The Golden Cow – Is India the place to be for biofuels?

August 18, 2019 |

Aemetis may be based in California, but it has set sights in India thanks to the country’s growing biofuel market. And it’s not just Aemetis that sees India’s biofuel market as key for their own growth, but what exactly is the market there? What is it predicted to be? Is India the cash cow for biofuels? Or even the golden cow? If Aemetis’ recent 200% year over year increase in biodiesel sales is any indication…well, let’s just say we see the value.

The market

It is estimated that the ethanol market in India alone is projected to grow from $2.50 billion in 2018 to $ 7.38 billion by 2024, exhibiting a CAGR of 14.50% during 2019-2024. Another report by the International Energy Agency says the Indian biofuel market is forecasted to grow 11% from 2019 to 2024 and referred to India’s 2018 biofuels policy created by the government which “widened the permitted feedstock base for ethanol and introduced subsidies to expand production capacity, establishing the foundations for ethanol output growth.”

As reported in The Digest just a few weeks ago, the USDA’s attaché reports that ethanol blending this year could reach a record 5.8%, above last year’s 4.1% as the government pushes for higher blending through deregulation of feedstocks, soft loans for increased investment in ethanol production and focus on 2G ethanol technologies and commercialization.

The government

So why is the market expected to grow so significantly? Why has it been growing over the last few years already? It’s partially thanks to the government.

Government support for biofuels – it’s something many people want but it’s also something that is rare around the world. There are really only a handful of countries globally that are putting significant efforts towards promoting biofuels. Even the U.S. government hasn’t been 100% fully behind biofuels – just look at the recent small refinery waivers and the wimpy ethanol and biodiesel government volume numbers over the last few years.

But without government support, it’s an uphill battle for biofuels. Not impossible. Not a pie in the sky dream. But definitely challenging.

That’s why the Indian government’s push for biofuels is impressive. Why would the government want more biofuels? To save the environment? To lower GHG emissions?

Sure, that’s part of it, but from what we can see from the government website and published documents, the focus on the “why” of biofuels has been simply national security – the government wants to lower reliance on importing energy from other countries.

Call it nationalist. Call it homeland security. Call it whatever you want, but the fact is they repeatedly refer to biofuels as a way to lower reliance on exports. Not to mention, they want to show the world that they are Innovators. Entrepreneurs. Creative problem solvers. Technical geniuses.

So what is the government’s biofuel policy?

As reported in The Digest a week ago, celebrations of the country’s World Biofuel Day over the weekend led to the government highlighting their interest in the procurement of biodiesel from used cooking oil across 100 cities and asking for companies to submit Expression of Interest (EOI).  The purpose of inviting this EOI is to encourage the applicants to set up Biodiesel producing plants from Used Cooking Oil (UCO), processing plants and further utilizing the existing potential of UCO based Bio-diesel in India.

The National Policy on Biofuels envisages production of biofuel from UCO and the Food Safety and Standards Authority of India (FSSAI) is implementing a strategy to divert UCO from the food value chain and curb current illegal usage.

The 2018 India National Biofuels Policy stated a 5% biodiesel blending goal for transport vehicles, equal to about 1.1 billion gallons per year of biodiesel production. In late 2018, the three India OMC’s that supply about 70% of India domestic diesel issued purchase requests for about 260 million gallons of biodiesel for year 2019 – equal to the entire biodiesel production capacity in India.

While the government has looked at biodiesel from jatropha, as well as used cooking oil, it goes beyond one or two feedstocks. They are looking at all sorts of non-food options which is smart to avoid getting bombarded with attacks because of the food vs. fuel issue. And they want to avoid the palm oil debacle that Indonesia and Malaysia have been dealing with. So they are investing heavily in waste. Used cooking oil. Waste gases. Municipal solid waste. Agricultural waste. Basically any kind of waste is fair game.

Scientists from India-based CSIR-CMERI even developed a simplified, semi-continuous process to produce biodiesel from any feedstock with fatty acid content of up to 10%, from jatropha to jojoba to animal fats, be it virgin oils or waste fats. The technology was developed with small and medium enterprises in mind, producing biodiesel with up to 11 cents per liter profit, paying back investment on the technology in under a year.

