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ALTERNATIVEFUELS
18 globalcementMAGAZINE February2013
Dirk Lechtenberg, MVW Lechtenberg & Partner
Alternativefuels:Providing
growthandsustainability
Above: Under-developed
waste management systems,
an expensive coal deficit and
a need for higher cement
production all point to one
direction for the Indian cement
industry - Alternative fuels!
According to the International Monetary Fund,
India’s nominal GDP stands at US$1.53tn. In
terms of purchasing power parity, India’s economy
is the fourth largest in the world at US$4.06tn. With
future growth, India could emerge as the world’s third
largest economy by 2030, benefiting from strong
domestic demand and favourable demographics, ac-
cording to a Standard Chartered Global Research
study.1 The same study also showed that India is likely
to grow faster than China, on average, over the next
two decades.
Urbanisation2
India, with a population of over 1.21 billion accord-
ing to its 2011 census, accounts for 17.5% of the world
population. According to the provisional census fig-
ures, 377 million people live in the urban areas of the
country, 31.2 % of the country’s total population.
The growth of the urban population is much faster
than the growth of the rural population and India
already has 475 Urban Agglomerations (UA). Three
of these have populations of over 10 million. The larg-
est UAs are: 1. Greater Mumbai, with 18.4 million
inhabitants; 2. Delhi, which has 16.3 million; 3.
Kolkata, with 14.1 million; 4. Chennai, with 8.7 mil-
lion and; 5. Bangalore, where there are 8.5 million
people. Growing cities such as these require constant
construction and hence cement, accompanied by
steadily-increasing energy demand.
India’s industry is dependent on coal
In India 54% of the total installed electricity gen-
eration thermal capacity is coal-based and 67% of the
capacity that was planned to be added during the 11th
Five Year Plan period (2007-2012), was coal-based.3
Furthermore, over 70% of the electricity generated in
India is from coal based power plants.3
In order to achieve economic growth of 8-9% in
terms of GDP, the country’s total coal demand, even
after allowing for the slippage that has occurred in the
current plan period, has been projected to increase
from ~730Mt in 2010-11 to ~2Bnt in 2031-32, as
shown in the table, left. Of this ~2Bnt, about 75% of
coal would go to power plants.
Given the projected increase in coal requirement,
the domestic coal industry alone cannot fully meet the
demand. The present demand–supply gap is around
85Mt/yr and it is expected to increase gradually to
nearly 140Mt in 2017.3
The coal-mining state-monopolist has been unable
to expand output significantly over recent years and,
therefore, cannot keep up with the demand. Conse-
quently, the firms that run power stations are forced
to import costly foreign coal, but the grid companies
cannot afford the power they produce. With too little
coal and unsecured customers, many private firms that
have built new power stations are in financial trouble.
‘Incredible India,’ the slogan of the Indian
Tourist Board, might also be used to
label India’s overall economy. The world’s
biggest democracy now has the chance
to show that, in terms of the cement
industry, growth and sustainability need
not be divergent interests...
Below: Historic and
projected coal demands (Mt)
from various Indian industrial
sectors from 2005-6 to 2031-2.
Source: ‘India Energy Book.’
Industrial sector 2005-
2006
2006-
2007
2011-
2012
2016-
2017
2021-
2022
2026-
2027
2031-
2032
Electricity (A) 310 341 539 836 1040 1340 1659
Iron & Steel 43 43 69 104 112 120 150
Cement 20 25 32 50 95 125 140
Others 53 51 91 135 143 158 272
Non-electricity (B) 116 119 192 289 350 403 562
TOTAL (A + B) 426 460 731 1125 1390 1743 2221
Cement industry
After posting the poorest show in a decade in 2010-11,
at a sales growth rate of less than 5%, India’s cement
industry recovered in the following financial year,
thanks to the robust demand revival in the second half
of the year.
According to the Business Standard newspaper of
13 January 2013, the 330Mt/yr-capacity industry grew
by 6.4% against less than 5% in the prior financial
year. This was better than the cement makers’ earlier
estimates of 6.0%. However, later in the year when
demand revived, industry officials and sector analysts
turned positive, with growth projections of 6.5-7.0%.4
The industry sold 223Mt of cement, compared
with 209.5Mt a year earlier. Production also rose, to
223.6Mt, against 210.5Mt, a rise of 6.2%.
