Chapter from an UNDP Project Report on Sustainable Energy Systems prepared by the Third World Academy of Sciences, Trieste, Italy based on an International Workshop conducted in August 2006

1. Bio-diesel Energy Systems
and Technology – India
9
O Implementing Institution:
Indian Institute of Science
O Head of Institute:
Professor P. Balaram, Director
O Details of Institution:
Address: Indian Institute of Science, Bangalore 560 012, India
Tel.: (+91) 80 2360 2378/2741 or (+91) 80 2293 2337
Fax: (+91) 80 2360 0683 or (+91) 80 2360 0535
E-mail: pb@mbu.iisc.ernet.in
Website: www.iisc.ernet.in
O Implementation Period:
Started 1 August 2006. Phase 1 to last three years; phase 2
to continue for eight years.
O Costs:
The total estimated cost is $12,230,000. It is expected
that 50 per cent will be contributed by the Ministry of
Non-conventional Energy Sources.The balance of the
contributions is expected to be provided by the Karnataka
State Council for Science and Technology, Bio-diesel
Energy Systems and Technology, Rotary Electronics Pvt.
Ltd., and the Indian Institute of Science, Bangalore.
117
GENERAL INFORMATION

2. 118 VOLUME 17: EXPERIENCES IN DEVELOPING CAPACITY FOR SUSTAINABLE DEVELOPMENT
SU M M A R Y
The Bio-diesel Energy Systems and
Technology initiative is a start-up venture
that was launched in 2006 by the Indian
Institute of Science in Bangalore,
Karnataka State, India. The aim of this
initiative is to build scientific, technolog-
ical and human capacity for the genera-
tion and use of bio-diesel as an alternative
to petroleum-based fuel products. The
strategic advantages of using bio-diesel
are many: it is a renewable source of
energy (derived from inedible vegetable
oils), it is ecologically friendly and less
polluting than petrol, and it could make a
significant contribution to energy security
in India. Some States in India (e.g.,
Andhra Pradesh, Chattisgarh and
Orissa,) have already launched efforts to
produce bio-diesel. A unique approach in
the Bio-diesel Energy Systems and
Technology entrepreneurial venture has
been the creation of a sustainable private-
public partnership between Bio-diesel
Energy Systems and Technology, the
Karnataka State Council for Science
and Technology, the Ministry of Non-
conventional Energy Sources and Rotary
Electronics Pvt. Ltd., Bangalore, a small/
medium-sized enterprise that exercises
corporate social responsibility.
The Bio-diesel Energy Systems and
Technology project aims to identify and
evaluate the value chain and to develop a
viable business plan that considers the
potential political, economic and trade
risks involved in the steps to be taken
towards the sustainable generation and
use of bio-diesel as an alternative “clean”
fuel. Such steps include:
• the acquisition of land for plantation
and cultivation of oilseed feedstock;
• the development of efficient
technologies for the conversion of
the vegetable oils extracted from
the oilseed to bio-diesel via an
esterification process; and
• the assessment of the economic,
social and environmental impact
of large-scale production of bio-
diesel through public distribution
and private for-profit channels.
BA C KG R O U N D
A N D JU S T I F I C AT I O N
Most countries are net importers of oil
and depend on countries with indigenous
resources of fossil fuels that exceed
national demand to satisfy their energy
requirements. In view of the increasing
scarcity and cost of non-renewable
sources of energy (primarily petroleum-
based oil products), many countries
around the world are gradually shifting to
renewable fuels. In this scenario, bio-
diesel is an important component in the
mix of energy sources being considered
by many countries.
BIO-DIESEL CHAR ACTERISTICS
Bio-diesel is a clean-burning alternative
fuel produced from the seeds of various
crops. It is thus a renewable energy
resource.

