1introduction and · web viewthe united nations environment programme (unep), dti-ietc, has...

“Waste Agricultural Biomass for Energy: Resource conservation and GHG Emission Reduction”

Awareness raising workshop: Policies for converting waste agricultural biomass into energy19th September-2013

Output VII-a

Report on

UNEP Awareness raising Training Workshop

Policies for converting waste agricultural biomass into energy:

19th September-2013


CONTENTS

ChapterSub Chapter

Title Page

1 Introduction and Background 6

2 Workshop coverage 8

2.1 Government Policy 8

2.1.1The national scenario -- Biomass related Policies and Programmes

8

2.1.2 Current status of Policies to promote biomass power in India 8

2.1.3 Biomass power and cogeneration programme 9

2.2 Incentives 10

2.2.1 Central Financial Assistance (CFA) and fiscal incentives 11

2.2.2 Fiscal Incentives for Biomass Power Generation 13

2.3Institutional framework – Ministry of New and Renewable Energy

13

2.4 Analysis of climate change related policies 14

2.4.1 National Action Plan on Climate Change (NAPCC) 14

2.4.2 Market based mechanism 15

2.4.3 Accelerated shift to energy efficient appliances 15

2.4.4 Mechanism to finance Demand Side Management (DSM) 15

2.4.5 Fiscal instruments to promote energy efficiency 15

2.5 Goals of National Action Plan on Climate Change 16

2.6 Analysis of renewable energy related policy development 16

2.6.1 Early Policy Perspective 16

2.6.2 Multi-pronged approach 17

2.6.3 Shift in Policy Perspective 17



2.6.4 Major programmes of MNRE 18

2.6.4.1 National Biomass Cookstoves Programme 18

2.6.4.2 Programmes for Biomass based Electric Power 18

2.6.4.3 National biomass gasifier programme 19

2.6.4.4 Programmes for building research institutions 20

2.6.4.5 Programmes for Biomass based Energy in rural areas 20

2.6.4.6 Policies by state governments 21

2.6.4.7 Incentives for investing in Renewable Energy Technologies 21

2.7 Analysis of Foreign Investment Policy 23

2.8 Gaps/inadequacies in current policy framework 23

2.8.1 Uncertain economic viability of biomass to energy projects 24

2.8.2 Irrational incentive schemes for biomass to energy projects 24

2.8.3 Preference to large size biomass to energy projects 24

2.8.4Application of same environmental and land use related regulations

25

2.8.5 Lack of emphasis on technology research and development 25

2.8.6 Location of biomass to energy plants 25

2.9Policy drivers to promote enhanced conversion of waste agricultural biomass into energy

26

2.10Challenges for enhancing conversion of waste agricultural biomass into energy

26

3Proposed National Strategy for enhancing conversion of waste agricultural biomass into energy

29

3.1 Vision 29

3.2 Objectives 29

3.3 Targets 29

3.3.1 Scope and Timing 30



3.4 Relation to other strategies 30

3.5 Specific elements of the strategy 30

3.5.1Comprehensive data base on availability of waste agricultural biomass

30

3.5.2Enable sustainable and affordable supply of waste agricultural biomass to points of application

30

3.5.3 Technology modernisation 30

3.5.4 Price regulation of waste agricultural biomass 31

3.5.5 Fiscal Incentives 32

3.5.6 Financial subsidies 32

3.5.7 Awareness raising 33

3.5.8 Capacity building 33

3.6 Implementation and delivery mechanism 34

4 Next steps 37

4.1 Organise similar workshops for mass awareness raising. 37

4.1.1 Phase I workshops 37

4.1.2 Phase II workshops 37

4.1.3 Phase III workshops 37

List of Pictures

Picture-1 The workshop backdrop Welcoming address 6

Picture-2 Conduct of the workshop 7

Picture-3 Conduct of the workshop 7



List of Tables

Table-2.2 Summary of biomass power cogeneration tariff across states 10

Table-2.2.1-a Financial assistance and categories of biomass power projects 11

Table-2.2.1-b CFA provisions for Bagasse Cogeneration Project in through BOOT/BOLT model

12

Table-2.2.1-c CFA for Bagasse Cogeneration Project in existing cooperative sector sugar mills employing boiler modifications

12

Table-2.2.2 Fiscal Incentives for Biomass Power Generation 13

List of Annexures

Annexure-1 Schedule of Training Workshop on “Awareness raising about Policies for converting waste agricultural biomass into energy””

38

Annexure-2 List of participants 39

Annexure-3 Participants feed back 40



1 Introduction and BackgroundThe United Nations Environment Programme (UNEP), DTI-IETC, has assigned a project to

Birla Institue of Management Technology, (BIMTECH) under the project code MOD# 12-

29-11013, titled “Waste Agricultural Biomass for Energy: Resource conservation and GHG

Emission Reduction”

As a part of the SSFA terms, it was felt necessary that an awareness workshop should be

conducted for a group comprising people from different walks of life. Accordingly, a one day

training workshop was planned to be conducted on “Awareness raising about technologies for

conversion of agricultural biomass to energy”. A training workshop was designed by the

BIMTECH-UNEP team and was conducted on the 19th September 2013 at BIMTECH –

Delhi NCR.

The workshop was organized for the professionals working in the energy generation and

utilization activity. A total of 25 members attended the workshop. The complete deliberations

of workshop were mainly conducted by Professor K. R. Chari, supported by the team

members. The schedule of the workshop is provided in Annexure-1.

Picture-1 through 4 show various stages of the workshop.

Picture-1: The workshop backdrop with Prof. K. R. Chari welcoming the gathering



Picture-2: Conduct of the workshop

Picture-3: Conduct of the workshop

Annexure-2 provides the list of participants.



2 Workshop coverage

Power generation through renewable energy sources (Biomass and Co-generation)

2.1 Government Policy1

2.1.1 The national scenario -- Biomass related Policies and Programmes

A rural energy crisis started getting faced during the mid-1970s decade. Increased oil price, increased household energy demand due to high population growth, and depletion of local wood resources due to unsustainable use were found to be the three most important reasons and causes for this situation.

