Petroleum Rules, 2002 framed under the Petroleum Act, 1934. The licensing authority for the said purpose is the Chief Controller of Explosives, PESO, Nagpur. Biodiesel is not a liquid hydrocarbon or mixture of hydrocarbon or any inflammable mixture (liquid, viscous or solid) containing any liquid hydrocarbon and therefore, does not get covered under the ambit and scope of the term “Petroleum’ as defined under section 2(a) of Petroleum Act, 1934. Hence, fuel stations selling Biodiesel are outside the scope of Petroleum Rules, 2002 framed under Petroleum Act, 1934 and thereby no licence for its storage and dispensing is required from Petroleum and Explosives Safety Organisation, Govt. of India.
For setting up of any Factory for manufacturing Biodiesel, a Factory License is required to be obtained from the District Factory Inspectorate. Further, clearance from the Pollution Control Board is also required. Since Multi-feedstock Biodiesel Processing Plants are non-polluting, hence the same can be obtained easily. Biodiesel being a non-petroleum product needs registration under the Central Excise and Customs regulations.
Alternate fuels are the future and thus, need more impetus from the government through policy formulation and appropriate infrastructure. An important step could be to reduce the GST rates on Biodiesel which could lower the manufacturing cost of the said fuel. Despite the hurdles, it has been noticed that various companies are diversifying into the production of Biofuels in order to catch the market while its young and nascent and in order to have a first mover advantage. It would not be out of place to mention that a Company which would invest in the production at this stage would definitely reap exponential benefits in the future.
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