3. Bio-diesel Energy Systems and Technology – India 119
Chemically, bio-diesel is a fatty acid
alkyl ester that can be used as an alterna-
tive fuel in compression-ignition (diesel)
engines with little or no modification
since its physical and chemical character-
istics are very similar to those of conven-
tional diesel. In fact, the oxygen content
of bio-diesel (approximately 10 per cent)
has been shown to improve the combus-
tion of and reduce emissions from blended
fuel (a mixture of bio- and conventional
diesel) compared with conventional diesel
alone. The amount by which emissions –
including carbon monoxide, hydrocar-
bons and particulate matter – are reduced
depends on the relative levels of
constituents of the blend. Although emis-
sions of oxides of nitrogen (NOX), which
contribute to smog formation, may
increase slightly when bio-diesel is used at
blend levels of more than 5 per cent, fuel
additives may be able to resolve this issue.
Bio-diesel is also simple to use,
biodegradable, non-toxic and essentially
free from sulphur and aromatic hydro-
carbons, the combustion of which makes
an important contribution to the green-
house effect.
GROWTH IN THE USE OF BIO-DIESEL
The European Union has set guidelines
requiring that all Member States increase
the proportion of renewable fuels in total
fuel mixtures from 2 per cent in 2005 to
5.75 per cent by 2010 and to more than
10 per cent by 2020. In 2001, national
production of bio-diesel from vegetable
oils (mainly sunflower oil, rapeseed oil
and frying oil) in various countries of the
European Union and in Switzerland
ranged from 500 to nearly 780,000
tonnes per year.
In the United States, bio-diesel is
commercially available in most oilseed-
producing States. In 2004, almost 30
million US gallons (110 million litres) of
commercially produced bio-diesel were
sold. Owing to increasing pollution-
control requirements and tax relief, the
market in the United States is expected to
grow to 4 thousand million to 8 thousand
million litres by 2010. Many farmers who
grow oilseed use a bio-diesel blend in
tractors and other agricultural equipment
as a matter of policy to foster production
of bio-diesel and to raise public aware-
ness. Likewise, some agrobusinesses and
other businesses with ties to oilseed
farming use bio-diesel for public relations
reasons. Some tax credits are available for
using bio-diesel in the United States. The
price of bio-diesel decreased from an aver-
age of $0.92/litre in 1997 to $0.54/litre in
2007. These prices are comparable with
current petro-diesel prices, which, in early
2008, varied from $0.92/litre to
$1.12/litre.
THE SITUATION IN INDIA
In India, oil accounts for about 34 per
cent of total energy consumption and the
share of oil in the fuel mix used has been
growing gradually in recent years. While
the production of oil in India was
837,000 barrels per day in 2005, at that
time, India had net oil imports of nearly
1.7 million barrels per day. With the
recent and projected rapid growth of the

4. 120 VOLUME 17: EXPERIENCES IN DEVELOPING CAPACITY FOR SUSTAINABLE DEVELOPMENT
Indian economy, oil consumption is
expected to increase to 3.1 million barrels
per day by 2010.
The increasing demand for oil in
India, the ongoing depletion of national
resources and the rising cost of importing
oil (leading to an increasing deficit in the
balance of trade) are important macro-
economic factors that are encouraging a
shift to bio-diesel. On a micro level, the
generation of employment in rural areas,
the productive reclamation of wasteland
(of which India possesses more than 6
million square kilometres) and positive
contributions to the environment through
reductions in vehicular emissions and a
reduction of soil erosion through the
cultivation of bio-diesel crops are some of
the factors driving the consideration of
bio-diesel fuel for large-scale use.
Bio-diesel can be made from any
feedstock oil or fat, the cost of the feed-
stock being the most important con-
stituent in the economics of bio-diesel
production. In the United States and the
European Union, bio-diesel is being
made commercially from edible oils such
as sunflower or rapeseed oil. Because of
the growing demand for food by the
rapidly growing population of India,
alternatives to edible oils are a more
reasonable and feasible option. Of the
inedible oils available, oil from honge or
karanj (Pongamia pinnata, a leguminous
tree) and from jatropha (a genus contain-
ing approximately 175 succulent plants,
shrubs and trees) are the most feasible
alternatives. Jatropha has been selected as
the plant of choice in this project because
of its biological characteristics.
Jatropha curcas, a member of the
Euphorbia or spurge family, is a hardy
plant that is well adapted to harsh soil
and climatic conditions, growing on even
the poorest stony soils and in rock
crevices. Its water requirements are
extremely low and it can withstand long
periods of drought. It is easily propagated
by seeds or cuttings and grows rapidly.
Growing to more than five metres in
height, it may be trimmed as desired and
is suited to cultivation as a hedge plant. In
India, J. curcas is found in almost all States
and is generally grown as a living fence
for protecting agricultural fields.
The bean-like seeds of jatropha con-
tain viscous, inedible oil that can be used
for the production of high-quality soap, as
a raw material for cosmetic products, as
fuel for cooking and lighting, and as a
substitute for diesel fuel. The hydro-
carbon chains (triglycerides and fatty
acids) in jatropha oil, when mixed with
alcohol in the presence of a catalyst, form
a mono-alkyl ester that is bio-diesel.
The Central Salt and Marine Chemicals
Research Institute in Bhavnagar, India,
has developed a process for refining oil
from jatropha seeds at a reasonable cost
without the intensive use of energy.
After extended analysis and consider-
ation, a government policy on bio-diesel
purchasing was initiated on 1 January
2006. This policy includes the setting of
minimum support prices and blending
timelines. With the Ministry of Rural
Development as the nodal ministry, the
National Mission on Bio-diesel was
established under the chairmanship of

