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Produce Locally for Local Use, and for the Odd Mercedes-Benz
August 22, 2005 - www.redherring.com

In the high altitude, sub-zero climate of Ladakh, a cold desert region in India that lies in the shadow of the Himalayas, Jatropha biodiesel will be put to the test this month in two Mercedes-Benz cars and one Viano van.

The Central Salt and Marine Chemical Research Institute (CSMCRI) in Bhavnagar has developed a process for refining oil from Jatropha seeds that produces high-quality biodiesel at a reasonable cost without intensive use of energy. 

DaimlerChrysler says it has been testing CSMCRI’s biodiesel in its C-Class Mercedes-Benz for about a year, racking up over 10,000 kilometers with good results. The August test in India’s trans-Himalayan region will serve as additional verification.

“We want to ensure the consistency in results and also test run the vehicles for more mileage—30,000 kilometers,” says Suhas Kadlaskar, director of finance and corporate affairs at DaimlerChrysler India. 

Biodiesel from edible oilseeds like soybean and rapeseed has been in use for a long time and can be used in 5 to 20 percent blends in diesel engines without any design modification, making it ideal for domestic use. 

But India has compelling reasons to use non-edible seeds because it imports most of its edible oils. By championing Jatropha biodiesel, Mr. Ghosh says he is promoting “local produce for local use.”

India has 133 million hectares of wasteland, of which 33 million hectares can be reclaimed for Jatropha plantation—in addition to arable land that is being used for the plantations. D1Oils, for example, has struck a deal with Labland for crude supply of Jatropha oil. To begin with, the biotech firm will grow the plantation on 125,000 hectares. For every 5,000 hectares of the crop, D1 Oils will set up a biodiesel refinery in India; 75 percent of the biodiesel will be used in India, 25 percent will be exported. 

Pricing is not an issue at this stage. While Southern Online Biotechnologies (SOL) in Hyderabad says it will market biodiesel at about $0.55 a liter—slightly less than conventional diesel, which costs $0.57—oil companies testing transport fleets market it at a few cents more than petroleum diesel. They argue that biodiesel prices will fall once the economies of scale are achieved.

While Indian oil companies, including Indian Oil Corporation and Hindustan Petroleum, are testing biodiesel made at their own plants, small private companies are also getting into the business. SOL has signed a deal with Germany’s Lurgi to set up India’s first commercial-scale biodiesel plant in the Nalgonda district of Andhra Pradesh. With an annual capacity of 10,000 million tons, the plant will begin production by January 2006 using Jatropha, as well as oilseeds from other plants such as Pongamia, Neem, Jojoba, and Madhuca. The quality will comply with American Society of Testing Materials biodiesel specifications. 

According to Zenith Energy, a New Delhi-based consultancy, the plant would cut the equivalent of 27,000 tons of carbon dioxide emissions every year. 



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