Highlights

Domestic ethanol production will decline by eight percent in calendar year (CY) 2017 (out-year) to 1.9 billion liters. The decline in ethanol production stems from the second consecutive year of decreased sugarcane acres. Fuel ethanol will achieve a two-percent national-level blending rate, a slight increase over 1.9 percent this year. Although biodiesel's market penetration remains minimal, B-5 (five-percent biodiesel) will be commercial available from a few government-owned retail outlets. Private manufacturers can sell biodiesel directly, provided they meet prescribed official standards.

Executive Summary

Domestic ethanol production in CY 2017 will decline by eight percent to 1.9 billion liters due to the decline in sugarcane area planted for a second consecutive year (marketing year (MY) 2016/17). Fuel ethanol will achieve a two-percent national average blending rate, as ethanol will replace 700 million liters of gasoline. The current average for ethanol blending is estimated at 1.9 percent as parastatal petroleum companies (known colloquially as oil marketing companies or OMCs) are expected to blend an estimated 600 million liters of ethanol with gasoline.

Assuming normal market conditions in CY 2016, India is expected to import upwards of 440 million liters of ethanol. Import volumes will rise further to 600 million liters during the out-year to augment local supplies. Last year, the United States was the largest supplier of ethanol to India, followed by Brazil. In CY 2014, Brazil did not actively ship ethanol to India and the United States sold 66 million liters (62 percent of total imports) of denatured ethanol, valued at upwards of $51 million.

Compared to the benchmark price ($0.72 to $0.74/liter, landed-ethanol prices delivered at OMC depot), imported ethanol will sell on par with local supplies, thereby providing less incentive for imports. Usually, when local ethanol prices are high, Indian chemical and industrial end users prefer imported ethanol and sugar distilleries benefit by selling to OMCs.

Regarding biodiesel, the current average Indian blending rate is only 0.1 percent. However, B-5 will become available to customers across state-owned OMC retail outlets in select cities across India. Private biodiesel manufacturers are also encouraged to sell more biodiesel (made from multiple domestic feedstocks, as well as imported crude vegetable oil) directly to end-users provided they meet prescribe Bureau of Indian Standards norms. Advanced biofuel production remains nascent, as commercial production and economic viability remain a challenge.

Overview

India's economy is likely to remain stable during fiscal year (FY) 2016-17 (April-March), and should maintain at least seven-percent GDP. Last calendar year, India averaged about 7.3 percent GDP growth per capita (World Factbook) which was spurred largely due to low crude oil prices, which saved billions of dollars and enabled Indian to narrow its current account deficit. Recent World Bank reports indicate that India's economic activity may achieve upwards of 7.6 percent in FY 2017 based on private investment and infrastructure spending. Additionally, growth will be driven by private consumption, which has benefited from lower energy prices and higher real incomes (World Economic Outlook, IMF).

Although the energy consumption per capita (per industry estimates) is one-third of the global average, growth in Indian's economy will drive demand for energy across sectors. Hence, access to adequate and reliable sources of energy becomes vital; particularly when one-quarter of population lack access to electricity and dependence on fossil fuels (imported and local) continues to grow. The latter meets about three-quarter of India's energy demand.

India is the third-largest importer of crude oil after the United States and China and continues to rely on imports considerably. Lower crude oil prices have encouraged higher demand for gasoline and petroleum products, helped the exchequer save significantly in terms of import bills, and provided a cushion against the strengthening dollar. Over the last four years, import volumes grew modestly from 240 billion liters to 278 billion liters and associated cost dropped more than 50 percent to $74 billion

Energy Consumption and End Use

44 percent of India's total energy consumption basket comes from coal. Energy rich resources such as petroleum and biomass contribute 22 percent each, followed by natural gas at seven percent, hydro-electricity at three percent, while nuclear and other renewables contribute just one percent each (U.S. Energy Information Administration. The industry and transport sectors are the largest end-users of energy in India and account for half of the total energy consumed. The main fuels contributing to this end-use demand growth are coal (in industry), petroleum (in transport), and electricity (in buildings, industry, and agriculture) (International Energy Agency).