The government also created an autonomous Institution of the Ministry of New and Renewable Energy called the Sardar Swaran Singh National Institute of Renewable Energy (SSS-NIRE). It is spread over a sprawling campus of about 75 acres and is focused on biomass energy.

“The objectives of the Institute is to carry out and facilitate research, design, development, testing, standardization & technology demonstration eventually leading to commercialization of RD&D output with a focus on bioenergy, biofuels & synthetic fuels in solid, liquid & gaseous forms for transportation, portable & stationary applications, development of hybrid / integrated energy systems, to undertake & facilitate human resource development and training in the area of bioenergy,” according to the government website.

What’s Aemetis’ role in all this?

Ok, so the government wants biofuels. The National Biofuel Policy requires it. But are there companies that can meet the demand?

For sure. Let’s start with Aemetis, an international renewable fuels and biochemicals company using patented industrial biotechnology for the construction and operation of advanced biorefineries. They own and operate a 60+ million gallon ethanol plant in California, a 50 million gallon capacity Biodiesel and Glycerin refinery in India, they are building a $50 million Dairy Biogas digester, pipeline and cleanup system, and are developing $175 million Cellulosic Ethanol plant (waste orchard wood feedstock).

As reported in the Digest just a few weeks ago, they reported a 200% year over year increase in biodiesel sales volumes at their India plant. Their Q2 results showed the volumes rise high from 4,282 metric tons to 12,960 metric tons. Not only that, but they expanded the India plant and operations, representing a 106% increase from the prior year quarter and 22% of total revenue for the quarter – with $11.1 million of revenue just from India operations in Q2.

In July, the Digest reported that Aemetis’ Universal Biofuels India subsidiary ramped revenues to more than a $50 million per year run rate after biodiesel shipments commenced in May pursuant to the previously announced $23 million biodiesel supply contract to the three India government-owned Oil Marketing Companies (OMC’s).

Beyond biodiesel

Aemetis goes beyond biodiesel and as reported in The Digest in May, it is expanding into the biomethane business with their dairy biomethane digest project in Central California and $30 million of funding that began the permitting and construction phase of its multi dairy renewable biomethane digester cluster.

Aemetis continues to advance its ultra-low carbon California cellulosic ethanol biorefinery, which is expected, upon completion, to add approximately $80 million of high margin revenues. Utilizing thousands of tons of waste wood from California’s Central Valley, the Aemetis cellulosic ethanol biorefinery is expected to produce the state’s lowest carbon ethanol fuel and reduce greenhouse gas emissions in the process. More on the Riverbank project here. And for more on Aemetis overall, check out The Digest’s 2019 Multi-Slide Guide to Aemetis here.

It’s not just Aemetis either

With strong government support, India isn’t just attracting Aemetis. As reported in The Digest in July, United Arab Emirates company Neutral Fuels who fuels McDonald’s fleet with UCO-based biodiesel based on its own UCO is expanding into India and Bahrain with the Indian facility near New Delhi under commissioning at the moment.

As reported in The Digest in July, India’s own Synergy Green Diesel has established a delivery service for its UCO-based biodiesel in several regions around the center of the country to supply B100 to SMEs, hotels and other industrial users of fuel in an effort to expand the use of the fuel to consumers who would ordinarily just buy fossil fuels in jerry cans and other unsafe delivery mechanisms. The company is also supplying fossil fuels but is focusing on its biodiesel with the aim of setting up UCO biodiesel production in several sites around the country over the next five years.

Even entire countries are interested. As reported in The Digest in July, when the Indian Prime Minister visits Brazil on an official visit in November, the two countries are expected to sign a memorandum of understanding on ethanol cooperation. India is trying to boost its ethanol blending to more than 20%.

Bottom Line

While some biofuel companies are seeing revenues stagnant or even declining, and frustration with the U.S.’s small refinery waivers mounting, it makes sense that many companies are looking to India with hopeful eyes and investing in plants and facilities there. The government support there for biofuels is growing as they look to India-based biofuels as a solution to their reliance on exported energy. Aemetis is seeing record revenues thanks to their India-based facility. Those are things you can’t ignore and we wouldn’t be surprised to see more announcements this year related to the growing biofuels sector in India.

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