Business case for Indian corporates to invest in third gen biodiesel
India is a diesel country. Surprisingly, very few in the mainstream sector know this because they mostly use petrol (gasoline) for their cars and bikes. About 75% of all transport fuels consumed in India is diesel.
From a CO2 emissions perspective too, diesel is where the emphasis should be, especially diesel for heavy vehicles. Just consider this stat: While trucks comprise only about 2% of on-road vehicles, they are responsible for about 40% of emissions and fuel consumption from road transport. And trucks use only diesel.
Digest that, and you will know why, despite the good news from the ethanol front, transport decarbonization needs low carbon alternatives for diesel.
If we rule out large scale electrification of heavy vehicles in short and medium terms, and LNG based trucking also being quite infeasible in India, the only feasible low carbon diesel alternative for this timeline is biodiesel.
But biodiesel has been the problem child of the Indian biofuels industry. While ethanol has done reasonably well, biodiesel has had serious supply chain issues, with the result that India blends less than 0.3% of biodiesel in diesel as of 2022 (Target is 5%).
What are the options?
* Scaling up the side streams from edible oils (especially palm oil) is quite difficult
* Use of used cooking oil & animal fats once again are unlikely to provide the kind of scale needed for large scale biodiesel use
* Efforts into Non-edible oil options such as Jatropha and Pongamia have been singularly unsuccessful
*. Some second generation technologies such as HVO (hydrogenated vegetable oil, pioneered by cos such as Neste) show promise as they produce a drop-in diesel replacement, but they may be beset by the same feedstock problems at least in India.
So, where does this leave us?
I strongly believe that Indian companies (especially medium and large corporates) should seriously explore the third generation pathway, which is in the form of Biomass to Liquid (BTL). In this, any type of biomass (including the organic portion of household waste) is converted into syngas, which is put through a catalyst assisted thermochemical process to produce a range of hydrocarbon fuels, including diesel.
BTL is already used, though only in select places. The technology works and can use a range of biomass including agri waste.
Challenges are there too: Currently, it is expensive though there can be economies of scale. There is no dominant tech, with 4-5 prominent vendors each touting their own tech.
All said however, for someone like me watching the biodiesel sector in India fumble and stumble for over a decade, this route holds the greatest promise for scaling biodiesel production and use in India.
What do you think?
Also, you can read more on options available for Indian biofuels sector from here – https://bit.ly/3vV6fLr
See my LinkedIn post on this topic