Petroleum use will continue to expand on growth in transport sector, particularly road transport, which account for significant share of passenger and freight movement. The share of road traffic as percent of freight and passenger traffic is estimated at upwards of 60 percent and 90 percent, assuming vehicle population grows 10 percent annually. Currently, diesel alone meets an estimated 46 percent of transportation fuel demand followed by gasoline at 24 percent (Figure 2). Further, it is estimated that in next ten years, by the average demand for transport fuels will rise from an estimated 134 billion liters in CY 2015 to 225 billion liters in CY 2026

Why Road Transport: Easy availability, adaptability to individual needs, and cost saving are some of the factors which favor automotive transport. Road transport also acts as a feeder service to railway, shipping and air traffic. Additionally, continued economic growth, increasing urbanization, rise in consumer spending levels and with improving road infrastructure, new vehicle registration is expected to push the total number of registered motor vehicles past 245 million by end of the current fiscal. The number of registered vehicles in India as of March 31, 2013 was 183 million, wherein motorcycles constituted 73 percent and automobiles accounted for 14 percent of total share.

India to Adopt Bharat Stage (BS)-VI Emission Norms by 2020

The current growth in transportation and consequent increase in petroleum consumption raises environmental concerns. As India is the fourth (energy data) largest global contributor to carbon emissions, the Government of India (GOI) is targeting EURO-III and IV as reference emission norms for vehicles, which in turn require adoption of clean and green fuel. Bharat Stage-III norms are already enforced across the country while BS-IV (equivalent to Euro-IV) emission norms are applicable across 12 to 14 major cities. To meet that objective, the Union Cabinet approved the National Policy on biofuels on December 24, 2009 (PIB press release).

The Ministry of Road Transport and Highways is now introducing BS-VI fuel norms after due consultation with Ministry of Petroleum and National Gas (MoPNG), Department of Heavy industry and Ministry of Environment and Forest all over the country by 01.04.2020. Accordingly, a draft notification to amend the Central Motor Vehicles Rules, 1989 has been forwarded to the Government of India Press on February 22, 2016 for publication in the Gazette of India, giving 30 days' time to the public, inviting suggestions/comments on the notification before finalizing the same.

Scope

Biofuels are viewed as a means to provide a higher degree of national energy security in an environmentally friendly, cost-effective and sustainable manner. The GOI believes biofuels can supplement conventional energy resources, reducing dependence on imported fossil fuels and meeting energy needs of India's vast rural population by use of non-food feed stocks.

Believing India to be endowed with significant potential for generating energy through renewable resources, the GOI is promoting and encouraging: a) ethanol derived from sugar molasses/juice for blending with gasoline, b) biodiesel derived from inedible oils and oil waste for blending with diesel, and c) bio-methanol and biosynthetic fuels.

Additionally, biomass plays an important role as fuel for sugar mills (captive use), textiles, pulp and paper mills, small and medium enterprises (SME) and has significant potential in breweries, textile mills, fertilizer plants, paper and pulp industry, solvent extraction units, rice mills, and petrochemical plants. The total estimated biomass power potential in India is estimated upwards of 40,000 MW of which the power generation through bagasse cogeneration is estimated at 10,000 MW.

POLICY AND PROGRAM: 'INDIA'S BIOFUEL POLICY'

The GOI approved the National Policy on Biofuels on December 24, 2009. The policy encourages use of renewable energy resources as alternate fuel to supplement transport fuels and had proposed an indicative target to replace 20 percent of petroleum fuel consumption with biofuels (bioethanol and biodiesel) by end of 12th Five-Year Plan (2017).

In a bid to renew its focus and strongly implement the ethanol blending program (EBP), the GOI recommended 10 percent mandatory blending of ethanol with gasoline across all states. The GOI's target of five percent blending of ethanol in gasoline was partially successful in years of surplus sugar production and unfilled when sugar production declines. Presently, the contracted ethanol supply for CY 2016 is sufficient to meet 1.9 percent blending target.