5. Bio-diesel Energy Systems and Technology – India 121
the Member Planning Commission. The
Mission has formulated a programme, the
first phase of which is to cultivate jatropha
on about 0.4 million hectares of wasteland
across the country, while the second phase
is to increase this to 11 million hectares
and to achieve 20 per cent blending of
bio-diesel with conventional diesel.
States such as Andhra Pradesh,
Chattisgarh, Rajasthan, Tamil Nadu and
Uttaranchal have formed nodal agencies
for the development of bio-diesel and
have announced draft policies. On the
part of industry, automobile companies
such as DaimlerChrysler and Tata Motors
Ltd. have been conducting trials with
bio-diesel in addition to doing research
and development on process technology.
BIO-DIESEL ENERGY SYSTEMS
AND TECHNOLOGY PROJECT
The objectives of the Bio-diesel Energy
Systems and Technology project are to:
• identify and evaluate a value chain
that is relevant to the national
economy, that could be implemented
in rural areas, that could generate
employment, and that could also be
environmentally responsible;
• develop a viable business plan
based on the sustainable generation
and use of bio-diesel;
• identify the economic and political
risks involved in such a venture; and
• create a workable public-private
partnership to implement the
above scheme.
DE S C R I P T I O N
IDENTIFYING AND EVALUATING
THE VALUE CHAIN FOR BIO-DIESEL
The value chain is a chain of activities
involved in the production of any product
whereby each activity adds value to the
final product. The value chain for bio-diesel
manufactured from renewable sources of
energy in India, i.e., non-edible oils, would
consist of the following phases (fig. 1):
• acquisition of land for plantations;
• cultivation of the oilseed crop;
Figure 1 Steps in the production of
bio-diesel from jatropha: top row (a and b):
crop production; middle row (c and d): seed
harvest and extracted oil; and bottom row (e
and f): conversion to the bio-diesel product.
(a) (b)
(c) (d)
(e) (f)

6. 122 VOLUME 17: EXPERIENCES IN DEVELOPING CAPACITY FOR SUSTAINABLE DEVELOPMENT
• extraction of the vegetable oil
from the seeds; and
• conversion of the extracted
vegetable oil into alkyl ester and
glycerol via esterification.
Acquisition of Wasteland
Wasteland can be acquired via purchase,
contract or lease. Usually, the purchasing
of land would occur only when the
landowner is in financial distress or when
the land has been lying idle for extended
periods. Large initial outlays of capital, the
acquisition of small tracts of land from sev-
eral individual owners and the aggregation
of these purchases into a single large
holding are characteristic of this option.
Concerning contracts, the owners of
large tracts of wasteland must be
convinced (perhaps through financial
incentives) of the potential benefits of
this enterprise and they should be
brought into the venture as partners.
Profit-sharing on the basis of investments
by all parties concerned should be agreed
early in the contracting process.
With regard to leases, different State
governments should be approached with
the business plan and large tracts of land
should be leased for nominal annual
payments either on a fixed-sum or a profit-
sharing basis. The incentives for the State
governments would be primarily the
environmental and societal benefits. The
financial returns would also be useful for
the government as an additional income
from land that has been lying idle for a
long time.
Under plans proposed by the
National Rural Employment Guarantee
Scheme (NREGS), local communities
will also benefit from jatropha produc-
tion, being paid to plant, tend and harvest
the crop on common land.
Cropping Jatropha
Under the Bio-diesel Energy Systems and
Technology project, the crop chosen for
the production of oil for bio-diesel is
jatropha, an indigenous plant that is
hardy, easy to grow and especially suited
to wasteland (thus it does not require the
use of valuable agricultural land).
Jatropha oil is a promising and commer-
cially viable alternative to diesel oil since
it has physico-chemical and performance
characteristics that resemble those of
conventional diesel. The agricultural
practices required to grow jatropha,
including pest and disease control, are
well known.
Generation of Bio-diesel
The final part of the value chain involves
setting up a production plant to extract oil
from the jatropha seeds and to convert
the oil into bio-diesel and glycerol. After
crushing the seeds, the oils and fats are
filtered and preprocessed to remove water
and contaminants. In a process known as
transesterification, the vegetable oils are
chemically reacted with an alcohol (usually
methanol) and a catalyst (usually potas-
sium hydroxide) to produce fatty acid
methyl esters. Bio-diesel is the name given
to these esters when intended for use as