The national policy makers needed to find economically viable and sustainable energy resource to meet rural energy needs. Although, import of kerosene and LPG for cooking and diesel for irrigation pumping remained a possible short-term supply-side solution, this was not viable in the long run due macro as well as micro economic constraints. While at macro-economic level the high proportion of POL (Fuel Oil and Lubricants) in the total imports of India was a matter of concern to the policy makers, a t micro economy level, a majority of the poorer section of rural households was facing the problem of very low disposable income to spend on commercial fuels. With a view to meet these challenges of rural energy crisis, the programmes for renewable energy technologies (RETs) were developed in the 1970s. Biomass, being a local, widely accessible and renewable resource, was potentially the most suitable to alleviate both macro and micro concerns.

Despite rapid growth of commercial energy, biomass remains principle energy source in rural and traditional sectors and is estimated to contribute a third of India's energy2. The national biomass policy of India has few decades of history, emanating with the rural energy policies. The GOI strategy was multi dimensional and was focused on improving efficiency of conventional technologies, enhancing supply chain of biomass, stressing on introduction of modern biomass technologies to provide reliable energy at competitive prices and establishing institutional support.

2.1.2 Current status of Policies to promote biomass power in India

During the past four decades, Government of India, through it’s earstwhile Department of Nonconventional Energy Sources (DNES), currently the Ministry of Renewable Energy (MNRE), has been supporting many projects for development of various renewable energy sources, such as use of waste biomass through the Biogas plants, biomass gasifiers and small and medium sized Biomass power plants. In addition, various other developments like (i) Technology for alcohol (ethanol) production from crop residues, (ii) Production of bio-diesel from non-edible oils and plants like Pongamia also have been developed.

1 http://web.grinnell.edu/courses/ant/S00/ANT154-01/magar/policy.html2 Biomass energy: Key Issues and Priority Needs : P.R. Shukla: IIM-A: Paper presented at the workshop on Biomass Energy: Key Issues and Priority Needs Organized by International Energy Agency (IEA): Paris, February 3-5,



However, considerable amounts of waste agricultural waste is still not utilised and is being wasted, primarily through burning in the fields or left to rot. A substantial amount of crop residues is burnt by the farmers after harvesting of main crop like wheat and paddy.The Ministry of New and Renewable Energy (MNRE) has initiated a detailed study and creation of national database on the available and surplus biomass. The project has been assigned to the esteemed Indian Institute of Science, Bangalore (IISc). However, due to the difficulties in collecting the huge amounts of data, the database is not being kept up to date, with a result that detailed data is available only till the period 2004.

Biomass power plants in India are based mostly on agricultural waste. Gasifier-based power plants are providing a great solution for off-grid decentralized power. While for providing grid-based power 8-15 MW thermal biomass power plants are suitable for Indian conditions, they stand nowhere when compared to power plants being set up in Europe which are at least 20 times larger.3

Government policy is the biggest factor behind lack of investment in biopower sector in states with high biomass potential. Defragmented nature of agricultural lands do not allow high mechanization which results in reduction of efficiency and increase in procurement cost.

2.1.3 Biomass power and cogeneration programme

Traditionally and historically, biomass has always been considered as an important source of energy in India. The favourable factors are the renewability, easy and local availabilit, carbon-neutrality and it’s potential to provide significant employment in the rural areas. It is estimated that about 32% of the total primary energy use in India is derived from biomass and more than 70% of the country’s population depends upon it for its energy needs. Ministry of New and Renewable Energy has realised the potential and role of biomass energy in the Indian context and hence has initiated a number of programmes for promotion of efficient technologies for its use in various sectors of the economy to ensure derivation of maximum benefits

Biomass power generation in India is an industry that attracts investments of over Rs.600 crores every year, generating more than 5000 million units of electricity and yearly employment of more than 10 million man-days in the rural areas. For efficient utilization of biomass, bagasse based cogeneration in sugar mills and biomass power generation have been taken up under biomass power and cogeneration programme.4

The “Biomass power & cogeneration programme” is implemented with the main objective of promoting technologies for optimum use of country’s biomass resources for grid power generation. Biomass materials used for power generation include bagasse, rice husk, straw,

3 http://www.bioenergyconsult.com/biomass-india/4 http://www.mnre.gov.in/schemes/grid-connected/biomass-powercogen/



cotton stalk, coconut shells, soya husk, de-oiled cakes, coffee waste, jute wastes, groundnut shells, saw dust etc.

2.2 Incentives

The Ministry of New and Renewable Energy (MNRE) has been implementing biomass power/co-generation programme since mid nineties. A total of 288 biomass power and cogeneration projects aggregating to 2665 MW capacity have been installed in the country for feeding power to the grid consisting of 130 biomass power projects aggregating to 999.0 MW and 158 bagasse cogeneration projects in sugar mills with surplus capacity aggregating to 1666.0 MW. States which have taken leadership position in implementation of bagasse cogeneration projects are Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra and Uttar Pradesh. The leading States for biomass power projects are Andhra Pradesh, Chattisgarh, Maharashtra, Madhya Pradesh, Gujarat and Tamil Nadu.

Besides the Central Financial Assistance, fiscal incentives such as 80% accelerated depreciation, concessional import duty, excise duty, tax holiday for 10 years etc., are available for Biomass power projects. The benefit of concessional custom duty and excise duty exemption are available on equipments required for initial setting up of biomass projects based on certification by Ministry. In addition, State Electricity Regulatory Commissions have determined preferential tariffs and Renewable Purchase Standards (RPS). Indian Renewable Energy Development Agency (IREDA) provides loan for setting up biomass power and bagasse cogeneration projects.

Table-2.2 provides a summary of such provisions in different states.

Table-2.2: Summary of biomass power cogeneration tariff across states (As on 31.03.2011)

State Tariff fixed by Commissions RP0 %Andhra Pradesh Biomass

power Rs.4.28/kWh, (2010-11) Min. 3.75%

Cogeneration Rs.3.48/kWhChattishgarh Biomass

[email protected]/Unit (2010-11) 5%

Gujarat Biomass power

Rs.4.40/unit (with accelerated depre.) 10%Cogeneration Rs.4.55/unit (with accelerated depre.) for 1st 10 yrs

Haryana Biomass power

Rs.4.00/unit: 3%escalation (base year 2007-08)1%

Cogeneration Rs.3.74/unit: 3%escalation (base year 2007-08)Karnataka Biomass

powerRs.3.66 per unit (PPA signing date) Rs.4.13 (10th year) Min.10%Cogeneration Rs.3.59/unit, (PPA signing date) Rs.4.14/unit (10th Year)

