India’s biodiesel mission on hold due to a problem-laden Greenrush: a Biofuels Digest special report

By Biofuels Digest special correspondent Joelle Brink

Too much of a good thing can sometimes turn into a very bad problem. With nearly one third of the world’s corporate-funded Jatropha biodiesel plantations either in Indian soil or scheduled for planting in the near future, the government is quietly putting its national biodiesel mission on hold.

The cause is not food vs. fuel, as some have speculated. The Indian Government has repeatedly denounced that argument and identified petroleum consumption by the agricultural and transportation sectors as the number one driver of rising food prices—a finding that should be a wake-up call to food vs. fuel advocates in agriculturally rich nations like the US.

Rather, the cause is the very foreign investment that the liberal government of Prime Minister Manmohan Singh worked to attract. India has a long and troubled history of conflict with foreign corporations, especially energy companies. Indira Ghandi was forced to nationalize Indian Shell, now Bharat Petroleum, and other foreign oil major subsidiaries because they refused to accept the sovereignty of the Indian Government over their land and dealings.

The Government never quite managed to distance itself from Shell, which soon reappeared as Bharat Petroleum’s partner in exploiting the Bombay High offshore oil field, and later encouraged its former subsidiary to enter the biofuels business. Now Bharat Petroleum is requesting a record 1 million hectares of land to grow biofuel crops. It’s no surprise that some government insiders see this move as a new foreign oil company land-grab.

Shell is not the only oil major that worries government insiders. D1 signed a joint venture with British Petroleum shortly after landing its first Jatropha biofuel plantation deal with the Indian Government. Then there’s India’s own success story, Reliance Petroleum Ltd., which made corporate chairman Mukesh Ambani one of the richest men in the world. Reliance shares trade on the New York Stock Exchange and Chevron is a stakeholder.

It is the renewed prominence of foreign oil majors—especially given the poor performance of some of their Jatropha plantations (See: “The Blunder Crop: a Biofuels Digest special report on jatropha development“) — that is raising questions about their competence and even their sincerity.

But the bottom line is that India can’t afford to slacken the pace of its biodiesel program. Imported transportation diesel currently fuels a whopping 80% of vehicles on Indian roads and still accounts for 75% of the fuel used by the nation’s largest transportation industry, Indian Railways. Its cost takes a king-size bite out of the nation’s annual budget and options for development. Increased biodiesel production can provide the energy security essential to the future of the nation and vital to the government’s plans for better infrastructure, environmental conservation and poverty relief.

Hopefully this hiatus in India’s Biodiesel Mandate will give both the government and its corporate partners time to evaluate the lessons of the past and develop a frank and productive relationship going forward.

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