Notably, few policy decisions such as deregulating diesel prices in line with gasoline, allowing private biodiesel manufacturers to sell biodiesel directly to consumers, fixed pricing mechanism for fuel ethanol procurement for OMCs and excise duty exemption for ethanol produced in MY 2015/16 will induce some momentum to the EBP, infuse cash into the local sugar industry, help millers clear partial debts, and help save millions of dollars in foreign exchange.

India's Biofuel Policy: Salient Features and Recent Developments

On June 5, 2015, the Union Cabinet, GOI approved following decisions:

  • Sugarcane or sugarcane juice may not be used for production of ethanol and it be only produced only from molasses.
  • Ethanol produced from non-food feedstock besides molasses like cellulosic and ligno cellulosic materials and including petro-chemical route, may be allowed to be processed subject to meeting the relevant BIS standard.
  • The Motor Spirit (MS) and High Speed Diesel (HSD) control order may be suitable amended to acknowledge private biodiesel manufacturers, their authorized dealers, and JVs of OMCs authorized by MoPNG as dealers and give marketing and distribution functions to them for the limited purpose of supply of biodiesel to consumers. Earlier, on January 16, 2015, the Union Cabinet had decided to suitably amend Para 5.11 and 5.12 of the national biofuel policy to address direct sale of biodiesel.
  • Relaxation in marketing resolution No. 23015/1/20001 dated March 8, 2002 and a new clause give marketing rights for B-100 to the private bio-diesel manufacturers and authorized dealers.

December 10, 2014, the GOI announced a price fixing scheme for fuel ethanol procurement for parastatal OMCs. The program fixes landed-ethanol prices at OMC depots from INR 48.50 to INR 49.50 per liter, a three to five percent increase over the previous price.

Derive biofuel from non-feed stock that would be grown on degraded soils or wastelands not otherwise suited to agriculture, thus avoiding a possible conflict of fuel versus food security.

Strengthen India's energy security by encouraging use of renewable energy resources to supplement motor transport fuels. An indicative 20-percent target for blending of biofuel for both biodiesel and bioethanol is proposed by end of 12th Five-Year Minimum Support Price (MSP) mechanism for inedible oilseeds to provide fair price to oilseed growers but subject to periodic revision. If necessary, GOI proposes to consider creating a National Biofuel Fund for providing financial incentives, including subsidies and grants, for new and second generation feed stocks, advanced technologies and conversion processes, and production units based on new and second generation feedstock.Thrust for innovation, (multi-institutional, indigenous and time bound) research and development on biofuel feedstock (utilization of indigenous biomass feedstock included) production including second generation biofuels. Meet the energy needs of India's vast rural population by stimulating rural development and creating employment opportunities and addressing global concerns about containment of carbon emissions through use of environment friendly biofuels.

Bring biofuels under the ambit of “Declared Goods" by the GOI so as to ensure their unrestricted interstate and intrastate movement. Except for a concessional excise duty of 16 percent on bioethanol, no other central taxes and duties are proposed to be levied on biodiesel and bioethanol.

Biofuel technologies and projects would be allowed 100 percent foreign equity through automatic approval to attract foreign direct investment (FDI), provided the biofuel is for domestic use only, and not for export. Plantations of inedible oil bearing plants would not be open for FDI participation.

Setting up of National Biofuel Steering Committee (NBSC) under Prime Minister to provide policy guidelines.The objective of biofuel program is to support R&D, Pilot plant/Demonstration projects leading to commercial development of second generation biofuels.

Institutional Mechanism

The National Biofuel Policy proposes to set up a National Biofuel Coordination Committee (NBCC) headed by the Prime Minister. Given the role of different agencies and ministries in biofuel program, the role of NBCC is to provide high level coordination, policy guidance and review on different aspects of biofuel development, promotion and utilization becomes more imperative. The committee would meet periodically to review the progress and monitor the biofuel program. The policy also supports development of Biofuel Steering Committee headed by Cabinet Secretary to oversee implementation of its policies on regular basis.

Various state governments will work closely with respective research institutions, forestry department, universities etc. for development and promotion of biofuel program in respective states. Few states have drafted policies and set up institutions for promoting biofuel in their states.