According to the latest report from the working
group on the industry for the 12th Five-Year Plan
(2012-17), India would require overall cement capac-
ity of around 480Mt/yr. This would mean that the
industry would have to add another 150Mt/yr of ca-
pacity during the same period.
Currently, the top players, namely Ultratech,
ACC, Ambuja Cements, Jaiprakash Associates, India
Cements and Shree Cement, collectively control more
than half of the cement market in the country. There
are 40 players in the industry across the country as
reported by the Business Standard.
With predicted demand of 50Mt/yr of coal, it is
foreseen that this will be one of the key issues in in-
creasing the capacity and reducing operational costs
for the industry in the coming years.
Alternative fuels as a solution?
The very high rate of urbanisation coupled with im-
proper planning and the poor financial condition has
made municipal solid waste management (MSW) in
Indian cities a herculean task. At the same time, the ce-
ment industry’s need for sustainable fuels is increasing.
Why not combine these two issues?
Until now the use of alternative fuels in India
has been at a very low level. According to an MVW
Lechtenberg evaluation, only 1% of the fossil fuels
used in the Indian cement industry is substituted by
alternative fuels.
Of this 1%, the main alternative fuels are ba-
gasse, rice husks and palm kernels. Small projects
for the production of refuse-derived fuels (RDF) are
launched, for example by Grasim Industries, ACC and
others, to promote the use of such fuels. Some small
processing facilities have also started operations.
Indeed, Denmark’s FLSmidth has just received orders
for dosing and feedings systems for such alternative
fuels at Grasim South, which is part of Aditya Birla.
Elsewhere, Tecpro Systems, in collaboration with
MVW Lechtenberg, has started an RDF production
Plant in Ajmer, Rajasthan, with a production rate of
250t/day. The partnership has launched a similar pro-
ject in Bikaner.
However, many obstacles are found in developing
such projects. In Ajmer, the time between submitting
the first bid to process the MSW until start-up at the
plant was four years. This was mainly due to the bu-
reaucratic system and permitting issues.
Another main obstacle is winning long-term con-
tracts for the supply with waste, which are necessary
in order to secure investments in the plants in the first
place. As the recycling and disposal of MSW is under
the control of municipalities and nationwide legisla-
tion and because frameworks are not implemented yet
on a regional basis, a lot of ‘groundwork’ has to be done
by companies that want to enter into co-processing of
wastes in India. Many municipalities are even asking
to get paid for wastes, a circumstance that does not
allow a sustainable, all-waste-embracing concept.
According to the Institute for Industrial Productiv-
ity (IIP),5 a multi-stakeholder initiative was launched
in India to draw up an implementable action plan to
increase the thermal substitution rate in the Indian
cement industry from the present low level to 15% by
2020. The plan will identify the five most promising
alternative fuels for co-processing in cement kilns and
the two most promising blending materials.
The cement industry could play a significant role
in the country’s effort to find a sustainable waste
management solution, greenhouse gas reduction and
reduction of costly fossil fuel usage.
Assuming 300Mt/yr of clinker production capacity
and a substitution rate of only 20%, a total quantity
of 16Mt/yr of refuse-derived fuels can be used! This
would accumulate in a saving of approximately
8Mt/yr of coal at a value of US$984m/yr. This also
allows for an off-set cut in CO2 emissions due to non-
combustion of fossil fuels.
References
1. Standard Chartered Global Research website. Sahay, A.; Kulkami,
N.; Kishore, P.; Chakraborty, S., ‘India in the Super-Cycle’, 25 May 2011.
2. Rajendra Kumar Kaushal et. al., ‘Municipal Solid Waste Management
in India - Current state and future challenges’, International Journal of
Engineering Science and Technology, Vol. 4, No. 4, April 2012.
3. World Energy Council, ‘India Energy Book 2012’.
4. Chandan Kishore Kant, ‘Cement industry posts 6.4% growth in
FY12,’ 12 April 2012.
