bio diesel energy systems and technology best sie.v17 ch9 twas trieste public

Bio-diesel Energy Systemsand Technology – India

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� Implementing Institution:Indian Institute of Science

� Head of Institute:Professor P. Balaram, Director

� Details of Institution:Address: Indian Institute of Science, Bangalore 560 012, IndiaTel.: (+91) 80 2360 2378/2741 or (+91) 80 2293 2337Fax: (+91) 80 2360 0683 or (+91) 80 2360 0535E-mail: [email protected]: www.iisc.ernet.in

� Implementation Period:Started 1 August 2006. Phase 1 to last three years; phase 2to continue for eight years.

� Costs:The total estimated cost is $12,230,000. It is expected that 50 per cent will be contributed by the Ministry ofNon-conventional Energy Sources. The balance of the contributions is expected to be provided by the KarnatakaState Council for Science and Technology, Bio-dieselEnergy Systems and Technology, Rotary Electronics Pvt.Ltd., and the Indian Institute of Science, Bangalore.

117

GENERAL INFORMATION

118 VOLUME 17: EXPERIENCES IN DEVELOPING CAPACITY FOR SUSTAINABLE DEVELOPMENT

SUMMARY

The Bio-diesel Energy Systems andTechnology initiative is a start-up venturethat was launched in 2006 by the IndianInstitute of Science in Bangalore,Karnataka State, India. The aim of thisinitiative is to build scientific, technolog-ical and human capacity for the genera-tion and use of bio-diesel as an alternativeto petroleum-based fuel products. Thestrategic advantages of using bio-dieselare many: it is a renewable source of energy (derived from inedible vegetableoils), it is ecologically friendly and lesspolluting than petrol, and it could make asignificant contribution to energy securityin India. Some States in India (e.g.,Andhra Pradesh, Chattisgarh andOrissa,) have already launched efforts toproduce bio-diesel. A unique approach inthe Bio-diesel Energy Systems andTechnology entrepreneurial venture hasbeen the creation of a sustainable private-public partnership between Bio-dieselEnergy Systems and Technology, theKarnataka State Council for Science and Technology, the Ministry of Non-conventional Energy Sources and RotaryElectronics Pvt. Ltd., Bangalore, a small/medium-sized enterprise that exercisescorporate social responsibility.

The Bio-diesel Energy Systems andTechnology project aims to identify andevaluate the value chain and to develop aviable business plan that considers thepotential political, economic and traderisks involved in the steps to be takentowards the sustainable generation and

use of bio-diesel as an alternative “clean”fuel. Such steps include:

• the acquisition of land for plantationand cultivation of oilseed feedstock;

• the development of efficient technologies for the conversion ofthe vegetable oils extracted fromthe oilseed to bio-diesel via anesterification process; and

• the assessment of the economic,social and environmental impactof large-scale production of bio-diesel through public distributionand private for-profit channels.

BACKGROUND

AND JU S T I F I C AT I ON

Most countries are net importers of oiland depend on countries with indigenousresources of fossil fuels that exceednational demand to satisfy their energyrequirements. In view of the increasingscarcity and cost of non-renewablesources of energy (primarily petroleum-based oil products), many countriesaround the world are gradually shifting torenewable fuels. In this scenario, bio-diesel is an important component in themix of energy sources being consideredby many countries.

BIO-D I ESEL CHARACTER I ST ICS

Bio-diesel is a clean-burning alternativefuel produced from the seeds of variouscrops. It is thus a renewable energyresource.

Bio-diesel Energy Systems and Technology – India 119

Chemically, bio-diesel is a fatty acidalkyl ester that can be used as an alterna-tive fuel in compression-ignition (diesel)engines with little or no modificationsince its physical and chemical character-istics are very similar to those of conven-tional diesel. In fact, the oxygen contentof bio-diesel (approximately 10 per cent)has been shown to improve the combus-tion of and reduce emissions from blendedfuel (a mixture of bio- and conventionaldiesel) compared with conventional dieselalone. The amount by which emissions –including carbon monoxide, hydrocar-bons and particulate matter – are reduceddepends on the relative levels of constituents of the blend. Although emis-sions of oxides of nitrogen (NOX), whichcontribute to smog formation, mayincrease slightly when bio-diesel is used atblend levels of more than 5 per cent, fueladditives may be able to resolve this issue.

