Biodiesel challenges: Why Indian transporters hesitate to adopt

The Centre is strongly advocating among transporters the use of biodiesel. However, its shortage across India, worry about damage to the engine when used, and lack of clarity on the use of environment-friendly fuel have put a brake on its increased usage.

Biodiesel is a renewable, biodegradable fuel manufactured domestically from vegetable oils, animal fats and waste oils. It is environment friendly fuel with no sulphur or aromatics and has about 10 per cent built-in oxygen. It’s been over 18 years since the Ministry of Petroleum & Natural Gas released the Biodiesel Purchase Policy. However, offtake has been poor so far, said sources.

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Growth prospects

India Biodiesel market demand stood at 0.17 million tonnes in FY2021 and is forecast to reach 0.26 million tonnes by FY2030, growing at a healthy CAGR of 8.60 per cent until 2030

A report by JM Baxi says that India has more than six plants with an installed annual biodiesel production capacity (maximum possible) of one billion litres. However, the operating capacity remains at 500-550 million litres as most plants remain closed due to the lockdown and high feedstock prices (imported palm oil, palm stearin, and domestically available animal tallows) that have reduced operating margins. The production capacity ranges from 11 million to 225 million litres for existing plants.

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Impact of pandemic

India’s annual biodiesel consumption grew by 6 percent till 2019; however, due to the pandemic demand dropped by almost 24 per cent and remained flat at 140 million litres in 2021.

The muted demand for biodiesel is because its applications are limited to certain OMC retail outlets, Indian railways, certain state road transport corporations, road transport fleet companies and port authorities, the report said.

While biodiesel is unavailable across India, those who have used it are complaining of jerks, said a leading truck operator, who tried but failed. “Long haul, it may not make sense to use biodiesel. However, for short haul vehicles like tippers, it may,” he said.

Mohammed Afzal, CMD of the Chennai-based Parveen Travels Pvt Ltd says biodiesel cannot be used 100 per cent as vehicle fuel. It will reduce the engine life. Oil companies are blending around 20 per cent of biodiesel with diesel and that’s why it is not available. Biodiesel has not been allowed to supply officially to transporters, he said.

The lack of clarity surrounding biodiesel and the absence of government-authorised outlets are contributing factors to its limited utilisation in India, says Bal Malkit Singh, Chairman - Core Committee and Former President of the All India Motor Transport Congress. There needs to be a standardised definition regarding the quality and quantity of biodiesel.

Real-time data on biodiesel usage in the country is not readily accessible. This is mainly attributed to the absence of government-sanctioned outlets for biodiesel distribution. This absence of officially approved outlets poses significant challenges in gathering information related to the usage, effectiveness, efficiency, emissions, and density of biodiesel,

Singh adds that biodiesel is accessible in the grey market. This situation raises concerns as industrial-grade oil is sometimes marketed as biodiesel, and few users have complained about potential damage to fuel pumps and injectors. The formal launch of biodiesel by the government, complete with defined quality standards and efficacy guarantees, is still pending, he said.

Absence of incentives

The absence of government incentives or mandates also discourages transport companies from transitioning to biodiesel, said Singh.

The Bengaluru-based VRL Logistics Limited, a leading transport company, in its 2022-23 annual report, said that during the earlier year, 6.06 per cent of the total fuel used was biodiesel. The availability of biodiesel has been a concern for the last two years. Prior to that, the company had replaced up to 28 per cent of its total fuel consumption with biodiesel. Upon biodiesel becoming easily available, the company would again start aggressively using it in its vehicles.

India was one of the countries that launched the Global Biofuel Alliance on September 9. Against this backdrop, non-availability of biodiesel will send the wrong signal, said a transporter.

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