Kerala Rs.2.80/unit Biomass power escalated at 5% for five years (2000-01) 3%

Maharashtra Biomass power

Rs. 4.98 (2010-11) 6%



Cogeneration @Rs.4.79/unit (Comm yr.) Madhya Pradesh Rs.3.33 to 5.14 /unit paise for 20 yrs. With escl

of 3- 8paise 0.8%

Punjab Biomass power

Rs.5.05 /unit, (2010-11) escalated at 5% -cogen, & 5%-BM

Min. 3%

Cogeneration Rs.4.57/unit (2010-11) Rajasthan Biomass

powerRs.4.72 / unit-water cooled (2010-11)& Rs.5.17-air cooled (2010-11) 1.75%

Tamil Nadu Biomass power

Rs.4.50-4.74/unit(2010-11)Min. 13%

Cogeneration Rs.4.37-4.49/unit (2010-11)- (Escalation 2%)Uttaranchal BM Rs.3.06/unit. (2010-11) – 9%Cogeneration Rs.3.12/unit (2010-11)- (new projects)U.P. Rs.4.29 / unit, for existing and 4.38 for new with

escalated at 4 paise/year, base year (2006) 4%

West Bengal Biomass Power

Rs. 4.36/unit fixed for 10 years 4%

Bihar Biomass Power

Rs. 4.17/unit (2010-11)–

1.5%Cogeneration Rs.4.25/unit (2010-11) – existing plantsNew Cogeneration

Rs.4.46/unit (after 2010-11)

Orissa Rs.4.09/unit O.A.. - Open Access terms & conditions as for CERC and SERC’s order(The concerned state Regulatory Commissions provide the details and clarifications)

2.2.1 Central Financial Assistance (CFA) and fiscal incentives The central government has designed various schemes for financial assistance to this sector. Most of these provisions and incentives are on specific application and technology, thereby suiting to the needs of individual type of projects..

Such CFAs for Biomass Power Project and Bagasse Cogeneration Projects by Private/Joint/Coop./Public Sector Sugar Mills are depicted din Table-2.2.1-a.

Table-2.2.1-a: Financial assistance and categories of biomass power projects

Project Type Capital SubsidySpecial Category States(NE Region, Sikkim, J&K, HP & Uttaranchal)

Other States

Biomass Power projects Rs.25 lakh X(C MW)^0.646 Rs.20 lakh X (C MW)^0.646

Bagasse Co-generation by Private sugar mills

Rs.18 lakh X(C MW)^0.646 Rs.15 lakh X (C MW)^0.646

Bagasse Co-generation projects by cooperative/ public sector sugar mills 40 bar & above60 bar & above80 bar & above

Rs.40 lakh *Rs.50 lakh *Rs.60 lakh *Per MW of surplus power@

(maximum support Rs. 8.0 crore per project)

Rs.40 lakh *Rs.50 lakh *Rs.60 lakh *Per MW of surplus power@

(maximum support Rs. 8.0 crore per project)



*For new sugar mills, which are yet to start production and existing sugar mills employing backpressure route/seasonal/incidental cogeneration, which exports surplus power to the grid, subsidies shall be one-half of the level mentioned above. @ Power generated in a sugar mill (-) power used for captive purpose i.e. net power fed to the grid during season by a sugar mill. Note: CFA and Fiscal Incentives are subject to change.Similarly, Table-2.2.1-b and Table-2.2.1-c provide details of CFA provisions for Bagasse Cogeneration Project in cooperative/ public sector sugar mills implemented by IPPs/State Government Undertakings or State Government Joint Venture Company / Special Purpose Vehicle (Urja Ankur Trust) through BOOT/BOLT model and for sector sugar mills employing boiler modifications, respectively.

Table-2.2.1-b: CFA provisions for Bagasse Cogeneration Project in cooperative/ public sector sugar mills implemented by IPPs/State Government Undertakings or State Government Joint

Venture Company / Special Purpose Vehicle (Urja Ankur Trust) through BOOT/BOLT model

PROJECT TYPE MINIMUM CONFIGURATION CAPITAL SUBSIDY

Single coop. mill through BOOT/BOLT Model

60 bar & above 80 bar & above Rs.40 L/MW of surplus power *Rs.50 L/MW of surplus power*(maximum support Rs.8.0 crore/ sugar mill)

* Power generated in a sugar mill (-) power used for captive purpose i.e. Net power fed to the grid during season by a sugar mill.

Table-2.2.1-c : CFA for Bagasse Cogeneration Project in existing cooperative sector sugar mills employing boiler modifications

PROJECT TYPE MINIMUM CONFIGURATION CAPITAL SUBSIDY

Existing Cooperative Sugar Mill

40 bar & above 60 bar & above80 bar & above

Rs.20 L/MW of surplus power * Rs.25 L/MW of surplus power* Rs.30 L/MW of surplus power*

* Power generated in a sugar mill (-) power used for captive purpose i.e. Net power fed to the grid during season by a sugar mill. CFA will be provided to the sugar mills who have not received CFA earlier from MNRE under any of its scheme.

Note: CFA and Fiscal Incentives are subject to change.



2.2.2 Fiscal Incentives for Biomass Power Generation Various other fiscal incentives have been provided, as shown in Table 2.2.2.

Table-2.2.2: Fiscal Incentives for Biomass Power Generation

Item Description

Accelerated Depreciation 80% depreciation in the first year can be claimed for the following equipment required for co-generation systems:

Back pressure, pass-out, controlled extraction, extraction–cum-condensing turbine for co-generation with pressure boilers

Vapour absorption refrigeration systems

Organic rankine cycle power systems

Low inlet pressures small steam turbines

Income Tax Holiday Ten years tax holidays.

Customs / Excise Duty Concessional customs and excise duty exemption for machinery and components for initial setting up of Biomass power projects.

General Sales Tax Exemption is available in certain States

Despite some successes, the overall impact of biomass programmes on the Indian energy scene has been only marginal. The trend of the rural masses has shifted to use of more convenient modes of cooking fuel like the LPG etc. The free markets are not involved in this form of energy supply as well as conversion. Most of the successful technology implementations have been seen in the government supported projects only, or in those cases where there was considerable financial support from various national and international sources.