Bio-diesel is also simple to use,biodegradable, non-toxic and essentiallyfree from sulphur and aromatic hydro-carbons, the combustion of which makesan important contribution to the green-house effect.

GROWTH IN THE USE OF BIO-DIESEL

The European Union has set guidelinesrequiring that all Member States increasethe proportion of renewable fuels in totalfuel mixtures from 2 per cent in 2005 to5.75 per cent by 2010 and to more than10 per cent by 2020. In 2001, nationalproduction of bio-diesel from vegetableoils (mainly sunflower oil, rapeseed oiland frying oil) in various countries of the

European Union and in Switzerlandranged from 500 to nearly 780,000tonnes per year.

In the United States, bio-diesel iscommercially available in most oilseed-producing States. In 2004, almost 30 million US gallons (110 million litres) ofcommercially produced bio-diesel weresold. Owing to increasing pollution-control requirements and tax relief, themarket in the United States is expected togrow to 4 thousand million to 8 thousandmillion litres by 2010. Many farmers whogrow oilseed use a bio-diesel blend intractors and other agricultural equipmentas a matter of policy to foster productionof bio-diesel and to raise public aware-ness. Likewise, some agrobusinesses andother businesses with ties to oilseed farming use bio-diesel for public relationsreasons. Some tax credits are available forusing bio-diesel in the United States. Theprice of bio-diesel decreased from an aver-age of $0.92/litre in 1997 to $0.54/litre in2007. These prices are comparable withcurrent petro-diesel prices, which, in early2008, varied from $0.92/litre to$1.12/litre.

THE S ITUAT ION IN IND IA

In India, oil accounts for about 34 percent of total energy consumption and theshare of oil in the fuel mix used has beengrowing gradually in recent years. Whilethe production of oil in India was837,000 barrels per day in 2005, at thattime, India had net oil imports of nearly1.7 million barrels per day. With therecent and projected rapid growth of the


Indian economy, oil consumption isexpected to increase to 3.1 million barrelsper day by 2010.

The increasing demand for oil inIndia, the ongoing depletion of nationalresources and the rising cost of importingoil (leading to an increasing deficit in thebalance of trade) are important macro-economic factors that are encouraging ashift to bio-diesel. On a micro level, thegeneration of employment in rural areas,the productive reclamation of wasteland(of which India possesses more than 6million square kilometres) and positivecontributions to the environment throughreductions in vehicular emissions and areduction of soil erosion through the cultivation of bio-diesel crops are some ofthe factors driving the consideration ofbio-diesel fuel for large-scale use.

Bio-diesel can be made from anyfeedstock oil or fat, the cost of the feed-stock being the most important con-stituent in the economics of bio-dieselproduction. In the United States and theEuropean Union, bio-diesel is beingmade commercially from edible oils suchas sunflower or rapeseed oil. Because ofthe growing demand for food by the rapidly growing population of India,alternatives to edible oils are a more reasonable and feasible option. Of theinedible oils available, oil from honge orkaranj (Pongamia pinnata, a leguminoustree) and from jatropha (a genus contain-ing approximately 175 succulent plants,shrubs and trees) are the most feasiblealternatives. Jatropha has been selected asthe plant of choice in this project becauseof its biological characteristics.

Jatropha curcas, a member of theEuphorbia or spurge family, is a hardyplant that is well adapted to harsh soiland climatic conditions, growing on eventhe poorest stony soils and in rockcrevices. Its water requirements areextremely low and it can withstand longperiods of drought. It is easily propagatedby seeds or cuttings and grows rapidly.Growing to more than five metres inheight, it may be trimmed as desired andis suited to cultivation as a hedge plant. InIndia, J. curcas is found in almost all Statesand is generally grown as a living fencefor protecting agricultural fields.

