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The Confederation of Indian Industry and the Ministry of New and Renewable Energy recently conducted a study to assess the Realistic Cost of Biodiesel in India. The study has determined that the price of jatropha-based biodiesel needs to be increased to create an economically sustainable biodiesel industry within the country

The study estimates was based on an assumption that the blending initiative of two per cent Jatropha based Biodiesel be achieved by year 2011-12, India. If such an intiative is achieved, our country is expected to save around Rs. 30 billion and will generate revenue of around Rs. 55 billion in the rural economy with an opportunity of investment to the extent of Rs. 17 billion on an annual basis. This initiative, if achieved would also help in reduction of Green House Gas emission by 3 Million Metric Tonnes (MMT) on an annual basis.

The investment in Jatropha business has not been fancied much because of the unattractive price the government has labeled over the Biofuel.  The present procurement price of Rs. 26.50/litre as per the Government declared Biodiesel Policy, if reviewed and corrected realistically, could possibly sustain the investment and required growth of the Biodiesel sectors. Record fluctuation in the oil market pricing in recent years has created a security threat to India’s crude oil imports and resulted in increased financial burden on the global economy. It has also created an opportunity for easier adaptation and integration of Biofuels in the energy portfolio. To counter and mitigate the security threat in diesel based economy like India, biodiesel may be used as a true supplement to fossil diesel with appropriate technological, financial and policy interventions. With the study results showing so much of revenue generation for the government upon blending biodiesel, it is essential for the policy makers of our government to rethink their strategy.

The study suggests that the Government should create a suitable policy framework (incentives, grants etc. and the distribution mechanism) to make this price of Biodiesel self-sustainable and have an average procurement price of Jatropha seeds at Rs 6,000/tonne to ensure no migration of food land for fuel crops and business viability for conversion of seeds to Biodiesel. This will create a pull for Biodiesel demand to accelerate the development of the industry. Biodiesel from Jatropha, generates a significant opportunity of employment, is a potential source of revenue for the farmers without giving rise to the “Food vs Fuel” debate. There are several countries in the World, which have successfully developed their Biofuels sector by suitably addressing and favourably developing successful and sustainable models for catalyzing its growth. Its very much possible for our country to learn from global trend and to bring about such a policy change, studies such as the one from CII would be good catalysts.