2.3 Institutional framework – Ministry of New and Renewable Energy

The Government of India, seeing the limited results of the biomass energy related programmes and realising imminent need of new and renewable energy resources that would ensure sustainable development and energy security identified use of various renewable energy resources and efficient use of energy as the two thrust areas of the sustainable development. In order to make concentrated efforts in this sector, the Government of India established a Commission for Additional Sources of Energy (CASE) in the Department of Science and Technology, in 1981. The mandate of CASE was to promote research and



development activities in the field of renewable energy. CASE was formally incorporated in 1982, in the newly created Department of Non -conventional Energy Sources (DNES). In 1992 DNES became the Ministry for Non-conventional Energy Sources, commonly known as MNES, and now the Ministry of New and Renewable Energy (MNRE). It has been accorded more importance for working on higher levels of renewable energy technology programmes. The changed emphasis was aimed at promoting modernization and commercialization of biomass production, combustion, densification, and electricity generation.

The Ministry continues to support the implementation of a large broad –spectrum programme covering the entire range of new and renewable energies. The Ministry has Regional Offices, three specialised research Institutions and a non -banking financial company –Indian Renewable Energy Development Agency (IREDA) -under its administrative control to promote its policy and programme initiatives.

2.4 Analysis of climate change related policies

2.4.1 National Action Plan on Climate Change (NAPCC)On June 30, 2008, Prime Minister released India’s first National Action Plan on Climate Change (NAPCC) outlining existing and future policies and programs addressing climate mitigation and adaptation. The plan identifies eight core “national missions” running through 2017 and directs ministries to submit detailed implementation plans to the Prime Minister’s Council on Climate Change by December 2008.

Emphasizing the overriding priority of maintaining high economic growth rates to raise living standards, the plan identified measures that would promote India’s development objectives while also yielding co-benefits for addressing climate change effectively. These national measures were planned to be more successful with assistance from developed countries, and India’s pledge that per capita greenhouse gas emissions, will at no point, exceed that of developed countries even as we pursue our development objectives.

The eight national missions were;

1. National Solar Mission

2. National Mission for Enhanced Energy Efficiency

3. National Mission on Sustainable Habitat

4. National Water Mission

5. National Mission for Sustaining the Himalayan Ecosystem

6. National Mission for a “Green India”

7. National Mission for Sustainable Agriculture and

8. National Mission on Strategic Knowledge for Climate Change



2.4.2 Market based mechanismA market based mechanism to enhance cost effectiveness of improvements in energy efficiency in energy-intensive large industries and facilities, through certification of energy savings that could be traded. (Perform Achieve and Trade)

2.4.3 Accelerated shift to energy efficient appliancesAccelerating the shift to energy efficient appliances in designated sectors through innovative measures to make the products more affordable. (Market Transformation for Energy Efficiency)

2.4.4 Mechanism to finance Demand Side Management (DSM)Creation of mechanisms that would help finance demand side management programmes in all sectors by capturing future energy savings. (Energy Efficiency Financing Platform), and

2.4.5 Fiscal instruments to promote energy efficiencyDeveloping fiscal instruments to promote energy efficiency (Framework for Energy Efficient Economic Development)

In addition, The NAPCC also describes other ongoing initiatives, including:

Power generation: The government is mandating the retirement of inefficient coal-

fired power plants and supporting the research and development of IGCC and

supercritical technologies.

Renewable energy: Under the Electricity Act 2003 and the National Tariff Policy

2006, the central and the state electricity regulatory commissions must purchase a

certain percentage of grid-based power from renewable sources.

Energy efficiency: Under the Energy Conservation Act 2001, large energy-consuming

industries are required to undertake energy audits and an energy labeling program for

appliances has been introduced.

Implementation: Ministries with lead responsibility for each of the missions are

directed to develop objectives, implementation strategies, timelines, and monitoring

and evaluation criteria, to be submitted to the Prime Minister’s Council on Climate

Change. The Council will also be responsible for periodically reviewing and reporting

on each mission’s progress. To be able to quantify progress, appropriate indicators

and methodologies will be developed to assess both avoided emissions and adaptation

benefits.



2.5 Goals of National Action Plan on Climate Change

Some of the important goals of NAPCC are:

- Market-based approaches to unlock energy efficiency opportunities, estimated to be

about Rs. 740 billion (US$ 12 billion) By 2014-15:

- Annual fuel savings in excess of 23 million toe

- Cumulative avoided electricity capacity addition of 19,000 MW

- CO2emission mitigation of 98 million tons per year

- Specific Energy Consumption (SEC) reduction targets for the 685 energy-intensive

units which are designated consumers under the Energy Conservation Act

2.6 Analysis of renewable energy related policy development

The importance of Government Policy in the rapid adoption and growth of renewable energy technologies cannot be overemphasized. A comprehensive analysis of the effectiveness of the policies is rather difficult. While assessing the effectiveness, enough care is needed to be exercised to take care of and accommodate the multitude factors like technological, economic, social and institutional barriers. The policies are required to provide for steps to remove such barriers. The main issues for policy making are to develop the market for biomass energy services by ensuring reliable and enhanced biomass supply, removing the tariff distortions favouring fossil fuels and producing energy services reliably with modern biomass technologies at competitive cost.

2.6.1 Early Policy PerspectiveThe DNES’s emphasis was on the decentralized and direct use renewable technologies. The renewable energy sources were viewed as the primary source of rural and remote area energy needs. Direct subsidy to the user remained a major element of the renewable energy programmes. During the early 1990s, it was realized that faster diffusion of renewable energy sources required greater reliance on commercialization through fiscal rather than financial incentives involving the private sector - the role of the Ministry of Non-Conventional Energy Resources (then a Department of the Ministry of Power called the DNES) had to change from that of an implementing organization to one facilitating the rapid commercial application of renewable energy. Since then the thrust of the programmes has been on market development in order to facilitate and catalyze commercialization resulting in several-fold increase in the diffusion of renewable energy technologies. India is perhaps, the only country in the world with an independent ministry for the promotion of RETs.

The subsidies, fiscal support, information, and consultancy services provided by the MNES have and will likely continue to be the single most important factor in the growth of these technologies. This is because the MNES has to essentially make these technologies competitive with conventional technologies by helping overcome the two primary problems of slightly higher costs and high initial costs. The future of these technologies in India will be



determined on the basis of the success of the MNRE being able to address these two issues, viz: making the technologies competitive with conventional technologies by helping overcome the primary problems of slightly higher costs and high initial costs. The World Bank, IMF, and Asian Development Bank (ADB) have provided a large portion of the financing for these projects. Since it is most likely that the MNES cannot provide near the same level of assistance to these projects the continuing help (and hopefully increased help) of these multilateral lending organizations is also vital to the development of these technologies.