The bean-like seeds of jatropha con-tain viscous, inedible oil that can be usedfor the production of high-quality soap, asa raw material for cosmetic products, asfuel for cooking and lighting, and as asubstitute for diesel fuel. The hydro-carbon chains (triglycerides and fattyacids) in jatropha oil, when mixed withalcohol in the presence of a catalyst, forma mono-alkyl ester that is bio-diesel.

The Central Salt and Marine ChemicalsResearch Institute in Bhavnagar, India,has developed a process for refining oilfrom jatropha seeds at a reasonable costwithout the intensive use of energy.

After extended analysis and consider-ation, a government policy on bio-dieselpurchasing was initiated on 1 January2006. This policy includes the setting ofminimum support prices and blendingtimelines. With the Ministry of RuralDevelopment as the nodal ministry, theNational Mission on Bio-diesel was established under the chairmanship of


the Member Planning Commission. TheMission has formulated a programme, thefirst phase of which is to cultivate jatrophaon about 0.4 million hectares of wastelandacross the country, while the second phaseis to increase this to 11 million hectaresand to achieve 20 per cent blending ofbio-diesel with conventional diesel.

States such as Andhra Pradesh,Chattisgarh, Rajasthan, Tamil Nadu andUttaranchal have formed nodal agenciesfor the development of bio-diesel andhave announced draft policies. On thepart of industry, automobile companiessuch as DaimlerChrysler and Tata MotorsLtd. have been conducting trials withbio-diesel in addition to doing researchand development on process technology.

BIO-D I ESEL ENERGY SYSTEMS

AND TECHNOLOGY PROJECT

The objectives of the Bio-diesel EnergySystems and Technology project are to:

• identify and evaluate a value chainthat is relevant to the national economy, that could be implementedin rural areas, that could generateemployment, and that could also beenvironmentally responsible;

• develop a viable business planbased on the sustainable generationand use of bio-diesel;

• identify the economic and politicalrisks involved in such a venture; and

• create a workable public-privatepartnership to implement theabove scheme.

DES C R I P T I ON

IDENT IFY ING AND EVALUAT ING

THE VALUE CHAIN FOR BIO-DIESEL

The value chain is a chain of activitiesinvolved in the production of any productwhereby each activity adds value to thefinal product. The value chain for bio-dieselmanufactured from renewable sources ofenergy in India, i.e., non-edible oils, wouldconsist of the following phases (fig. 1):

• acquisition of land for plantations;

• cultivation of the oilseed crop;

Figure 1 Steps in the production of bio-diesel from jatropha: top row (a and b):crop production; middle row (c and d): seedharvest and extracted oil; and bottom row (eand f ): conversion to the bio-diesel product.

(a) (b)

(c) (d)

(e) (f )


• extraction of the vegetable oilfrom the seeds; and

• conversion of the extracted vegetable oil into alkyl ester andglycerol via esterification.

Acquisition of Wasteland

Wasteland can be acquired via purchase,contract or lease. Usually, the purchasingof land would occur only when thelandowner is in financial distress or whenthe land has been lying idle for extendedperiods. Large initial outlays of capital, theacquisition of small tracts of land from sev-eral individual owners and the aggregationof these purchases into a single large holding are characteristic of this option.

Concerning contracts, the owners oflarge tracts of wasteland must be convinced (perhaps through financialincentives) of the potential benefits ofthis enterprise and they should bebrought into the venture as partners.Profit-sharing on the basis of investmentsby all parties concerned should be agreedearly in the contracting process.

With regard to leases, different Stategovernments should be approached withthe business plan and large tracts of landshould be leased for nominal annual payments either on a fixed-sum or a profit-sharing basis. The incentives for the Stategovernments would be primarily theenvironmental and societal benefits. Thefinancial returns would also be useful forthe government as an additional incomefrom land that has been lying idle for along time.

Under plans proposed by theNational Rural Employment GuaranteeScheme (NREGS), local communitieswill also benefit from jatropha produc-tion, being paid to plant, tend and harvestthe crop on common land.