5. Institute for Industrial Productivity website, ‘Increasing the thermal
substitution rate in India’s cement industry,’ http://www.iipnetwork.org/
increasing-tsr-cement-india,
ALTERNATIVEFUELS
globalcementMAGAZINE February2013 19
Below: Inside the Ajmer
refuse-derived fuels plant,
which is the first such
privately-owned facility
in India.

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Global cement

  • 1. ALTERNATIVEFUELS 18 globalcementMAGAZINE February2013 Dirk Lechtenberg, MVW Lechtenberg & Partner Alternativefuels:Providing growthandsustainability Above: Under-developed waste management systems, an expensive coal deficit and a need for higher cement production all point to one direction for the Indian cement industry - Alternative fuels! According to the International Monetary Fund, India’s nominal GDP stands at US$1.53tn. In terms of purchasing power parity, India’s economy is the fourth largest in the world at US$4.06tn. With future growth, India could emerge as the world’s third largest economy by 2030, benefiting from strong domestic demand and favourable demographics, ac- cording to a Standard Chartered Global Research study.1 The same study also showed that India is likely to grow faster than China, on average, over the next two decades. Urbanisation2 India, with a population of over 1.21 billion accord- ing to its 2011 census, accounts for 17.5% of the world population. According to the provisional census fig- ures, 377 million people live in the urban areas of the country, 31.2 % of the country’s total population. The growth of the urban population is much faster than the growth of the rural population and India already has 475 Urban Agglomerations (UA). Three of these have populations of over 10 million. The larg- est UAs are: 1. Greater Mumbai, with 18.4 million inhabitants; 2. Delhi, which has 16.3 million; 3. Kolkata, with 14.1 million; 4. Chennai, with 8.7 mil- lion and; 5. Bangalore, where there are 8.5 million people. Growing cities such as these require constant construction and hence cement, accompanied by steadily-increasing energy demand. India’s industry is dependent on coal In India 54% of the total installed electricity gen- eration thermal capacity is coal-based and 67% of the capacity that was planned to be added during the 11th Five Year Plan period (2007-2012), was coal-based.3 Furthermore, over 70% of the electricity generated in India is from coal based power plants.3 In order to achieve economic growth of 8-9% in terms of GDP, the country’s total coal demand, even after allowing for the slippage that has occurred in the current plan period, has been projected to increase from ~730Mt in 2010-11 to ~2Bnt in 2031-32, as shown in the table, left. Of this ~2Bnt, about 75% of coal would go to power plants. Given the projected increase in coal requirement, the domestic coal industry alone cannot fully meet the demand. The present demand–supply gap is around 85Mt/yr and it is expected to increase gradually to nearly 140Mt in 2017.3 The coal-mining state-monopolist has been unable to expand output significantly over recent years and, therefore, cannot keep up with the demand. Conse- quently, the firms that run power stations are forced to import costly foreign coal, but the grid companies cannot afford the power they produce. With too little coal and unsecured customers, many private firms that have built new power stations are in financial trouble. ‘Incredible India,’ the slogan of the Indian Tourist Board, might also be used to label India’s overall economy. The world’s biggest democracy now has the chance to show that, in terms of the cement industry, growth and sustainability need not be divergent interests... Below: Historic and projected coal demands (Mt) from various Indian industrial sectors from 2005-6 to 2031-2. Source: ‘India Energy Book.’ Industrial sector 2005- 2006 2006- 2007 2011- 2012 2016- 2017 2021- 2022 2026- 2027 2031- 2032 Electricity (A) 310 341 539 836 1040 1340 1659 Iron & Steel 43 43 69 104 112 120 150 Cement 20 25 32 50 95 125 140 Others 53 51 91 135 143 158 272 Non-electricity (B) 116 119 192 289 350 403 562 TOTAL (A + B) 426 460 731 1125 1390 1743 2221