ETHANOL POLICY

Ethanol is produced in India from sugarcane molasses and partly from grains. Beginning in January 2003, the GOI mandated the use of five-percent ethanol blend in gasoline through its ambitious EBP. Ethanol and alcohol production in India depends largely on availability of sugar molasses (a byproduct of sugar production). Since sugarcane production in India is cyclical, ethanol production also varies accordingly and therefore does not assure optimum supply levels needed to meet the demand at any given time.

At times, lower availability of sugar molasses and resultant higher molasses prices affect the cost of production of ethanol, thereby disrupting supply of ethanol for the blending program at pre-negotiated fixed ethanol prices. However, recently announced price fixing scheme for fuel ethanol procurement for OMCs and with sugarcane cycle expected to enter its sixth year of surplus production, the EBP is likely to accelerate but with slower pace.

Expanding domestic ethanol supply could address supply issues

Both the private and public sectors claim to be successful in customizing technology (low-cost and indigenous) to generate power (pilot scale) and advanced biofuels from locally available bio-mass resources, particularly multi-feedstock ligno-cellulosic material. However, scaling up of such projects on a commercial scale is yet to be seen, while industry observers are optimistic.

Promote use of alternate crops such as sweet sorghum, sugar beet, sweet potatoes, pearl millet and broken rice to supplement domestic ethanol production, though the efforts to produce ethanol from these feed stocks are only experimental or at pilot stage.

The GOI offers subsidized loans through sugarcane development funds to sugar mills for setting up of ethanol production units.

Impediments

Procedural formalities such as delay in issuance of no-objection certificates (NOC), import/export permits, renewable storage license, and other permits hinder inter-state and intra-state movement of ethanol. Further, higher and non-uniform taxes and levies across different states have impeded the implementation of EBP. Additionally, rules and regulations, interstate charges, applicable to control alcohol for potable industry use are equally applicable for ethanol blending with gasoline, thereby severely constraining its availability and utilization for EBP.

BIODIESEL POLICY

The GOI had launched the National Biodiesel Mission (NBM) identifying jatropha (jatropha curcas) as the most suitable inedible oilseed for biodiesel production. The central government and several state governments provide fiscal incentives for supporting planting of jatropha and other inedible oilseeds. Several public institutions, government departments, state biofuel boards, state agricultural universities and cooperative sectors also supported the biofuel mission in various capacities.

The Planning Commission of India had set an ambitious target of planting 11.2 to 13.4 million hectares to jatropha by the end of 11th Five Year Plan (2011/12). However, the GOI's ambitious plan of producing sufficient biodiesel by 2011/12 (marketing year October/September) to meet its mandate of 20-percent blending with diesel was unachievable mostly due to unavailability of sufficient feedstock (jatropha seeds) and lack of high-yielding drought-tolerant jatropha cultivars. Hence most of the biodiesel units operating in India have shifted to alternative feed-stocks such as edible oil waste (unusable oil fractions), animal fat and inedible oils, utilizing almost 28 percent of their existing capacity to continue year round operations.

Meeting a hypothetical five-percent biodiesel blending target would require a dedicated plantation of energy crops or a probable switch to alternate sources of biodiesel from locally available tree-borne oilseeds, utilizing multiple feedstock and imported biodiesel (if viable).

GOI has deregulated diesel price in line with gasoline. Following up, the Union Cabinet has also allowed private biodiesel manufacturers, their authorized dealers and joint ventures (JVs) of OMCs authorized by the MoPNG to sell biodiesel directly to consumers subject to their product meeting prescribed BIS standards.

Impediments

Smaller land holdings and ownership issues with government- or community-owned wastelands has resulted in very little progress made by state governments to create large jatropha (and/or pongamia) plantations. Except for few pilot scale projects in Chhattisgarh, and Karnataka, negligible commercial production of biodiesel from jatropha seeds (through old technology) has stymied efforts and investments by both private and public-sector companies.

ETHANOL

India has around 330 distilleries which can produce over 4 billion liters of rectified spirit (alcohol) per year. Of this total, about 162 distilleries have the capacity to distill over 2 billion liters of conventional ethanol. India produces conventional bioethanol mostly from sugar molasses and partly from grains.