Cropping Jatropha

Under the Bio-diesel Energy Systems andTechnology project, the crop chosen forthe production of oil for bio-diesel is jatropha, an indigenous plant that ishardy, easy to grow and especially suitedto wasteland (thus it does not require theuse of valuable agricultural land).Jatropha oil is a promising and commer-cially viable alternative to diesel oil sinceit has physico-chemical and performancecharacteristics that resemble those ofconventional diesel. The agriculturalpractices required to grow jatropha,including pest and disease control, arewell known.

Generation of Bio-diesel

The final part of the value chain involvessetting up a production plant to extract oilfrom the jatropha seeds and to convertthe oil into bio-diesel and glycerol. Aftercrushing the seeds, the oils and fats are filtered and preprocessed to remove waterand contaminants. In a process known astransesterification, the vegetable oils arechemically reacted with an alcohol (usuallymethanol) and a catalyst (usually potas-sium hydroxide) to produce fatty acidmethyl esters. Bio-diesel is the name givento these esters when intended for use as


fuel. Glycerol (used in pharmaceuticalsand cosmetics, for example) is producedas a co-product. The esters and glycerolare then separated and purified.

The details of the process of extractingand converting jatropha oil to bio-dieselare presented in figure 2.

DEVELOPMENT OF A VIABLE

BUS INESS PLAN

The following steps in the implementa-tion process have already been initiatedin order to fulfil the four-step value chaindescribed earlier:

• a 10-hectare piece of land hasbeen procured on the premises ofRotary Electronics Pvt. Ltd.,Bangalore, to cultivate jatropha foroil extraction and esterification;

• a proposal for the involvement ofand funding by the KarnatakaState Council for Science andTechnology has recently beenapproved;

• a proposal for a national-level

project is being prepared in conjunction with, and for possiblefunding by, the Ministry of Non-conventional Energy Sources; and

• a unique system of public-privatepartnership is being created,involving the Indian Institute ofScience, Bangalore; Bio-dieselEnergy Systems and Technology;the Karnataka State Council forScience and Technology; theMinistry of Non-conventionalEnergy Sources; and RotaryElectronics Pvt. Ltd. The details ofthis partnership are provided inthe “Partnerships” section.

The core idea is to create a businessenterprise involved in creating bio-dieselfrom jatropha oil. The enterprise wouldbe involved in the entire value chain ofbio-diesel production.

The long-term target is the acquisitionby the enterprise of more than 20,000hectares of land in Karnataka State thatwill be under jatropha cultivation within10 years from the start of the venture.

JATROPHAPLANTATION

JATROPHAOIL

MINERALACID

FATTY ACIDSGLYCEROL

BIO-DIESEL

ALCOHOL

SETTLER EVAPORATIONNEUTRALIZATION

DISTILLATION

SEEDCOLLECTION

OILEXPELLER REACTOR SETTLER WASHING PURIFICATION EVAPORATION

CATALYST

ALCOHOLRECOVERY

Figure 2 Production of bio-diesel from jatropha.


The annual cost of cultivation (mate-rials and labour) is estimated to be about$175 per hectare in the first year, fallingto $60 per hectare in the second year.

The estimated outflow of privatefunds for paying for land and first- andsecond-phase cultivation, together withfunds contributed by the government, isexpected to reach $22,000 in the firstyear, rising to more than $3 million inyear 10 but falling to about $856,000 inyear 11, when the targeted area of landhas been purchased.

Yield is expected to be an average of2 kilogrammes per plant from the secondyear onwards (yield in the first year isexpected to be 60 per cent of the potentialyield, i.e., 1.2 kilogrammes per plant).

PAT EN T I NG AND

COMMERC I A L I Z AT I ON

With the government of Karnataka guar-anteeing a minimum assured purchaseprice of 4.5 rupees ($0.10) per kilo-gramme of seed, the inflow of cash isexpected to be $6,800 from the first year,rising to $10,768,000 by year 11.

Within three years, it is estimatedthat the project will become a net producer of funds and that the net cashflow (including the costs of land acquisi-tion, cultivation, government paymentsand the sale of seed produced) is likely toexceed $10 million.