7. Bio-diesel Energy Systems and Technology – India 123
fuel. Glycerol (used in pharmaceuticals
and cosmetics, for example) is produced
as a co-product. The esters and glycerol
are then separated and purified.
The details of the process of extracting
and converting jatropha oil to bio-diesel
are presented in figure 2.
DEVELOPMENT OF A VIABLE
BUSINESS PL AN
The following steps in the implementa-
tion process have already been initiated
in order to fulfil the four-step value chain
described earlier:
• a 10-hectare piece of land has
been procured on the premises of
Rotary Electronics Pvt. Ltd.,
Bangalore, to cultivate jatropha for
oil extraction and esterification;
• a proposal for the involvement of
and funding by the Karnataka
State Council for Science and
Technology has recently been
approved;
• a proposal for a national-level
project is being prepared in
conjunction with, and for possible
funding by, the Ministry of Non-
conventional Energy Sources; and
• a unique system of public-private
partnership is being created,
involving the Indian Institute of
Science, Bangalore; Bio-diesel
Energy Systems and Technology;
the Karnataka State Council for
Science and Technology; the
Ministry of Non-conventional
Energy Sources; and Rotary
Electronics Pvt. Ltd. The details of
this partnership are provided in
the “Partnerships” section.
The core idea is to create a business
enterprise involved in creating bio-diesel
from jatropha oil. The enterprise would
be involved in the entire value chain of
bio-diesel production.
The long-term target is the acquisition
by the enterprise of more than 20,000
hectares of land in Karnataka State that
will be under jatropha cultivation within
10 years from the start of the venture.
JATROPHA
PLANTATION
JATROPHA
OIL
MINERAL
ACID
FATTY ACIDS
GLYCEROL
BIO-DIESEL
ALCOHOL
SETTLER EVAPORATION
NEUTRALIZATION
DISTILLATION
SEED
COLLECTION
OIL
EXPELLER
REACTOR SETTLER WASHING PURIFICATION EVAPORATION
CATALYST
ALCOHOL
RECOVERY
Figure 2 Production of bio-diesel from jatropha.

8. 124 VOLUME 17: EXPERIENCES IN DEVELOPING CAPACITY FOR SUSTAINABLE DEVELOPMENT
The annual cost of cultivation (mate-
rials and labour) is estimated to be about
$175 per hectare in the first year, falling
to $60 per hectare in the second year.
The estimated outflow of private
funds for paying for land and first- and
second-phase cultivation, together with
funds contributed by the government, is
expected to reach $22,000 in the first
year, rising to more than $3 million in
year 10 but falling to about $856,000 in
year 11, when the targeted area of land
has been purchased.
Yield is expected to be an average of
2 kilogrammes per plant from the second
year onwards (yield in the first year is
expected to be 60 per cent of the potential
yield, i.e., 1.2 kilogrammes per plant).
PAT E N T I N G A N D
CO M M E R C I A L I Z AT I O N
With the government of Karnataka guar-
anteeing a minimum assured purchase
price of 4.5 rupees ($0.10) per kilo-
gramme of seed, the inflow of cash is
expected to be $6,800 from the first year,
rising to $10,768,000 by year 11.
Within three years, it is estimated
that the project will become a net
producer of funds and that the net cash
flow (including the costs of land acquisi-
tion, cultivation, government payments
and the sale of seed produced) is likely to
exceed $10 million.
PA R T N E R S H I P S
A unique approach in this entrepreneurial
venture has been the creation of a
sustainable private-public partnership
with the following stakeholders:
• the Indian Institute of Science,
Bangalore: is responsible for
innovation and system design;
• the Karnataka State Council for
Science and Technology: sponsors
the project and provides assistance
with technology transfer;
• the Ministry of Non-conventional
Energy Sources, New Delhi:
provides national support for
infrastructure and assistance with
technology transfer;
• Bio-diesel Energy Systems and
Technology, a small start-up
venture founded by an alumnus of
the Indian Institute of Science
with a master’s degree in business
administration: is responsible for
basic project implementation and
the entrepreneurship scheme; and
• Rotary Electronics Pvt. Ltd.,
Bangalore, a small/medium-sized
enterprise: has corporate social
responsibility.
RE P L I C A B I L I T Y
In view of the global depletion of non-
renewable energy resources, bio-diesel
represents a novel and economically and
environmentally viable source of renew-

