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Asia Biodiesel

India biodiesel rule changes prime Aemetis for growth

US-based advanced biofuel producer Aemetis is set for strong sales growth into India’s nascent domestic market for biodiesel while the firm gears up for increased investment in cellulosic technologies in its US business, chairman and chief executive Eric McAfee told PRIMA.

Government deregulation of India’s biodiesel market has for the first time this year allowed biodiesel manufacturers to sell their product direct to bulk customers without having to go through state-controlled oil marketing companies (OMCs). The new rules were announced in January but not officially published until August. Regional ethanol suppliers are also taking an increased interest in India as the government signals that it is serious about implementing significant biofuel blending measures.

Aemetis owns and operates a 50mn gal/yr biodiesel plant at Kakinada on India’s east coast. While the firm geared the plant’s past output towards the European export market, Aemetis expects the facility to concentrate on using waste oils to meet Indian demand going forward. National and state excise exemptions allow Aemetis’ facility to undercut mineral diesel on price into the domestic market, McAfee said. The warm climate in southern and western India allows meanwhile allows Aemetis’ customers to fully substitute biodiesel for fossil diesel rather than using the 5-20% biodiesel/diesel blends which are commoner in Europe or the US, Aemetis said.

Indian OMCs have already issued tenders to buy up to 225mn gal of biodiesel as a step towards implementing a targeted 5% blend policy. The volume will consume almost all of India’s estimated 250mn gal of installed biodiesel capacity. With India diesel demand stretching to around 25bn gal/yr of diesel, Aemetis sees Indian biodiesel consumption hitting up to 1.25bn gal/yr as the government pursues policies to to improve air quality as well as reducing India’s reliance on imported fuels with concurrent benefits for India’s balance of payments.

Aemetis sold 1.3mn gal of biodiesel in the first six months of this year, up 7% on the year-ago period. But the firm only began to expand direct sales relationships with Indian operators of buses, truck and fleets as well as power generators at the start of this year, which has since accelerated sales.

Aemetis is now selling diesel to a “large OMC”, in addition to a number of major transportation and logistics businesses, the firm said on 17 September.

In California Aemetis is exploring plans to convert its 60mn gal/yr Keyes ethanol and animal feed plant to cellulosic technology capable of converting waste agricultural biomass into higher grade biofuel than that achieved through traditional corn ethanol processing. The near trebling in price of carbon reduction credits under California’s LCFS ticket program is highlighting the benefits of such investments in low carbon fuel pathways under mandate or cap and trade systems which allow producers to monetize the reduced carbon intensity of their products. Other US states and Canadian provinces are closely watching developments under California’s LCFS as they mull their own schemes aimed at increasing the uptake of low carbon emission fuels.

Longer term, Aemetis is keeping a close eye on the US military’s ambitions to start sourcing renewable jet fuel as alikely spur to fresh facility investment plans. The firm is working on research and development into several new potential processes for converting sugars into molecules capable of substituting mineral jet fuel.

MS – 18/09/2015

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