PARTN E R SH I P S

A unique approach in this entrepreneurialventure has been the creation of a sustainable private-public partnershipwith the following stakeholders:

• the Indian Institute of Science,Bangalore: is responsible for innovation and system design;

• the Karnataka State Council forScience and Technology: sponsorsthe project and provides assistancewith technology transfer;

• the Ministry of Non-conventionalEnergy Sources, New Delhi: provides national support for infrastructure and assistance withtechnology transfer;

• Bio-diesel Energy Systems andTechnology, a small start-up venture founded by an alumnus ofthe Indian Institute of Sciencewith a master’s degree in businessadministration: is responsible forbasic project implementation andthe entrepreneurship scheme; and

• Rotary Electronics Pvt. Ltd.,Bangalore, a small/medium-sizedenterprise: has corporate socialresponsibility.

REP L I C A B I L I T Y

In view of the global depletion of non-renewable energy resources, bio-dieselrepresents a novel and economically andenvironmentally viable source of renew-


able energy for all countries with unexploited land resources.

J. curcas, found in the tropics and sub-tropics, having a low water requirementand adapted to a wide range of climates and soil types, is suitable for cultivation in other developing countries.Jatropha bio-diesel is already used in coun-tries such as Argentina, the DominicanRepublic, Kenya and Mozambique and itspotential is being investigated in countriessuch as Indonesia, Myanmar and thePhilippines. Indeed, enquiries about theBio-diesel Energy Systems and Technologyproject have been received fromBangladesh, Malaysia and South Africa.

POL I C Y IMP L I C AT IONS

Bio-diesel has been promoted as a viablealternative to petroleum-based diesel viathe formulation of a bio-diesel purchasepolicy with minimum support prices, ini-tiatives by the central government in setting bio-diesel blending targets withtimelines, and initiatives by State govern-ments in promoting the cultivation of bio-diesel feedstock on wastelands. Forexample, some States in India (e.g.,Andhra Pradesh, Chattisgarh and Orissa)have introduced legislation to encouragethe use of bio-diesel. The National Bio-diesel Policy, formulated in March2006, now encourages other States to dolikewise.

The major risk in this project hasbeen assessed to be a political one: the likelihood that State and federal govern-

ments will change their energy and agriculture policies to make bio-dieselless attractive. In the worst-case scenario,the governments may even discourage orprohibit the use of inedible oils for energypurposes.

The greatest economic risks arisefrom the volatility of the internationalenergy markets, including price fluctua-tions that may arise from the introductionof a new energy technology. Moreover, ifthe cost of conventional energy shouldfall, the price of bio-diesel would becomeless competitive.

There is always competition for agricultural land and associated forestland. If the programme proves successful,the promoters and regulators of bio-diesel may begin to encourage thelarge-scale conversion of agricultural landto jatropha cultivation, placing enormouscompetitive pressure on land-use pat-terns. For example, wastelands are oftenused as common land and supply thepoorest rural peoples with food, fodder,fuel wood and medicine.

I M PAC T

The validity of the basic concept of thisproject and its feasibility have beendemonstrated. Its success at later stages willbe measured by the following parameters:

• the progressive rate of conversionof arid land and wasteland to thecultivation of jatropha and othersimilar plants producing inediblevegetable oils;


• the annual increase in the produc-tion of seed from which inediblevegetable oil can be extracted tomake bio-diesel;

• the successful implementation oflow-cost processes and technologiesfor esterifying the vegetable oil toproduce bio-diesel;

• the increasing generation of ruralemployment for farmers and socialentrepreneurs engaged in the cultivation of jatropha and otheroilseed crops;

• the production, marketing, distribution and use of bio-dieselas a substitute for conventionalpetroleum-based diesel; and

• the national social benefits generated overall through the bio-diesel project, including thecreation of energy security.