  • 2. Cement industry After posting the poorest show in a decade in 2010-11, at a sales growth rate of less than 5%, India’s cement industry recovered in the following financial year, thanks to the robust demand revival in the second half of the year. According to the Business Standard newspaper of 13 January 2013, the 330Mt/yr-capacity industry grew by 6.4% against less than 5% in the prior financial year. This was better than the cement makers’ earlier estimates of 6.0%. However, later in the year when demand revived, industry officials and sector analysts turned positive, with growth projections of 6.5-7.0%.4 The industry sold 223Mt of cement, compared with 209.5Mt a year earlier. Production also rose, to 223.6Mt, against 210.5Mt, a rise of 6.2%. According to the latest report from the working group on the industry for the 12th Five-Year Plan (2012-17), India would require overall cement capac- ity of around 480Mt/yr. This would mean that the industry would have to add another 150Mt/yr of ca- pacity during the same period. Currently, the top players, namely Ultratech, ACC, Ambuja Cements, Jaiprakash Associates, India Cements and Shree Cement, collectively control more than half of the cement market in the country. There are 40 players in the industry across the country as reported by the Business Standard. With predicted demand of 50Mt/yr of coal, it is foreseen that this will be one of the key issues in in- creasing the capacity and reducing operational costs for the industry in the coming years. Alternative fuels as a solution? The very high rate of urbanisation coupled with im- proper planning and the poor financial condition has made municipal solid waste management (MSW) in Indian cities a herculean task. At the same time, the ce- ment industry’s need for sustainable fuels is increasing. Why not combine these two issues? Until now the use of alternative fuels in India has been at a very low level. According to an MVW Lechtenberg evaluation, only 1% of the fossil fuels used in the Indian cement industry is substituted by alternative fuels. Of this 1%, the main alternative fuels are ba- gasse, rice husks and palm kernels. Small projects for the production of refuse-derived fuels (RDF) are launched, for example by Grasim Industries, ACC and others, to promote the use of such fuels. Some small processing facilities have also started operations. Indeed, Denmark’s FLSmidth has just received orders for dosing and feedings systems for such alternative fuels at Grasim South, which is part of Aditya Birla. Elsewhere, Tecpro Systems, in collaboration with MVW Lechtenberg, has started an RDF production Plant in Ajmer, Rajasthan, with a production rate of 250t/day. The partnership has launched a similar pro- ject in Bikaner. However, many obstacles are found in developing such projects. In Ajmer, the time between submitting the first bid to process the MSW until start-up at the plant was four years. This was mainly due to the bu- reaucratic system and permitting issues. Another main obstacle is winning long-term con- tracts for the supply with waste, which are necessary in order to secure investments in the plants in the first place. As the recycling and disposal of MSW is under the control of municipalities and nationwide legisla- tion and because frameworks are not implemented yet on a regional basis, a lot of ‘groundwork’ has to be done by companies that want to enter into co-processing of wastes in India. Many municipalities are even asking to get paid for wastes, a circumstance that does not allow a sustainable, all-waste-embracing concept. According to the Institute for Industrial Productiv- ity (IIP),5 a multi-stakeholder initiative was launched in India to draw up an implementable action plan to increase the thermal substitution rate in the Indian cement industry from the present low level to 15% by 2020. The plan will identify the five most promising alternative fuels for co-processing in cement kilns and the two most promising blending materials. The cement industry could play a significant role in the country’s effort to find a sustainable waste management solution, greenhouse gas reduction and reduction of costly fossil fuel usage. Assuming 300Mt/yr of clinker production capacity and a substitution rate of only 20%, a total quantity of 16Mt/yr of refuse-derived fuels can be used! This would accumulate in a saving of approximately 8Mt/yr of coal at a value of US$984m/yr. This also allows for an off-set cut in CO2 emissions due to non- combustion of fossil fuels. References 1. Standard Chartered Global Research website. Sahay, A.; Kulkami, N.; Kishore, P.; Chakraborty, S., ‘India in the Super-Cycle’, 25 May 2011. 2. Rajendra Kumar Kaushal et. al., ‘Municipal Solid Waste Management in India - Current state and future challenges’, International Journal of Engineering Science and Technology, Vol. 4, No. 4, April 2012. 3. World Energy Council, ‘India Energy Book 2012’. 4. Chandan Kishore Kant, ‘Cement industry posts 6.4% growth in FY12,’ 12 April 2012. 5. Institute for Industrial Productivity website, ‘Increasing the thermal substitution rate in India’s cement industry,’ http://www.iipnetwork.org/ increasing-tsr-cement-india, ALTERNATIVEFUELS globalcementMAGAZINE February2013 19 Below: Inside the Ajmer refuse-derived fuels plant, which is the first such privately-owned facility in India.