A Tale of Two Biofuels Models; US and India

by Biofuels Digest special correspondent Joelle Brink

As an American covering Indian biofuels, I’m constantly struck by the different biofuel development and commercialization models at work in the two countries. Perhaps most noticeable is the difference in age of the companies and public enterprises carrying forward biofuels development and commercialization.

Indian Railways had been in business for 150 years when it migrated to biodiesel—for the second time, the first having been during World War II. Tata Industries, whose chemicals division is launching Sweet Sorghum to ethanol at national scale, is not much younger. Even Praj Industries, a typical US-model startup with two young entrepreneurs from a top technical university at the helm, is the same age as Microsoft.

The difference in models goes even deeper. Although much the same research is going on in India and the US, most Indian biofuel companies conduct research, development, commercialization and marketing in-house or as part of an ongoing formal partnership, very much along the same lines as the “household name” US corporations of the 1950s and ‘60s that are now being dismantled in their home country.

While venture capital plays an increasing role in Indian biofuels, so far it hasn’t reached the speculative heights—or depths—that it has in the US, except for some foreign Jatropha promotions that are now under review by the government.

Underlying conditions in both the US and India that may explain some of these differences, but lower labor costs cannot account for the success of Praj Industries in high-cost markets like Europe, the US, and Southeast Asia.

The Indian Government has been committed to biofuels for a few years longer than the US Government, and has consistently committed to high mandates even when they could not be achieved in the short run. But growing environmentalism, especially in the cities, and the strategic necessity for energy security in a nation surrounded by enemies may have helped even more to speed things along.

B20 has already replaced petroleum diesel in many city transportation systems and on Indian Railways, the world’s largest rail system. The economic conditions in India are also favorable for further progress, with 6-7 percent growth and one of the highest savings rates in Asia.

Perhaps most importantly, “India Shining” now sees itself embodying the future in much the same way as the US once did during the era of the space race. But this time it is a green and socially compassionate future.

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