A preliminary assessment of thepotential of the Bio-diesel EnergySystems and Technology venture to gen-erate employment shows that at least 2million jobs will be created in the State ofKarnataka in the next 20 years. Thiswould represent a 5 per cent increase inemployment levels in the State (whichcurrently has a work force of about 40million people in the organized sectors).There will also be an indirect effect onanother 10 million people who stand tobenefit as tertiary suppliers and ancillaryunits involved in the bio-diesel supplychain. Most (an estimated 60 per cent) ofthe jobs created will be for the semi-skilled and unskilled labour force in rural

areas where the jatropha will be grown,the remainder of the downstream processing occurring in urban and semi-urban areas.

The Bio-diesel Energy Systems andTechnology project represents an economically and environmentally viableoption in view of the increasing demandfor renewable domestic energy suppliesin the face of the depletion of nationalresources and efforts to attain energysecurity, and central and State govern-ment involvement in the promotion ofbio-diesel cultivation and use. The project is highly sustainable because itexploits wasteland that would otherwiselie idle and not generate income. It canpotentially generate a significant amountof rural employment and possibly allowthe accumulation of carbon credits (a keycomponent of national and internationalemissions trading schemes to offset emissions of greenhouse gases).

L E S SON S L EA RN ED

Among the obstacles faced during thisproject to date has been the reluctance oflocal farmers to sell or lease land for thecultivation of jatropha, especially in theabsence of clear government policies.This problem has been partially overcome by offering to involve thefarmers as participants in a social entre-preneurship project with the formation ofa profit-sharing cooperative.

Environmental concerns have beenraised concerning the effect on biodiversity


of large-scale monoculture with jatrophaor honge. In order to address these concerns, suitable multiple-croppingstrategies have been proposed (for exam-ple, a combination of cereal crops withjatropha).

The political will of the central gov-ernment to develop and implement sustainable policies for the promotionand incentive-based growth of bio-dieselfuels was recognized as a limiting factorwith respect to the widespread success ofthe project.

Developing appropriate marketingand distribution policies and strategiesthat will ensure the uniform availabilityof bio-diesel across a large country suchas India is also a significant challenge.

With regard to technical issues, it willbe necessary to develop more economicalmeans of extracting oil from the jatrophaseed and to develop economic strategiesfor the esterification process by whichbio-diesel is produced from the vegetableseed oil.

The preparation of public perceptionfor the acceptance of bio-diesel as aviable alternative to petroleum-baseddiesel has yet to be undertaken. The success of this part of the venture willdepend largely on the efforts of govern-mental and non-governmental organiza-tions to inform the public of the socialand economic benefits of using bio-dieselin the agricultural, industrial and transport sectors.

FUTUR E P L AN S

Efforts are now being concentrated oncreating the infrastructure necessary forsuccessful implementation of the Bio-diesel Energy Systems and Technologybio-diesel project in Karnataka State.

P U B L I C AT I O N S

Mandal, R. (2004). Energy – AlternateSolutions for India’s Needs. PlanningCommission, Government of India.

Manjunath, K. C. (2006). Generation ofbiodiesel using inedible oils: Value chainanalysis and business plan. MBA thesis.Department of Management Studies,Indian Institute of Science, Bangalore.

Case Study Prepared by:

Parameshwar P. IyerPrincipal research scientistAddress: Department of ManagementStudies, Indian Institute of Science,Bangalore 560 012, IndiaTel.: (+91) 80 2293 2448E-mail: [email protected],[email protected]

Project Participants:

Parameshwar P. Iyer, innovator and systemdesigner, Indian Institute of Science,Bangalore.

K. C. Manjunath, innovator and systemdesigner, Department of ManagementStudies, Indian Institute of Science,Bangalore.


Karnataka State Council for Science and Technology and Indian Institute ofScience, Bangalore: Project sponsors and technology transfer assistance.

Ministry of Non-conventional EnergySources, New Delhi: National supportfor infrastructure and project technologytransfer.

Bio-diesel Energy Systems andTechnology: Basic project implementa-tion and the entrepreneurship scheme.

Rotary Electronics Pvt. Ltd., Bangalore.

bio diesel energy systems and technology best sie.v17 ch9 twas trieste public

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