Overview of Biodiesel Plant Business

Biodiesel, also known as FAME (fatty acid methyl ester) and FAEE (fatty acid ethyl ester), is a form of biofuel created through the transesterification process of biomass. It is a first-generation biofuel that is enabled the use of lower-cost, non-edible feedstocks to generate a carbon-neutral source of energy. The raw material for biodiesel comes from non-edible oilseeds like Jatropha Curcas, palm stearin oil etc. However, a shortage of jatropha seeds, other feedstocks and related technologies are also being used by biodiesel plant businesses. For example, animal fats used in cooking oils and imported crude vegetable oils are also used by several producers to manufacture biodiesel. Biodiesel and ethanol are the two main transport biofuels largely used in India. The process of making biodiesel involves directly converting biomass into liquid fuel, which is then blended with existing automotive fuel (diesel). The process is called transesterification. This process purifies the raw material (oils and fats) and adds oxygen to the fuel. Biodiesel can be blended with diesel at a 5% to 20% ratio depending upon the use. The latest update to the Biofuel Policy came in 2018, through which the government aims to achieve a five per cent blending for diesel by 2030. We saw ethanol blending with petrol being successfully implemented, and the same approach has been adopted for biodiesel blending with normal diesel. All these developments hint at a massive demand for biodiesel in future, and new businesses can tap into this opportunity by setting up biodiesel plant businesses. Moreover biodiesel plant business can expand its production to include the production of 2G biofuels (from waste) and 3G biofuels (from algal biomass).

Advantages of setting up Biodiesel Plant Business

Small-scale biodiesel plant businesses may be able to collect waste oil for very little expense, with the other option being purchasing oilseeds. Several common outlets are waste greases from restaurants, animal fats from rendering plants, or damaged grain from mills. The expense of buying oilseeds or oil products for biodiesel production into oil typically accounts for more than 70% of total costs. These businesses also need to account for their time and transportation costs when determining overall profitability. The advantages of setting up this business are

• Biodiesel needs no separate infrastructure for storage and dispensing, and the existing storage facilities like tanks or the dispensing stations of conventional diesel can be used. Oil Marketing Companies (OMCs) are periodically floating Expression of Interest (EoI) for procurement of biodiesel produced from UCO.
• Blending biodiesel with diesel results in a reduced amount of unburnt hydrocarbons, carbon monoxide and particulate matter in vehicular emissions. These advantages have fuelled the popularity of biodiesel in domestic as well as international markets.
• Biodiesel is very similar to diesel fuel in composition, and therefore, there is no need for engine modification to run on biodiesel. Also, bio-diesel is safe to handle, and the flash points of biodiesel are higher than conventional diesel.

Licences needed to set up Bio-diesel Plant Business

After registration of the business with appropriate authority, additional licences that will be needed are mentioned below

Factory License: Premises engaged in the "manufacturing process" employing ten or more workers (with aid of power) or 20 or more workers (without aid of power) is defined as factory under the Factories Act, 1948. The documents required for obtaining Factory Licence are

• ID proof of Occupier and Manager
• List of Partners and Directors with their residential address.
• NOC from Board Resolution by Directors for the nomination of the occupier as per sections 2 (n) and 7 of the Factories Act, 1948.
• Proof of Occupier as Director/ Partner/ Proprietor of the factory.
• Building plan
• The latest electricity bill is proof of the sanctioned load of electricity.
• Proof of occupancies like copy of rent agreement or ownership proof i.e.conveyance deed).
• Flow chart of the manufacturing process.
• List of raw materials used in the manufacturing process.
• List of machinery installed on the premises.
• Any other particulars as the Chief Inspector/Director (ISH) may require.

Explosive License: For storage of combustible fuel such as biodiesel, one has to obtain an explosive license from the Directorate of Explosive. The applicant is required to apply with the below-mentioned supporting documents for grant of license/ No Objection Certificate under various provisions of The Explosives Rules, 2008.

• Duly filled Application Form.
• Title Document or NOC of the owner.
• Site Plan
• Survey Plan
• NOC of the local body
• Trade License/ House Tax Receipt
• Passport-size photographs of the applicant

ConsentNOC: A Biodiesel Plant Business must obtain Consent certificates, i.e. Consent to Establish(CTE) and Consent to operate (CTO), from their respective state pollution control Board. These must be obtained systematically before the unit’s establishment and the starting operation of the facility, respectively.

Documents required for Consent to Establish

• Duly filled Application Form
• Signed Undertaking
• Land documents such as rent /lease agreement
• Site Plan or layout plan.
• Industry Registration Proof
• Detailed Project Report with total investment.
• Details of processes and the sources of effluent discharge /air emission/solid waste/hazardous waste generated.
• list of machinery, capital used in the unit (land, building, and plant machinery), water balance, source of water, and its required quantity
• Any other Document specified in the Application Form

Documents required for Consent to Operate

• Duly filled Application form
• Balanced Sheet Certified by a CA
• Copy of CTE
• Details of water pollution control/air pollution control measures
• Copy of land-related documents
• Consent fee (as applicable)
• Laboratory analysis report of the effluent and air emissions.
• Environment Clearance (if applicable)

Steps to Obtain Consent NOC

Market Overview of Biodiesel Plant Business

• Presently, bio-diesel is being produced primarily from imported palm stearin oil as jatropha cultivation is limited in the country. Domestically available used cooking oil (UCO) is also being used as the feedstock for biodiesel. National Policy on Biofuels-2018 has identified UCO as a potential raw material for biodiesel production. For conversion, UCO can be collected from Bulk Consumers such as hotels, restaurants, canteens, etc.
• India's biofuel production accounts for only one per cent of the global production, and hence its market is still in a niche segment. India's demand for biodiesel stood at 0.17 Million Tonnes (MT) in the Financial year 2021, and as per some estimates, it is expected to reach 0.26 MT and grow at a CAGR of 8.60% until 2030.
• An increase in crude oil import bills has made the GOI switch to domestic alternatives with biodiesel, which is serving as main game-changer. The government has notified the guidelines for the sale of biodiesel for blending with High-Speed Diesel for transportation purposes in 2019.
• With the National Policy on Biofuels in 2019, the demand for biodiesel is set to witness an upward trend in the coming years. India's initiative toward promoting cleaner fuels elevates the country's overall Biodiesel demand. As India's primary energy demand is set to double in the next two decades, using cleaner fuel alternatives will continue to increase the sales of biodiesel. The transport sector, railways, & industries are the major Biodiesel end-users in India and offer vast potential to the biofuel market.

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