2.6.2 Multi-pronged approach The biomass policies were designed to address the five main areas as:

i) Improving efficiency of the traditional biomass use (e.g. improved cook-stove programme),

ii) Improving the supply of biomass (e.g. social forestry, wasteland development),

iii) Technologies for improving the quality of biomass use (e.g. biogas, improved cook-stoves),

iv) Introduction of biomass based technologies (wood gasifiers for irrigation, biomass electricity generation) to deliver services provided by conventional energy sources, and

v) Establishing institutional support for programme formulation and implementation.

Specific programmes were developed to address the above-mentioned five areas.

2.6.3 Shift in Policy Perspective It was increasingly realized that the failures of the biomass programmes resulted from the deficiencies in policy perspective. Firstly, the biomass was viewed solely as a traditional fuel for meeting the rural energy needs. Secondly, the policies primarily focused on the supply-side push. Since early 1990s decade, keeping pace with the technological developments in the biomass use area, there has been a visible policy shift. Under the market oriented economic reforms policies pursued by the Government of India, the market forces are now allowed a greater role. The shift in the policy approach is characterized by:

i) Higher emphasis on market instruments compared to regulatory controls,

ii) R eorientation from technology push to market pull, and

iii) Enhanced role of private sector.

The new policies signify a shift in policy perspective towards biomass. The old perspective viewed biomass as a non-commercial rural resource (poor man's fuel) which has to be pushed by the government programmes. The new perspective considers biomass as a clean



competitive energy resource which will be pulled commercially by energy users if the government policies help to internalize its multiple social benefits and the social costs of conventional fuels. The new policy perspective has resulted in enhanced support to the sugar cane bagasse based co-generation, improved biomass combustion technologies, biomass densification, charcoal making and decentralized electricity generation.

2.6.4 Major programmes of MNRE

A brief description of some of the major programmes of MNES addressing the five main areas is given below.

2.6.4.1 National Biomass Cookstoves Programme5

A National Biomass Cook-stoves Initiative (NBCI) was launched by MNRE on 2nd December 2009 at New Delhi with the primary aim to enhance the use of biomass cook-stoves. The initiative stressed the setting up of state-of-the-art testing, certification and monitoring facilities and strengthening R&D programmes. The aim was to design and develop the most efficient, cost effective, durable and easy to use device.

The NBCI of MNRE is structured differently from the earlier National Programme on Improved Chulhas (NPIC), although building on the several successes of that programme as also drawing lessons from the experience gained from its implementation. Under this initiative, a series of pilot scale projects are envisaged using several existing commercially – available and better cook-stoves and different grades of biomass fuel.

2.6.4.2 Programmes for Biomass based Electric Power The organized thrust on biomass based electric power in India has been in place ever since the 1990s. The thrust on bagasse based cogeneration resulted in many sugar producing plants adopt the cogeneration route, thereby helping the country in bridging a part of the gap in energy supply and demand.

Most of these projects were supported through the surplus Power Purchase Agreements (PPAs), which was the much needed support for getting economic tariffs for the surplus cogenerated electricity. The programme was modified in August 1995 and subsequently in September 1996 to attract sugar mills in the co-operative and public sector. The important features of the programme include:

Demonstration scheme: provides a subsidy up to Rs. 60 million per project for 12

projects. The co-operative and public sector units are offered additional benefits of

Rs. 20 million per Mega Watt (MW) of surplus power comprising of subsidies

and soft loans.

Interest subsidy scheme: provides grants up to Rs. 3.5 million per MW of surplus

power to financial institutions for them to reduce the interest rates on loans.5 http://www.mnre.gov.in/schemes/decentralized-systems/national-biomass-cookstoves-initiative/



Support to R&D Projects: to contribute to enhancement of power potential.

International support: US$ 12.5 million USAID/GEF project for promotion of

alternative biomass use in co-generation using off-season, and an ADB line of credit

of $ 100 million.

Besides the Central Financial Assistance, fiscal incentives such as 80% accelerated depreciation, concessional import duty, excise duty, tax holiday for 10 years etc., are available for Biomass power projects. The benefit of concessional custom duty and excise duty exemption are available on equipments required for initial setting up of biomass projects based on certification by Ministry. In addition, State Electricity Regulatory Commissions have determined preferential tariffs and Renewable Purchase Standards (RPS). Indian Renewable Energy Development Agency (IREDA) provides loan for setting up biomass power and bagasse cogeneration projects.

2.6.4.3 National biomass gasifier programmeThe programme aiming at providing mechanical, electrical, thermal heating applications and village electrification has been in operation since mid 80s. Financial incentives for installation of gasifier systems are provided under the programme. Biomass gasifiers in the capacity range of 5 kW to 1 MW equivalent electric capacity have been developed indigenously and are being manufactured by around 15 manufacturers in the country. The systems being proposed for village electrification applications are based on 100% producer gas which is a recent technological development.

The estimated cost of gasifier systems is about Rs.10, 000/-to Rs. 15,000/-per kWh for thermal applications and Rs. 30,000/-to Rs. 45,000/-per kWe for mechanical and electrical applications. The estimated cost of village electrification projects with biomass gasification systems is about Rs. 50,000/-to Rs. 80,000/-per kWe in capacity range of 5 KW to 50 KW including the cost of land, civil works, distribution lines and development. (1US$ = Rs. 60 approx.)

The biomass gasification systems are quite versatile for use in a diverse range of applications in rural areas. Apart from use as a cooking fuel and for electricity generation, the gas can be used for heating applications in village industries.

Biomass gasifiers in India are being made in capacities ranging from a few kWs to MW scale. For heating applications, the current upper limit on unit size is equivalent to 300-500 Kg/hour of oil consumption (which is equivalent of 1200 to 2000 kg. of biomass per hour). There are about 12 manufacturers who offer gasifiers up to 1 MW capacity.

Technology for these systems has been developed by the research institutions with the support of government. Some biomass gasifiers have also been exported to the USA, South Asia, Europe and Latin America.



2.6.4.4 Programmes for building research institutionsThe policy proposals aim at expanded and ambitious biomass programme. Addition of five more biomass research centres to the existing nine was proposed during the ninth five year plan itself, thereby covering all fourteen agroclimatic zones. In addition to the four existing Gasifier Action Research Centers, it was also proposed to establish an International Centre for Biomass Production and Conversion Technologies.

