By Anita Khuller
Due to the limited domestic production of petroleum products, India is compelled to import over 80 per cent of its fuel requirement. The country’s energy security cannot improve until alternative fuels are developed based on indigenously produced renewable feedstock. The government has therefore set an ambitious target to reduce the country’s crude oil import dependency by 10 per cent by 2022.
One of the steps taken by the government to this end is the approval of the new Biofuels Policy, which aims to increase the use of biofuels in the energy and transportation sectors. Biofuels in India are of strategic importance as they support ongoing government initiatives to double farmers’ income and spur employment generation as well as schemes such as Make in India and the Swachh Bharat Abhiyan.
Besides, the air quality has dropped to an alarming level over the past couple of years across Delhi-National Capital Region and parts of northern India. Farm-waste burning, specific to the paddy-wheat cultivation cycle, in the rural areas of the northern states has been identified as the major source of air pollution. Unlike other crop residues, paddy straw (rice crop stubble) is utilised to a very small extent outside the field. India produces approximately 110 million tonnes of paddy straw annually. About 30 million tonnes is produced in Punjab itself, which is burnt by farmers because of lack of alternative means for disposal and high transportation costs. It is estimated that roughly 39 million tonnes of paddy straw is burnt in Punjab, Haryana and Uttar Pradesh every crop season. Open field burning of 1 tonne of paddy straw results in the release of about 1.5 tonnes of CO2, 200 kg of carbon monoxide and many other pollutants into the atmosphere. The burning also removes 100 per cent of the nitrogen and 80 per cent of the phosphate from the soil, resulting in the excessive use of chemical fertilisers in farming.
Alternatives to burning stubble
The production of bio-compressed natural gas (CNG) is a viable solution to the highly polluting paddy straw burning as well as to the energy problem in India. This pollution-free fuel can be used in trucks, buses, tractors, utility vehicles, etc., and create an additional income for farmers. It is a clean and safe energy source with a variety of commercial applications, including electricity generation. However, in the Indian context, the major application is expected to be in the transportation sector where it is being looked at as an environment-friendly alternative to diesel.
Recognising its benefits, the Ministry of Petroleum and Natural Gas recently launched an innovative initiative with public sector oil marketing companies (OMCs) inviting expressions of interest (EoIs) from potential entrepreneurs to set up compressed biogas (CBG) plants and make CBG available in the market for use in automotive fuels. The EoIs are available on the websites of the OMCs and can be filed from October 1, 2018 to March 31, 2019.
Several other initiatives are being taken in the private sector as well. For example, a consortium of Sampurn Agri Ventures (SAVPL), Triune Energy Services (TESPL) and Chemical Systems Technologies (CST) incorporated a company, CH4 Biotech Private Limited, in June 2018 to design, engineer, install and commission bio-CNG plants on a turnkey basis for clients in India and abroad. These plants will utilise paddy straw to produce biogas and manure/organic fertiliser. They will process 70 tonnes per day of biomass. Paddy straw along with 6 tonnes of cow dung will be processed per day to produce approximately 2,646 tonnes of bio-CNG, 13,930 tonnes of manure and 3,500 kl of liquid fertiliser annually. The plants will be based on the anaerobic digestion process designed indigenously in consultation with the Indian Institute of Technology, Delhi. Each plant will take around eight months for commissioning.
Meanwhile, the Punjab government has signed an MoU with the Indian Oil Corporation (IOC) to set up 400 plants based on this technology over the next four years. SAVPL has also signed an MoU with IOC for the sale of compressed bio-CNG through its retail outlets for any plant set up using SAVPL’s technology. IOC has agreed to offtake the entire bio-CNG produced by these plants. The gas will be compressed to around 250-bar pressure and then bottled in CNG cylinders for further transportation. The manure will be bagged in 50 kg sacks while the liquid fertiliser will be bottled and sold to various agricultural cooperative societies and farmers. As per the consortium, the initial estimated cost of each bio-CNG project is Rs 380 million. This is proposed to be funded at a debt-equity ratio of 2:1. As such, the total debt requirement works out to Rs 253.5 million with equity of Rs 126.5 million.
SAVPL’s working model has three focal points – preventing paddy straw burning, contributing to renewable energy generation through biogas or compressed biogas, and producing fermented paddy straw manure. CO2 is a by-product of bio-CNG production. Liquid CO2 can become an additional source of revenue for the plant given its demand across industries. Solid CO2, also known as “dry ice”, is extensively used for food preservation, etc.
Financial and fiscal benefits
The government plans to make India a gas-based economy and has earmarked around Rs 70 billion to set up bio-CNG infrastructure in the country. Besides, bio-CNG is classified under the 5 per cent slab of goods and services tax. Under the Biofuels Policy, fiscal incentives will be provided in the form of tax credits, accelerated depreciation on plant and machinery, etc. Further, the Ministry of New and Renewable Energy’s biogas technology development division is undertaking the National Biogas and Manure Management Programme, which is aimed at setting up biogas plants through various forms of support.
The CH4-IIT technology has been successfully implemented at a 1 MW demonstration plant set up by SAVPL in Fazilka, Punjab, in 2015. This biogas power plant will be upgraded to produce bio-CNG following the release of the latest policy in October 2018. The lessons learnt are as follows:
- Paddy straw, unlike other crop residue, has limited applications, mainly due to its low calorific value compared to other crops and high silica content.
- Paddy straw is available for a very short period of time (at best for 30-45 days in a year), which is the window available between the harvest of the paddy crop and the sowing of the wheat crop. The requirement for the entire year is therefore to be procured during this period and then stored. Additional land is required for storage, which would also increase working capital requirements.
- The demand for organic fertilisers has been increasing over the past few years and there are not enough producers. The manure produced by bio-CNG plants can replace chemical fertilisers, which are currently subsidised. But the CH4 consortium will have to explain the benefits of its product (organic fertilisers) over chemical fertilisers to farmers, even though the former has been recommended and approved by Punjab Agricultural University (PAU).
- The government’s biofuels and CBG policies have encouraged a large number of big players, particularly OMCs, to set up biodiesel and bioethanol facilities. These facilities may use similar raw materials. However, it would take three to four years for such plants to commence production.
While bio-CNG technology can use all kinds of biomass with minor modifications to the plant, the availability of paddy straw is more than enough to meet the entire requirement. Weighing the above challenges of land availability for storage and capital costs, versus its useful by-products such as manure, and the government’s proactivity in vigorously pursuing other applications as well for the utilisation of paddy straw in order to solve the problem of crop burning, it is hoped that the bio-CNG sector will move ahead quickly given the time frame involved for such plants to begin operations.
Based on inputs from Sanjeev Nagpal, CH4 Biotech