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Indian government set to release national renewable energy policy

July 2, 2008

In India, local observers say that the central government will release its long-awaited renewable energy policy by next week. Indian industry executives have been clamoring for a central board to coordinate policies related to feedstocks, production and R&D, but it is unclear if the new set of policies will include the measure.

India background report

The Planning Commission Expert Group said in its special report on biofuels that India will not be able to meet its 10 percent blending mandate scheduled for October, nor will it be able to meet the current five percent mandate this year. It blamed the 2006 decision by several Indian states to restrict the shipment of molasses, and the ban on production of ethanol directly from sugar. The five percent mandate took effect late last year with the exception of Jammu & Kashmir, some northeastern states and island possessions. Vehicle makers have expressed reservations about the increased mandate, saying that older cars would not be able to use the fuel.

While the E5 shortfall is unexpected, the central government had indicated earlier in June that it is unlikely to meet its October 2008 goal for moving to an E10 ethanol mandate, citing a 20-25 percent drop in sugar production expected for the 20087-09 season. Observers also suggested that India’s strong stand against US corn ethanol influenced the government’s position on increasing the ethanol mandate.

Meanwhile, the Society of Indian Automobile Manufacturers is conducting a study to determine how many of India’s 101 million existing vehicles will be able to handle the switch the E10 from E5 planned for October.

Petroleum and Natural Gas Minister Murli Deora said that the national government would raise the required ethanol content in gasoline from 5 percent to 10 percent in October

Meanwhile, Indian Finance Minister P Chidambaram, speaking at a conference in Singapore, called the policies of developed nations converting food into fuel “outrageous and must be condemned” and that the world’s poor are feeling the impact of higher food prices. “It is a sign of the lopsided priorities of certain countries that they will resort to measures that will produce fuel at a cheaper cost in order to meet the transport requirements of a section of their population,” he said. He did not offer comments on India’s rapidly expanding capacity to do the same thing.

In further developments in Indian biofuels-fromfoodstock, Tata Chemicals said will invest $185 million between now and 2012 to develop ethanol production capacity. The company announced that it would invest the first $12.7 million of that fund in a 3 Mgy sweet sorghum ethanol demonstration plant in Maharastra. The facility, which will be constructed by Praj Industries, will open in 2010. Tata said that it is exploring jatropha cultivation at five labs in Maharashtra and Gujarat. Tata Chemicals recently said that it would join the Sweet Sorghum Ethanol Research Consortium. By joining the Consortium, TCL will have access to Consortium research, including cultivation best practices and superior hybrids.

Naturol Bioenergy said that it will commence exporting biodiesel to Europe from its plant in Hyderabad, and said that it is growing jatropa on 5,000 hectares under contract with local farmers. The company said that it planned to invest $40 million by 2010 to expand its operations.

India and other countries continue to increase their focus on sweet sorghum as a feedstock, primarily because it can be cultivated on otherwise non-arable land and is inexpensive. Earlier this month, Rusni Distilleries said it was planning to double its sweet sorghum ethanol capacity to 8 Mgy in March 2008, and Ultimate Bio Fuels has announced a 19 Mgy sweet sorghum facility in Visakhapatnam. The completion of the projects will increase India’s sweet sorgum ethanol capacity to 38 Mgy.

The central government has confirmed that new regulations allowing the conversion of sugar juice into ethanol apply only to sugar producers, and not to specialized ethanol plants, which must still use molasses as a feedstock. The Bihar state government said that the ruling would mean the loss of up to fifteen new ethanol plants proposed for the sugar-rich state.

Bihar state was forced to re-auction 60-year leases on 10 abandoned sugar mills after bids were not received on three and seven bids did not meet the reserve price. Five mills were successfully leased to Reliance Industries, Hindustan Petroleum, Rollcon Projects and SS Infrastructure were successful in their lease bids.

The facilities would be used to increase ethanol production to meet the Indian government’s existing E5 mandate and proposed E10 mandate scheduled to take effect in October 2008.

Bihar has indicated that it hopes to reactivate as many as 15 sugar mills to produce ethanol, although the central government has required that only mills that produce sugar and ethanol will receive a waiver from the 1966 Sugarcane Control Order which bans the direct conversion of sugar juice into ethanol fuel. Previously, ethanol could only be made from molasses.

In India, sugar cane growers established rail and road blockades to protest the non-payment of nearly $5 million that is owed to them by Bihar State. Noting the non-payment protests, the Bihar Times is asking how the Bihar State government is going to be able to finance its ambitious ethanol policy.

India is projected to have a surplus of 11.5 million tonnes, based on a projected 33.15 million tonnes harvest this year, which would be a world record for national sugar production. Recently, 10 sugar-producing states have agreed to a framework for a national E10 mandate. India’s sugar crop this year is expected to exceed 29 million metric tons. With domestic consumption at 19 million tons and exports at 1.5 million tons, the country is turning to ethanol production to avoid a catastrophic sugar glut.

Sugarcane Minister Nitish Mishra said that “Bihar is sure to emerge as an ethanol hub“.

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    Written by Jim Lane · Filed Under Policy 

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