There is lack of authentic and readily usable data on availability of fodder, crop residues,

agro industrial by- products and feed grains (coarse cereal grains). There is a need to build an

actual database, on surplus agricultural, forestry and other similar bio wastes, to be used for

more effective and realistic planning of generation of energy to support the existing gap in

demand and supply.

The Ministry of New and Renewable Energy (MNRE) has initiated a detailed study and

creation of national database on the available and surplus biomass. The project has been

assigned to the esteemed Indian Institute of Science, Bangalore (IISc). However, due to the

difficulties in collecting the huge amounts of data, the database is not being kept up to date,

with a result that detailed data is available only till the period 2004.

2.6.4.5 Programmes for Biomass based Energy in rural areas The major biomass related rural energy programmes include:

i) Gasifier demonstration programme for higher capacity (100 KW) systems for captive use. As on date, a total of 67 power plants have been commissioned with capacities varying between 1 kW to 1,500 kW rating and the total installed capacity is of the order of about 8461.5 kW or 8.5 mW.6.

ii) Fiscal and financial incentives for biomass briquetting with a view to enhance supply of briquettes to replace coal and oil, and

iii) A village electrification pilot project by MNES through biomass gasifiers and biogas in unelectrified remote villages and coverage of 200 villages under biomass electrification during the ninth plan period. Programmes for biomass based power generation are relatively more ambitious. It is targeted to set up 500 MW biomass based power capacity during the plan period. Significant allocations are proposed for research and development activities (Rs. 770 million) and technical assistance and publicity support (Rs. 90 million). It is also proposed to estimate the biomass potential in different locations in India to guide the technology promotion effort.

6 http://www.eai.in/ref/ae/bio/csbg/list_of_installation.htmlAwareness raising workshop: Policies for converting waste agricultural biomass into energy

19th September-2013


2.6.4.6 Policies by state governmentsA number of states have announced policy packages including banking, third party sale and buy-back, which have been outlined in the respective technology or programme areas in this report. Some states provide concessions or exemption in state sales tax. These rates vary widely from state to state and between different technologies. Policies introduced by State Government for purchase of electricity from Biomass Power projects have been laid down in the policy document of the GOI.

Fourteen states have so far announced policies for the purchase and support of electrical energy generated from various RE sources.

2.6.4.7 Incentives for investing in Renewable Energy TechnologiesMNRE provides financial incentives, such as interest and capital subsidy

Soft loans are provided through: IREDA, a public sector company of the Ministry Nationalised banks and other financial institutions for identified technologies/systems The government also provides various types of fiscal incentives for the RE sector,

which include:o Direct taxes-100 per cent depreciation in the first year of the installation of the

projecto Exemption/reduction in excise duty

Exemption from Central Sales Tax, and customs duty concessions on the import of material, components and equipment used in RE projects

Under Income Tax Rules following concessions are available to the non-conventional energy sector:

Section 32: Accelerated 80% depreciation on specified RE-based devices/projects.

Section 80 IA: For industrial undertakings set up in any part of India for the generation or generation and distribution of power at any time during the period beginning on the 1st day of April, 1993 and ending on the 31s' day of March 2003, 100% deduction is allowable from profits and gains for first five years and thereafter 30 per cent of the profits and gains. This benefit can be availed for any 10 consecutive assessment years falling within a period of 15 assessment years beginning with the assessment year in which that industrial undertaking begins generation or generation and distribution of power. The budget for 2001-2002 has proposed a 10-year tax holiday for the core sectors of infrastructure, including solid waste management systems. This may be availed during the initial 20 years. Further, the budget has also proposed a 10-year tax holiday for the generation and distribution of power, to be availed during the initial 15 years.

Section 115 J: Exemption from Minimum Alternate Tax (MAT) to industrial undertakings on profits derived from the business of generation and distribution of electricity.



Section 80JJA: 100% deduction in respect of profit and gains from business of collecting and processing biodegradable wastes.

Section 10 (23G): Income by way of dividends, interest or long-term capital gains of infrastructure capital fund or infrastructure capital company from investments by way of shares or long-term finance in any enterprise wholly engaged in the business of developing, maintaining and operating any infrastructure facility and which has been approved by the Central Government on an application made by it in accordance with the rules made in this behalf and which satisfies the prescribed conditions. For the purpose of this clause among other things, infrastructure facility means a project for generation or generation and distribution of electricity or any other form of power where such project starts generating power on or after April 1, 1993.

In addition, MNRE extends financial incentives for renewable energy power generation. The incentives vary at different levels for special category of states and other states. Some of the fiscal incentives available to both manufacturers and users of renewable energy systems include:

100% accelerated depreciation for tax purposes in the first year of the installation of

projects/systems;

No excise duty on manufacture of most of the finished products;

Low import tariffs for capital equipment and most of the materials and components;

Soft loans to manufacturers and users of commercial and near commercial

technologies;

Five year tax holiday for power generation projects;

Remunerative price under alternate power purchase policy by State Government for

the power generated through renewable energy systems, fed to the grid by private

sector;

Facility for banking and wheeling of power;

Facility for Third party sale of renewable energy power;

Financial Incentives/Subsidies for devices with high initial cost;

Involvement of women not only as beneficiaries but also for their active contribution

in implementation of renewable energy programmes;

Encouragement to NGOs and small entrepreneurs;

Special thrust for renewable energy in North-Eastern region of the country. 10% of

Plan funds earmarked for North-East towards enhanced and special subsidies.



2.7 Analysis of Foreign Investment Policy

Analysis of renewable energy relevant features of Foreign Investment Policy revealed the following:

Foreign investors can enter into a joint venture with an Indian partner for financial and /or technical collaboration and for setting up of renewable energy based power generation projects.

Proposals for up to 100 per cent foreign equity participation in a joint venture qualify for automatic approval.

100 per cent foreign investment as equity is permissible with the approval of the Foreign Investment Promotion Board (FIPB).

