The biodiesel market: An upward trajectory
Globally, biodiesel production is a growing industry. Grand View Research estimated the global biodiesel market size at US$32.09 billion in 2021, projecting that it would grow at a CAGR of 10% between 2022 and 2030. Growth in the production of biodiesel will be driven by a growth in its demand, fueled by the need to replace traditional fossil fuels in power generation and automotive applications. The expanding global population and the concomitant increase in the number of vehicles on roads worldwide will also contribute to the growth in popularity of biodiesel production. And this growth is only just beginning - as the market becomes less fragmented, increases in production capacity bridge the demand-supply gap, and R&D in feedstock selection gathers steam, more and more players are expected to enter the market.
Meanwhile, the volume of biodiesel production in India was 185 million litres in 2022, with forecasts claiming that it will touch 200 million litres in 2023. In comparison, market demand stood at 0.17 million tons in the financial year that ended 2021, with forecasts of 0.26 million tons by FY 2030, representing a CAGR of 8.6%. This growth is being driven by expectations that primary energy demand will double in the coming 20 or so years. Additionally, there is an increased push towards domestic alternative fuels due to high import bills for crude oil and support from the Union Government for domestic and international players looking to invest in the biodiesel production process - the government has set a goal of 5% blending of biodiesel by 2030 (jatropha is emerging as a popular feedstock). Since the National Policy on Biofuels saw the light of day in 2019, biodiesel production in India is only expected to go one way: upward.
Globally, the biodiesel market is divided by demand from fuel, power generation, and other sectors. With a global market share of over 77% in 2021, the fuel application segment claimed the lion's share of biodiesel demand, with automotive fuel being the dominant category. This trend isn't likely to change dramatically, as compared to traditional fuels like diesel, people are increasingly demanding clean fuels as replacements for crude oil since the former emits fewer volatile organic compounds (VOCs) and harmful gases. In India, biodiesel production largely caters to similar sectors - transport, railways, and industries lead the way, while the energy and construction sectors also claim an important part of the market.
Going green: The production of biodiesel
Biodiesel is a clean-burning, toxin-free diesel substitute. Produced from used cooking oil (UCO), non-edible oils like jatropha oil, animal fats, and other agricultural feedstock, biodiesel is made using the transesterification process, which separates glycerine from the oil or fat content to produce methyl esters.
Slowly and steadily, manufacturers are understanding the importance of the biodiesel production process, which can even convert used edible oil from restaurants into a productive resource. While high-energy plants are great biodiesel sources, the ability to use recycled edible grease means that biodiesel manufacturers do not even need to invest in or monitor the oilseed cultivation process. The greatest advantage that this industry has is that some equipment used by oils and fats manufacturers can be diverted to produce biodiesel instead, making the transition to this excellent diesel alternative a smooth process.
What benefits does biodiesel production in India offer?
The world's energy demands are only going up, and there is an increasing need to find alternative ways to meet that demand. Fossil fuels are not the right choice. Beyond their polluting emissions and depleting global reserves, crude oils result in a high import burden and dependence on foreign nations to fuel Indian transportation and industry. A well-developed, large-scale domestic biodiesel production process is the answer.
Biodiesel is renewable and eco-friendly. It does not require dependence on foreign countries or on a limited fossil fuel supply. Using biodiesel blends reduces greenhouse gas emissions as biodiesel combusts completely. Biodiesel boosts local economies across sectors. And its high compatibility with existing diesel engines makes the adoption of biodiesel relatively hitch-free.
As the world continues to adapt to a rapidly changing climate and build resilience to it, governments are likely to continue to incentivise biodiesel production and adoption. Further, as emissions get taxed, and producers are forced to clean up the emissions they produce, it is in everyone's best interests - biodiesel producers and consumers - to begin to get greener today.
Costing, pricing, and demand in biodiesel production
While the pricing of biodiesel is not without debate, the costs involved in the biodiesel production process are fairly straightforward. Costs incurred to produce this clean fuel depend on the type of feedstock used, feedstock availability, feedstock prices, cost of operations, transportation, and logistics costs for handling and storage. Of these, feedstock prices, transportation costs, and the costs of collection (in case UCO is the feedstock) are the major expenses.
The cost of feedstock itself is dependent on multiple factors like geography, crop yields, season, fertilizer and insecticide use. When good irrigation systems and nutrient-rich soil are used to cultivate high-quality edible oils, naturally, the cost of inputs is higher for feedstock cultivation. However, in India, biodiesels are mainly produced from non-edible oilseeds, which can be grown on wastelands with minimal water supplies. Relying on feedstock like jatropha, therefore, can help manufacturers lower the cost of inputs. UCO and animal tallow also have low costs, but since they are procured from the unorganised sector, collection can lead to significant costs and challenges.
Even within the feedstock categories of vegetable oils and animal fats, there is further segmentation. Based on costs and availability in your region, you could rely on canola oil, palm oil, soybean oil, corn oil, or even poultry, tallow, or white grease to feed your biodiesel production process. Palm oil is a popular option in countries like Indonesia, Thailand, Germany, France, and Colombia for its high oil yield, though recently, concerns have been growing about how sustainable palm oil cultivation is. At over 17% of total feedstock demand, UCO and rapeseed also account for a substantial portion of the industry. In fact, China and India are poised to emerge as the most important markets for UCO-based biodiesel in the Asia-Pacific region.
The pursuit of a higher ROI: Optimising biodiesel production
What is without doubt is that biodiesel production in India and its adoption will rise in the years to come. In the transportation sector alone, India is expected to double its fuel consumption by 2030. What manufacturers now need to do is find ways to optimise the biodiesel production process to increase profit margins and make the endeavour financially viable and sustainable. This optimisation is based on minimising costs in the supply chain, particularly with regard to biomass, production, and transportation. Analyses have found that biomass cost has the greatest influence on biodiesel cost - an increase in feedstock cost can increase the cost of the final product by as much as 40%. To a smaller extent, investment cost and glycerol price also exert their influence.
Location also has a role to play as it affects feedstock availability, transportation costs, and more. India's National Policy on Biofuels, 2018, promotes the cultivation of non-edible oilseed crops like karanja, mahua, and jatropha for biodiesel production only on unused degraded land. Since there are no investments required in complex irrigation systems, fertilisers, and other inputs for plantation productivity, relying on crops grown on such lands can reduce feedstock costs. In states like Chhattisgarh, Jharkhand, Bihar, Uttar Pradesh, and Rajasthan, where such land is available fairly easily, non-edible feedstock cultivation can generate employment for locals and produce cheap feedstock for manufacturers.
Ultimately, generating a higher return on your investment (ROI) is a multi-pronged process. It involves not only minimising input costs but also finding ways to monetise by-products generated in the production of biodiesel. Methanol, glycerol, and seed waste generated can be converted into useful products. Glycerine, separated during transesterification, is the major by-product generated in the production of biodiesel. This substance is of particular interest to manufacturers as it is a source of revenue if sold to food, pharmaceutical, and soap manufacturing industries.
Kumar's biodiesel plant
Kumar's biodiesel plant promises a long life, minimal maintenance requirements, and wear and tear parts that are specially treated for durability. It is a single plant with multiple feedstock options. Kumar's biodiesel manufacturing plant produces top quality biodiesel which adheres to EN 14214 and BIS 15607:2005 standards. Designed to guarantee a high conversion rate, low methanol consumption, reduced catalyst consumption, low utility consumption, and production of pharma-grade glycerine, Kumar is the process engineering partner you need.
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