Production of advanced bioethanol is in its research and development stage. Note: Year mentioned in context is calendar year unless mentioned specifically

India: Ethanol Used as Fuel and Other Industrial Chemicals (Million Liters)

Calendar

Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017*

Beginning

Stocks

1,374

1,642

1,440

1,241

847

824

618

422

286

321

Production

2,150

1,073

1,522

1,681

2,154

2,057

2,002

2,292

2,085

1,918

Imports

70

320

92

39

34

33

107

217

450

600

Exports

12

14

53

119

177

234

175

200

140

140

Consumption

1,940

1,580

1,760

1,995

2,035

2,062

2,130

2,445

2,360

2,510

Fuel

Consumption

280

100

50

365

305

382

350

685

600

700

Ending Stocks

1,642

1,440

1,241

847

824

618

422

286

321

189

Production Capacity

No. of

Refineries

115

115

115

115

115

115

115

160

162

162

Nameplate

Capacity

1,500

1,500

1,500

1,500

2,000

2,000

2,000

2,000

2,050

2,050

Capacity Use

143

72

101

112

108

103

100

115

102

94

Feedstock A

8,958

4,469

6,342

7,004

8,975

8,573

8,343

9,551

8,689

7,994

Market Penetration

Fuel Ethanol

280

100

50

365

305

382

350

685

600

700

Gasoline

15,368

17,606

19,563

20,716

21,842

23,49

25,848

29,651

32,409

34,916

Blend rate %

1.8

0.6

0.3

1.8

1.4

1.6

1.4

2.3

1.9

2.0

Production

Domestic ethanol production in last decade has remained stable except for steep decline in 2009 and historic high registered last year. Ethanol production in 2017 will decline eight percent to 1.9 billion liters due to decline in cane planting for second consecutive year. Acute water scarcity and abnormal weather conditions in major cane planting regions will discourage farmers to bring new areas under cane production.

Fuel Ethanol Market Penetration

Fuel ethanol market penetration in 2017 will be slightly higher at two percent compared to 1.9 percent expected in current year. Industry sources indicated that the OMCs may procure upwards of 700 million liters in 2017. Technically, given the current growth in gasoline consumption, the installed capacity will meet five to six percent of blend target. The fixed price for ethanol delivered at OMC depot is attractive for sugar mill given that average retail price of gasoline is on slightly higher side. On contrary, any procedural delay in EBP could encourage them to divert ethanol to chemical and potable industries. Additionally, mills could divert molasses as cattle feed or for exports if their prices are competitive.

Imported Ethanol Volumes Will Rise to Augment Local Supplies….

India will continue to be a net importer of ethanol. Assuming normal market conditions in 2016, India is expected to import upwards of 440 million liters of ethanol. Import volumes will rise further to 600 million liters in out-year to augment local supply. Since 2003 the trade balance for ethanol has been negative except for a brief period (2011 to 2014) when ethanol production was sufficient to meet local demand. Despite the negative trade balance, ethanol imports grew seven-fold during the last decade (30 million liters ($18 million) in 2006 to 218 million liters ($147 million) through 2015.

Presently, the United States is the Largest Ethanol (Denatured) Supplier to India…

Last year, the United States stood as the largest supplier of ethanol to India followed by Brazil.

However, in 2014, Brazil didn't register any sales while the United States sold 66 million liters (62 percent of total imports) worth $51 million. Compared to benchmark price (landed-ethanol price delivered at OMC depot $0.72 to $0.74/liter), imported ethanol will presently sell at par with local supply thereby giving little incentive for imports except for competing with limited local supply. Usually, when local ethanol prices are strong, industry users prefer to buy imported ethanol and sugar distilleries benefit from selling it to OMCs.

Interestingly, trade data for last decade indicate that more than 96 percent of the import demand is met from five sources: the United States, Brazil, Spain, Bhutan, and Pakistan (in order of their export sales). Until 2011, Brazil dominated 60 percent of import market and U.S. ethanol just started to compete then. Post that period, sale of U.S. ethanol grew exponentially (>54 percent) to gain 72 of import market while Brazil sales shrunk to 20 percent and Spain retained four percent of India's import market.

