$480M Indian refinery signals jatropha shift?

Mumbai-based Bharat Renewable Energy plans to spend Rs 2,200 crore ($480 million) to grow more than a million acres of jatropha on Indian wasteland in the northern state of Uttar Pradesh.

Bharat Renewable Energy is a joint venture of state-run refiner Bharat Petroleum (BOM:500547), jatropha cultivator Nandan Biomatrix and construction firm Shapoorji Pallonji. Bharat Renewable Energy was created in June to make biofuels from crops, such as jatropha and pongamia pinnata, an Indian birch.

The venture has a goal of producing a million metric tons of biodiesel from the jatropha plantation by 2015. A government plan—the National Rural Employment Guarantee Scheme—is expected to pay for the saplings and planting.

Bharat Renewable Energy is responding to a new government mandate for 20-percent blend of biofuel in petroleum by 2017 (see India, EU affirm new biofuels).

The new policy mandates that the biofuels must come from non-edible crops. Jatropha is getting attention as a second-generation biofuel because it can be cultivated on barren land, so it does not compete for land that is being used for food production (see ADM, Deere, Monsanto in corn stover research).

Government-owned oil refiner and marketer Hindustan Petroleum announced plans in July to work with partners to plant over 15,000 hectares of jatropha for biodiesel (see Hindustan Petroleum in jatropha plantation venture).

The current requirement for Indian fuels is for 5 percent ethanol to blend with gasoline, and plans to increase that blend to 10 percent in October are likely on hold because of increased sugarcane costs (see India to delay October's ethanol mandate).

India accounts for about two-thirds of the world’s jatropha plantations, according to research firm New Energy Finance. Biodiesel is made by crushing the seeds of toxic fruit from the jatropha shrub. Seeds can yield up to 40 percent oil and produce about 60 to 70 U.S. gallons of oil per acre. Estimates are that jatropha oil yields are 10 times that of corn, but that production hasn’t been realized on a commercial scale.

Second-generation biofuel crops such as jatropha and pongamia hold promise because of their low water requirements (see Wartsila to deliver jatropha-powered CHP plant). But many biofuels have the added complication of not fitting into the existing distribution system, said John Barratt, president of the Palo Alto, Calif.-based Oil & Gas Innovation Center.

"The current distribution system is so sophisticated, and we’ve spent staggering amount of money to create this system, and it’s very, very difficult to get approval to build new pipelines," Barratt said. "To build a market for a fuel that’s not compatible with that system just won’t work."

Already, Bharat Petroleum has begun planting the jatropha on unused land around the company’s properties, with the expectation to harvest the fruit in three years. Bharat Petroleum is also looking at other states in India to site similar projects.

Bharat Petroleum is exploring other cleantech ventures. The company is in the pilot stage of building a grid-connected, Rs 25 crore, one-megawatt solar farm in Punjab.

Additionally, Bharat Petroleum is working on a fuel cell using hydrogen produced by electrolysis of alkaline water.

And the company has proposed 10 MW of windmills in Maharashtra and Rajasthan at an estimated cost of Rs 52 crore.

Bharat Petroleum said this week it expects to lose Rs 3,100 crore in the third quarter by selling fuel below cost to help the government curb inflation.

Cleantech developments making news in the past 24 hours

• Qteros claims 15-fold improvements in cellulosic ethanol yield
• Solairedirect raises €20M to move into commercial solar
• Intel, Numonyx open $20M water treatment plant in Israel
• Booming data-center business creates troubles for India

View the last week of cleantech developments here | Subscribe to full feed