Bamboo to ethanol, India's biofuel industry to explode into a $15 bn market

An oil refinery in a region in India that’s more famous for its tea plantations is hoping to put its abundant greenery to new use.

A $200 million joint venture between Numaligarh Refinery Ltd. and Finnish technology firm Chempolis Oy will crush bamboo, the longest of the grass family, to produce 60 million liters of ethanol every year in the tea producing state of Assam. That’s enough to meet mandatory requirements for blending with gasoline in the entire northeastern region. The eight states that lie at the foot of the Himalayas together make up about two-thirds of India’s total bamboo production.

“Bamboo is in abundance in the northeastern states. It grows everywhere,” said the Indian state-run refiner’s managing director S.K. Barua in New Delhi. “It will be a game changer for us and for the country.”

Record growth in Indian oil consumption means Prime Minister Narendra Modi is turning to everything from sewage water to crop residues to blend with diesel and gasoline. Apart from keeping up with the country’s surging demand for fuel, Modi is also trying to fulfill his pledge to meet a 10 per cent reduction in the nation’s energy imports by 2022. As a result, the biofuels industry is set to explode into a $15 billion market by 2020 with government backing.

Indian oil companies are investing in biofuel refineries to boost ethanol production from non-molasses sources such as agricultural residues and even petrochemicals. But usage of the contemporary fuel has been slow to catch on. Just 2.1 per cent of gasoline is being blended with ethanol, while very little biodiesel is mixed with diesel. The goal this year is 5 per cent blending for both.

“Bamboo will play a role in India’s energy security and promote green fuel use,” Barua said. “It will be the first experiment, but it’s not a complicated project.”