African Countries are Major Importer of Indian Ethanol…

Ethanol exports to Nigeria (25 percent), Ghana (20 percent), Angola (seven percent), Sierra Leone, Cameroon, Kenya and Nepal constitute 70 percent of total exports from India. In 2015, India exported 164 million liters of ethanol worth $125 million. Compared to peak export in 2013, exports were down by 30 percent. However, in last decade export quadrupled. Assuming normal market conditions, India should be able to export 140 million liters in 2016 and similar quantity in 2017. Growing local demand will however push imports to 280 million liters through 2020 which at current price is worth $210 million.

In India, export of biofuel is only permitted after it meets the domestic requirement and the final decision is taken by the NBCC. The GOI provides no financial assistance for exports of biofuels. However, current trade regulations allow duty-free imports of feed stocks for re-export by certified export oriented units.

Consumption

India is consuming more ethanol than it produces production (Figure 3). Throughout the last decade, ethanol consumption grew from 1.8 billion liters to 2.4 billion liters in 2016, and will continue to increase (albeit modestly) in 2017 to 2.5 billion liters. The consumption basket will comprise 700 million liters for fuel ethanol and 1.8 billion liters for the industrial and chemical sectors.

Since the inception of EBP in 2003 through 2014, fuel ethanol blending never crossed 380 million liters mark while remaining stocks were either sufficient or enough to meet demand from industry and chemical sector. For the first time in 2015, fuel ethanol demand grew upwards of 650 million liters and expected to rise by additional 50 million liters by end of 2017. Modest rise in fuel ethanol purchase will inflate consumption above production and deficit will be met through imports.

As a result, ethanol imports may increase considerably, from 200 million liters in 2015 to 600 million liters by 2017. A similar scenario occurred in 2008 and 2009. Since the GOI mandates the use of 'indigenous ethanol only' for EBP, ethanol supplies for blending will be relatively tight and the chemical and industrial sectors will rely more on imported ethanol.

Trade

Duties

During the latest budget announcement for Indian fiscal (April-March) 2016/17, the import duty on denatured ethanol reduced to 2.5 percent for manufacture of excisable goods, subject to actual user conditions . Earlier, the import duty was reduced from 7.5 percent to five percent Lower import duty helps make imports attractive and economically viable (especially when crude oil price are getting firm). Traditionally, India imports ethanol only to meet shortfalls in demand during years of lower sugar production. Demand is mostly for consumption across the potable liquor and chemical industries and not for fuel. There are no quantitative restrictions on import of biofuels as well.

Ending Stocks

Steady rise in consumption demand (CAGR four percent has led to steep decline in stocks from over 1.6 million liters in 2008 to just 320 million liters in 2016. Anticipating higher blend rate in 2017, end stock will remain tight (<190 million liters). In last decade the stock to use ratio has come down from over 78 percent to 13 percent.

BIODIESEL

The initial hypothesis that 'jatropha' (Jatropha curcus) could grow in semi-arid regions with little care and fertilization' is proven void, with research trials contradicting the initial claim. Limited availability of jatropha seeds (due to poor productivity), static plantations (inspite of being state subject, only a few states have been able actively to promote jatropha plantation with public and private sector participation), lack of promising varieties/cultivars, rising wage rates, and inefficient procurement and marketing channels has risen the cost of production, making it economically unviable proposition.

Concurrently, there are no commercial sales of biodiesel across the biodiesel purchase centers set up by the GOI. Apparently, the enthusiasm of producing biodiesel from jatropha is fading, despite its potential claim to withstand drought and rehabilitate degraded wastelands. As a result, researchers have gradually shifted their focus and resources to study feasibility of producing bio-diesel from tree-borne oilseeds (TBOs) such as pongamia (Pongamia pinnata), neem (Azadirachta indica), kusum (Schleichera oleosa), mahua (Madhuca longifolia), and waste edible oils. Some firms claim to import smaller quantity of biodiesel (assuming they were viable) and sell it locally after meeting prescribed BIS standards.

