Insight Conversation: Suhas Baxi, BiofuelCircle

This seven-part Insight Conversation series examines the opportunities and challenges in Asia's biofuels sector. This fifth installment features BiofuelCircle CEO and Co-Founder Suhas Baxi, who talks about India's biofuel objectives, the current policy environment and the emerging challenges in the industry. The next edition features Kishan Karunakaran, CEO of India-based biofuels aggregator Buyofuel, on how policies intersect with market dynamics.

In an interview with S&P Global Commodity Insights Editor Sampad Nandy, Baxi delves into India's ambitious biofuel targets, discusses challenges in achieving them, feedstock availability, technological advancements and potential export opportunities.

India is targeting 20% ethanol blending by 2025 and 5% biofuel blending by 2030. What challenges lie ahead as India tries to achieve these targets?

It is crucial for biofuels to gain broader acceptance across various segments including industrial, power generation, commercial and passenger vehicles, which is a significant requirement in the Indian market.

Over the past few years, robust technological advancements have been underway. Establishing facilities capable of producing all types of biofuels -- solid, liquid, and gaseous -- targeted at diverse applications is imperative.

There may be a need to have a bit of delay in achieving the targets which is my current expectation. Putting it all together and creating the product facilities is a significant challenge, which is required for producing that quantity of biofuel. There is investment which is happening there.

However, the technologies being used for the purpose of converting biomasses into biofuel are still relatively evolving technologies. The yields associated with these technologies are still things that are being established.

Do you anticipate India needing to import biofuel feedstock soon? How do you see global standards impacting India's biofuel supply chain?

In my view, India has the potential to become an exporter rather than an importer of biomass feedstock. The country possesses a substantial amount of biomass resources. Transporting biomass globally is feasible when converted into pellets or briquettes, which are suitable for applications such as power generation. This strategy aligns with ongoing efforts to promote biomass exports from India.

Japan and Western Europe show promising potential as import destinations for Indian biomass pellets. Japanese companies have already expressed interest in importing biomass pellets from India and similar opportunities may arise in Western Europe.

Biomass pellets are particularly advantageous for transcontinental transport, as they do not require excessive energy, making them a viable product in global markets.

Standards are emerging globally, initially established in the West for practical application, and are now relevant for Indian biofuel applications as well. Regardless of the biofuel class manufactured, adherence to these global standards ensures uniformity in supply both within India and for international exports.

How might repeated inflation-led restrictions on sugarcane products usage for ethanol impact production in India?

Feedstocks with multiple end uses will always be subject to dynamic policies influenced by external factors. Molasses and sugarcane, integral to sugar production, face ongoing challenges. Therefore, a comprehensive strategy should include establishing production facilities using diverse starchy feedstocks like corn and paddy stubble, which have demonstrated substantial capacity in ethanol and biofuel production.

What would help biofuel producers to overcome logistical bottlenecks while collecting feedstock like UCO for biofuel production?

Alongside government policy, there should be enhanced incentives and infrastructure for aggregating used cooking oil. UCO has alternative end uses that are currently economically attractive and prominent in the supply chain. Moreover, other industrial wastes such as fossil fuel or hydrocarbon waste could also be effectively accumulated

Recent incentives have been introduced, and it would be premature to comment on their effectiveness. Proper implementation of these incentives is crucial for fostering stability and growth in the sector. Current policies are adequate, but ensuring subsidies reach intended recipients is paramount. With efficient policy implementation, additional measures may not be necessary for fostering a conducive environment.

How do you expect the market to respond to India's sustainable aviation fuel mandate?

Advanced biofuels, such as SAF, are currently in the pilot stages. Establishing even small blending programs requires substantial production capacities. New companies, joint ventures and expanded production facilities are being developed to meet these demands. I anticipate SAF gaining significant traction over the next five years.

How can small and medium players thrive in the compressed natural gas sector?

Biomass-driven biofuel production inherently favors decentralized facilities due to challenges in long-distance feedstock transport. Investing in smaller facilities will stimulate smaller enterprises to participate, akin to the growth seen in India's solar sector. I anticipate significant involvement of small and medium businesses in the biofuel industry.

What is the role of second-generation biofuels in the long term, considering the food-versus-fuel debate?

Second-generation biofuels are poised to become the primary source in the biofuel sector, leveraging agricultural and food waste as feedstock. Ethanol and compressed biogas will synergize significantly with second-generation technology, strengthening their role in the future biofuel mix.

What are the current unit economics for CBG plants, and how do you see future challenges like distribution and feedstock complexity?

The unit economics of a CBG plant hinge on two key factors. Firstly, the significant logistics costs associated with transporting biomass to the refinery, which currently account for approximately 30% of the total landed cost. Utilizing compressed biogas for feedstock transportation could significantly reduce these expenses. Secondly, the economic viability is influenced by the sale price of digestate, comprising 80% to 90% of the output, akin to fertilizers or biofertilizers.

The ability to integrate fermented organic manure into the fertilizer portfolio would be a strong economic gain for biogas.

Additionally, the profitability depends on the market price of compressed biogas, currently determined by Indian Oil Corp. Ltd. or government-regulated rates.

Also in this series:

Insight Conversation: Alexander Kueper, Neste

Insight Conversation: Pinaki Mukherjee, Zuari Envien Bioenergy

Insight Conversation: Ed Mason, Jet Zero Australia

Insight Conversation: Clarence Woo, Asian Clean Fuels Association