9. Bio-diesel Energy Systems and Technology – India 125
able energy for all countries with
unexploited land resources.
J. curcas, found in the tropics and sub-
tropics, having a low water requirement
and adapted to a wide range of
climates and soil types, is suitable for
cultivation in other developing countries.
Jatropha bio-diesel is already used in coun-
tries such as Argentina, the Dominican
Republic, Kenya and Mozambique and its
potential is being investigated in countries
such as Indonesia, Myanmar and the
Philippines. Indeed, enquiries about the
Bio-diesel Energy Systems and Technology
project have been received from
Bangladesh, Malaysia and South Africa.
PO L I C Y IM P L I C AT I O N S
Bio-diesel has been promoted as a viable
alternative to petroleum-based diesel via
the formulation of a bio-diesel purchase
policy with minimum support prices, ini-
tiatives by the central government in
setting bio-diesel blending targets with
timelines, and initiatives by State govern-
ments in promoting the cultivation of
bio-diesel feedstock on wastelands. For
example, some States in India (e.g.,
Andhra Pradesh, Chattisgarh and Orissa)
have introduced legislation to encourage
the use of bio-diesel. The National
Bio-diesel Policy, formulated in March
2006, now encourages other States to do
likewise.
The major risk in this project has
been assessed to be a political one: the
likelihood that State and federal govern-
ments will change their energy and
agriculture policies to make bio-diesel
less attractive. In the worst-case scenario,
the governments may even discourage or
prohibit the use of inedible oils for energy
purposes.
The greatest economic risks arise
from the volatility of the international
energy markets, including price fluctua-
tions that may arise from the introduction
of a new energy technology. Moreover, if
the cost of conventional energy should
fall, the price of bio-diesel would become
less competitive.
There is always competition for
agricultural land and associated forest
land. If the programme proves successful,
the promoters and regulators of
bio-diesel may begin to encourage the
large-scale conversion of agricultural land
to jatropha cultivation, placing enormous
competitive pressure on land-use pat-
terns. For example, wastelands are often
used as common land and supply the
poorest rural peoples with food, fodder,
fuel wood and medicine.
IM PA C T
The validity of the basic concept of this
project and its feasibility have been
demonstrated. Its success at later stages will
be measured by the following parameters:
• the progressive rate of conversion
of arid land and wasteland to the
cultivation of jatropha and other
similar plants producing inedible
vegetable oils;