Currently, India has five to six large capacity plants (10,000 to 250,000 metric tons (MT) per year) currently utilizing 28 percent of the installed capacity to produce 130-140 million liters of biodiesel from multiple feed-stocks such as inedible vegetable oils, unusable edible oil waste (used-once), and animal fats. The biodiesel thus produced locally (or imported) is bought by small and medium enterprises, sold to unorganized consumers such as brick kilns, cellular communication towers, progressive farmers, and to institutions that run diesel generators as source of power back-up. Further, it's also sold to state transport corporations, automobiles and transport companies (state sponsored or private trial runs), and retailed at privately owned outlets.

ADVANCED BIOFUELS

The Indian biofuel industry, both private and public sector, claim to be successful in developing and customizing technology for converting ligno-cellulosic materials in form of wood biomass, agricultural (corn cob, bagasse, stalk of forage crops) waste and forest waste. Trials are still underway to process municipal solid waste, micro-algae and photosynthetic organisms into advanced biofuels. However, given the technological challenges, commercial production and economic viability remains to be demonstrated.

Biomass for heat and power

Scope

Biomass resource has the potential to produce grid-quality power utilizing various conversion technologies notwithstanding the scope to optimize power generation from sugar bagasse. Wide benefits include its renewability, wide adaptability, carbon neutrality and the potential to generate employment in rural areas. The potential could be enhanced further if dedicated plantation in forest and degraded land are linked to biomass power (MNRE, GOI). Additionally, biomass (non-fossilized and biodegradable organic material originating from plants, animals and micro-organisms) has been playing an important role as fuel for sugar mills, rice mills, textiles, and raw material for paper mills, small and medium enterprises.

Biomass material

Bagasse, rice husk, straw, cotton stalk, coconut shells, soy husk, de-oiled cakes, coffee waste, jute wastes, peanut shells, and sawdust are used a raw material for power generation The crop residues from non-fodder crops, e.g., cotton, oilseeds, chilies and bamboo residues may also be considered as good alternatives for biomass power production (DST, GOI). However, the use of biomass as cattle feed and part utilization by power industries may lead to a rise in cost of fuel for biomass power plant as it may not be available unless exclusively grown for power generation.

Biomass Availability and Power Potential

Biomass availability in India is estimated at upwards of 915 million metric tons which covers both agricultural (657 MMT/year) and 'forestry & wasteland' residues (260 MMT/year). The combined power potential from both resources is estimated at 33,292 MWe (agro: 18,730 MWe and forest and wasteland: 14,562 MWe)

Present Status

Presently, India has over 5,940 MW biomass based power plants comprising 4,946 MW grid connected and 994 MW off-grid power plants. Out of the total grid connected capacity, major share comes from bagasse cogeneration and around 115 MW is from waste to energy power plants. Whereas off-grid capacity comprises 652 MW non bagasse cogeneration, mainly as captive power plants, about 18 MW biomass gasifier systems being used for meeting electricity needs in rural areas, and 164 MW equivalent biomass gasifier systems deployed for thermal applications in industries.

Bagasse power cogeneration

With modernization of new and existing sugar mills, surplus power generation through bagasse cogeneration in India's 550 sugar mills is estimated at 10,000 MW (target for 12th Five-year plan is to achieve 32 percent of total potential) if these mills were to adopt technically and economically optimal levels of cogeneration for extracting power from the bagasse they produce.^ The optimum cogeneration capacity installed in Indian sugar mills is one of the highest among major sugar producing countries. The total estimated biomass power potential is thus estimated upwards of 40,000 MW. Note: Some think tank estimate bagasse based power generation potential close to 5000 MW. Considering the preceding estimate, total biomass power potential scales down to proportionate value.

The GOI has initiated several programs and schemes for promoting renewable energy sources. Seventeen Indian states have policies for development of biomass power. Biomass power projects attract fiscal incentives such as accelerated depreciation, concessional customs duties, and income tax exemptions. Emphasis will be put on development of fuel value-chain business models while encouraging the operating period of bagasse cogeneration projects from 180-220 to 300-plus days.