Foreign investors can also set up a liaison office in India

The Government of India also encourages foreign investors to set up renewable energy based power generation projects on Build, Own and Operate (BOO) basis. Various Chambers of Commerce and industry associations in India provide guidance to the investors in finding appropriate partners

The Government of India encourages foreign investors to set up power projects on BOO basis. Investors are required to enter into a power purchase agreement with the concerned state government

No prior approval of the government is required to set up an industrial undertaking with Foreign Direct Investment (FDI) by Non-Resident Indians (NRIs) or Overseas Corporate Bodies (OCBS)

The Reserve Bank of India (RBI) has permitted Indian companies to accept investment under the 'automatic route' without obtaining prior approval from RBI. Investors are required to notify the regional office of RBI, of receipt of inward remittances within 30 days of such receipt and file required documentation within 30 days of issue of shares to foreign investors Foreign Investment Promotion Board (FIPB)

2.8 Gaps/inadequacies in current policy framework

The analysis of the current policy framework reveals several gaps and/or inadequacies. These are briefly discussed below.

2.8.1 Uncertain economic viability of biomass to energy projectsA study of the current scenario of biomass energy projects reveals that the comparison of

prices of biomass energy is made entirely on the basis of conventional energy sources. The

projects are primarily based on various subsidies provided by the central and state



governments and are highly vulnerable to volatile markets as regards the price of the basic

biomass is concerned. In most cases, while the prices are reasonably low at the time of

starting of any project, the vendors and producers of agricultural biomass invariably increase

the prices of the material in due course, thus rendering most of the projects economically

unviable. With regards to technologies, most of the technologies are highly energy intensive

in their own operation. The auxiliary power requirement for running the systems warrants the

availability of conventional power to operate the system. Although the specific energy

consumption of such systems is quite attractive, being low, but the installed load is rather

high.

There is a total lack of understanding of the importance of biomass energy in general public,

and most of the projects thus have ended up as demonstration projects only, primarily based

on some or the other subsidy or incentive provided by the local governments.

Most of the biomass energy projects are considered too small to take advantage of economies

of scale with larger processing units that lead to reduced unit costs. The developers do not

understand that increasing the scale/size of the biomass production and processing capacity

can actually help the growth of supporting R&D and subject specialists which will lead to the

creation of a situation where the industry can generate more investments.

2.8.2 Irrational incentive schemes for biomass to energy projectsThe current incentive schemes usually provide support in the form of subsidies and low interest loans for establishing a biomass to energy facility. This results in an initial rush of entrepreneurs wanting to take advantage of the subsidy without looking into the term economic viability of the project. The issue gets further exacerbated as the tariffs for biomass based power plants are calculated on the same lines as for large thermal power plants. Considering the small size of biomass plants, there are many cost elements which cannot be accurately worked out right from the beginning thus resulting in a large number of projects becoming unviable in a short time.

2.8.3 Preference to large size biomass to energy projectsThe government’s emphasis continues to be to support large size projects. Knowing that cost of transporting biomass is a major cost element and that the large size plants will have to source biomass from a large catchment area thus increasing the transportation cost. On the other hand, small decentralized biomass to energy projects can source their biomass from a small local area at relatively lower transportation costs. Not only the invest cost per project is much lower, such small projects also provide much large employment per unit of investment cost.



2.8.4 Application of same environmental and land use related regulationsAlmost all the biomass projects need to be built on agricultural lands. The project proponents need to go through the same process, as for any other industry, for conversion of agricultural land for non-agriculture use. This is a time consuming and tedious process as the government departments dealing with such process do not distinguish between the merits of biomass to energy vis-à-vis other usual projects. For such biomass power plant, either the use of agriculture land should be allowed or there should be automatic process of conversion as soon as approval is given by State Nodal Agency. This will accelerate the process of setting up of small biomass power plants in the country.

Similarly, biomass-to-energy projects require same level of environmental clearance from State pollution Control Board through it is a source of Green Energy. It is again time consuming and tedious process. Biomass to energy projects should be given directly approval, while the concerned pollution control boards can exercise all the monitoring of the environmental norms.

2.8.5 Lack of emphasis on technology research and developmentThe current policies do not adequately support the necessary research required to develop

innovative technologies which are economically viable and locally suitable. The research

should extent to cover farm machinery as well so that waste agricultural biomass can be

properly collected and stored.

2.8.6 Location of biomass to energy plantsIn many states, biomass-to-energy projects are covered under Scheduling and ABT mechanism of power generation. Theoretically, biomass power can be considered as Firm Power like thermal power but in practice, due to various issues involved in use of biomass, it is really infirm power and Scheduling and ABT mechanism should not be made applicable to such plants.

It is understood that the biomass energy to projects should not be either in or close to any of the existing industrial and urban locations, and should be located in identified rural areas and at least say 50 Kms. from any such location. Such provisions should continue to apply. Similarly, to ensure that the units are economically viable, two such units should be separated by a distance of at least 50 Kms. from each other. This is necessary to ensure that the resources available in a given region and so also the logistics of handling and transportation support the viability of one unit.



2.9 Policy drivers to promote enhanced conversion of waste agricultural biomass

into energy

Appropriate amendments to the existing policy are needed to enhance the use of waste

agricultural biomass as a source of energy. The main drivers for formulating a conducive

policy framework are as follows:

• GHG emission: Reduction in emission of green house gases by substitution of

equivalent amount of fossil fuels as waste agricultural biomass being a renewable

form of energy is basically carbon-neutral.

• Energy security: with recent concerns over the reliability of petroleum oil supplies,

the country needs to increase its energy security by enhancing domestic energy

supplies.

• Environmental co-benefits: enhancing conversion of waste agricultural biomass into

energy will also help to achieve other environmental objectives, such as improving air

quality (e.g. reducing smoke and particulates emission particularly short lived climate

pollutants), and biodiversity conservation.

• Rural development: the increase in biomass feedstock offers the potential to expand

market opportunities for agriculture, while providing a new opportunity to stimulate

rural industrial development and employment.

• Economic development: At current market prices, the cost of energy produced from

waste agricultural biomass is considerably lower than that from fossil fuels

particularly oil and gas. Lower energy cost will have a cascading impact on cost

competitiveness of goods and services.

• Market innovation: Enhanced conversion of waste agricultural biomass can also spur

the development of a bioeconomy as an engine of growth and market innovation. This

can, on one side, offer possibilities in developing local solutions to energy needs and

industrial development, and also raise the opportunity for exports based on new and

emerging bio based technologies.

2.10 Challenges for enhancing conversion of waste agricultural biomass into energy

Government policy is the biggest factor behind lack of investment in bio-power sector in states with high biomass potential. Defragmented nature of agricultural land does not allow high mechanization which results in reduction of efficiency and increase in procurement cost. Most of the farmers are small or marginal with little or no investment capacity, little or no education and somehow meet their own needs through agriculture.