10. 126 VOLUME 17: EXPERIENCES IN DEVELOPING CAPACITY FOR SUSTAINABLE DEVELOPMENT
• the annual increase in the produc-
tion of seed from which inedible
vegetable oil can be extracted to
make bio-diesel;
• the successful implementation of
low-cost processes and technologies
for esterifying the vegetable oil to
produce bio-diesel;
• the increasing generation of rural
employment for farmers and social
entrepreneurs engaged in the
cultivation of jatropha and other
oilseed crops;
• the production, marketing,
distribution and use of bio-diesel
as a substitute for conventional
petroleum-based diesel; and
• the national social benefits
generated overall through the
bio-diesel project, including the
creation of energy security.
A preliminary assessment of the
potential of the Bio-diesel Energy
Systems and Technology venture to gen-
erate employment shows that at least 2
million jobs will be created in the State of
Karnataka in the next 20 years. This
would represent a 5 per cent increase in
employment levels in the State (which
currently has a work force of about 40
million people in the organized sectors).
There will also be an indirect effect on
another 10 million people who stand to
benefit as tertiary suppliers and ancillary
units involved in the bio-diesel supply
chain. Most (an estimated 60 per cent) of
the jobs created will be for the semi-
skilled and unskilled labour force in rural
areas where the jatropha will be grown,
the remainder of the downstream
processing occurring in urban and semi-
urban areas.
The Bio-diesel Energy Systems and
Technology project represents an
economically and environmentally viable
option in view of the increasing demand
for renewable domestic energy supplies
in the face of the depletion of national
resources and efforts to attain energy
security, and central and State govern-
ment involvement in the promotion of
bio-diesel cultivation and use. The
project is highly sustainable because it
exploits wasteland that would otherwise
lie idle and not generate income. It can
potentially generate a significant amount
of rural employment and possibly allow
the accumulation of carbon credits (a key
component of national and international
emissions trading schemes to offset
emissions of greenhouse gases).
LE S S O N S LE A R N E D
Among the obstacles faced during this
project to date has been the reluctance of
local farmers to sell or lease land for the
cultivation of jatropha, especially in the
absence of clear government policies.
This problem has been partially
overcome by offering to involve the
farmers as participants in a social entre-
preneurship project with the formation of
a profit-sharing cooperative.
Environmental concerns have been
raised concerning the effect on biodiversity

11. Bio-diesel Energy Systems and Technology – India 127
of large-scale monoculture with jatropha
or honge. In order to address these
concerns, suitable multiple-cropping
strategies have been proposed (for exam-
ple, a combination of cereal crops with
jatropha).
The political will of the central gov-
ernment to develop and implement
sustainable policies for the promotion
and incentive-based growth of bio-diesel
fuels was recognized as a limiting factor
with respect to the widespread success of
the project.
Developing appropriate marketing
and distribution policies and strategies
that will ensure the uniform availability
of bio-diesel across a large country such
as India is also a significant challenge.
With regard to technical issues, it will
be necessary to develop more economical
means of extracting oil from the jatropha
seed and to develop economic strategies
for the esterification process by which
bio-diesel is produced from the vegetable
seed oil.
The preparation of public perception
for the acceptance of bio-diesel as a
viable alternative to petroleum-based
diesel has yet to be undertaken. The
success of this part of the venture will
depend largely on the efforts of govern-
mental and non-governmental organiza-
tions to inform the public of the social
and economic benefits of using bio-diesel
in the agricultural, industrial and
transport sectors.
FU T U R E PL A N S
Efforts are now being concentrated on
creating the infrastructure necessary for
successful implementation of the Bio-
diesel Energy Systems and Technology
bio-diesel project in Karnataka State.
P U B L I C AT I O N S
Mandal, R. (2004). Energy – Alternate
Solutions for India’s Needs. Planning
Commission, Government of India.
Manjunath, K. C. (2006). Generation of
biodiesel using inedible oils: Value chain
analysis and business plan. MBA thesis.
Department of Management Studies,
Indian Institute of Science, Bangalore.
Case Study Prepared by:
Parameshwar P. Iyer
Principal research scientist
Address: Department of Management
Studies, Indian Institute of Science,
Bangalore 560 012, India
Tel.: (+91) 80 2293 2448
E-mail: piyer@mgmt.iisc.ernet.in,
piyer@csic.iisc.ernet.in
Project Participants:
Parameshwar P. Iyer, innovator and system
designer, Indian Institute of Science,
Bangalore.
K. C. Manjunath, innovator and system
designer, Department of Management
Studies, Indian Institute of Science,
Bangalore.

12. 128 VOLUME 17: EXPERIENCES IN DEVELOPING CAPACITY FOR SUSTAINABLE DEVELOPMENT
Karnataka State Council for Science
and Technology and Indian Institute of
Science, Bangalore: Project sponsors
and technology transfer assistance.
Ministry of Non-conventional Energy
Sources, New Delhi: National support
for infrastructure and project technology
transfer.
Bio-diesel Energy Systems and
Technology: Basic project implementa-
tion and the entrepreneurship scheme.
Rotary Electronics Pvt. Ltd., Bangalore.