Transportation cost constitutes a significant portion of the costs associated with the establishment and running of biomass power plants. There is need of processing in form of shredding the biomass onsite before transportation to increase its density when procurement is done from more than a particular distance. While transportation in any kind or form from more than 50 Km becomes unviable for a power plant of size 10-15MW. European power plants are importing their biomass in form of pellets and briquettes from other countries to meet the requirement of the huge bio-power plants.

To ensure that the benefits of such technology development are transferred to the farmers, and providing them a competitive cost of the agricultural waste, local entrepreneurs should be motivated to take up the responsibility of supplying biomass to processing facilities. Collection centres covering a group of villages can be set up to facilitate decentralization of biomass supply mechanism.

At this stage it may be prudent to briefly mention biofuels of which the world is witnessing7 a sudden growth, especially those suited for replacing oil like ethanol and biodiesel. The environmental, economic, and policy studies reveal the possible ill-effects of these types of biofuels. The studies have come to three key conclusions.

i) The current generation of biofuels, which is derived from food crops, is intensive in land, water, energy, and chemical inputs. It also gives rise to the debate of energy security vs. food security

ii) The literature is dominated by a discussion of net carbon offset and net energy gain, while indicators relating to impact on human health, soil quality, biodiversity, water depletion, etc., have received much less attention.

iii) There are a large number of policies - including energy, transportation, agricultural, trade, and environmental policies - which influence the development of biofuels. However, the policies and the level of subsidies do not reflect the marginal impact on human welfare or the environment. In summary, all biofuels are not created equal. They exhibit considerable spatial and temporal heterogeneity in production. Thus, the impact of biofuels will also be heterogeneous, creating winners and losers.

It is well known that agriculture has the potential to help meet the growing energy and raw

material needs of society in a sustainable manner and a necessary step towards a biobased

economy. However, like any other commercial option, agricultural biomass can only be

considered sustainable if it meets the conditions of economic viability; social acceptability;

environmentally neutrality or positivity, pro-rural development; and is compatible with policy

goals for agriculture, environment, energy, industry.

The issues related with the environmental advantages or otherwise of biomass usage for

energy however vary with the type process of production of the particular biomass.7 http://ideas.repec.org/p/wbk/wbrwps/4341.html



Fiscal incentives on different biomass products like the central/state excise duty exemptions,

price offsets or incentives for using bioenergy, like the briquetted biomass, coal from biomass

or electricity generated using biomass etc. should also include support to farmers.

The rationale for any such policy interventions in this field should be based on the scope,

potential and impact on:

Reducing greenhouse gas emissions;

Making energy available to every nook and corner of the country;

Environmental co-benefits like biodiversity, natural resource conservation; and

Supporting or strengthening of various socio-economic initiatives, such as rural

income generation and rural employment creation.

India should emphasise on developing the agricultural biomass technologies with primary

concentration on converting waste agricultural biomass into energy.



3 Proposed National Strategy for enhancing conversion of waste agricultural biomass into energyThe estimated potential in the country to generate power from wind, small hydro and biomass is around 80,000 MW. Electricity generation from these sources is becoming increasingly competitive with some preferential treatment being meted out to them. The Government of India’s aim is that 10 percent of the additional grid interactive power generation capacity should come from renewable sources during the 10th & 11th Plan periods. The challenge is to mainstream renewable based power generation in terms of reliability, quality and cost. This can be met to a large extent by addressing issues pertaining to the need to lower the cost of equipment, increase its reliability and set up projects in areas which give the maximum advantage in terms of capacity utilisation. Keeping in view the large potential of waste agricultural biomass as a source of energy, the following vision is proposed.

3.1 Vision

Utilize at least 50% of waste agricultural biomass as a source of energy by 2025 and at least 70% by 2030 by building requisite infrastructure and development of human resources.

3.2 Objectives

The strategy is based on the following objectives:

a. Establishment of efficient collection and transportation system for waste agricultural biomass, from the point of generation to the point of application

b. Development, promotion and wide-scale implementation of technologies to either convert waste agricultural biomass directly into energy (such rice-husk or bagasse fired boilers) or convert it into more easily usable fuel (such as briquetting or pelletising to make solid fuel, pyrolysis for making char, thermal gasification and anaerobic digestion to make gaseous fuels).

c. Price equalisation, fiscal incentives and financial subsidies to create greater business interest in waste agricultural biomass to energy projects.

d. Raising awareness among all energy and fuel users to switch over from fossil fuels to fuels derived from waste agricultural biomass.

e. Building capacity to support increased application of waste agricultural biomass as a source of energy and carry out research and development of technologies tailor-made to suit socio-economic conditions of India.

3.3 Targets

By 2035, energy generation from waste agricultural biomass reaches 35,000 MW (9 percent of the additional grid interactive power generation capacity). At this level waste agricultural biomass will replace 80 million tons of coal and avoid 40 million tons of GHG emissions annually.



3.3.1 Scope and TimingThe strategy covers the entire Republic of India and includes all types of waste agricultural biomass as illustrated earlier. The period of strategy implementation is 2014-2035.

3.4 Relation to other strategies

The strategy complements and supports the renewable energy policy. It is in support of major ongoing programmes of Ministry of New and Renewable energy such as; biomass cook-stoves programme, biomass based electric power generation, and biomass based energy in rural areas. It also supports the climate change related policy (National Action Plan on Climate Change – target of GHG emission mitigation of 98 million tons per year).

3.5 Specific elements of the strategy

The strategy is built around following key elements, which when implemented will enable the objectives to be met.

3.5.1 Comprehensive data base on availability of waste agricultural biomassThere is lack of authentic and readily usable data on availability of crop residues and waste

agricultural biomass, agro industrial by- products and coarse cereal grains. There is a need to

build an actual database, on surplus agricultural, forestry and other similar bio wastes, to be

used for more effective and realistic planning of generation of energy.

The Ministry of New and Renewable Energy (MNRE) has initiated a detailed study and

creation of national database on the available and surplus biomass. The project has been

assigned to the esteemed Indian Institute of Science, Bangalore. However, due to the

difficulties in collecting the huge amounts of data, the database is not being kept up to date,

with a result that detailed data is available only till the period 2004. The data base needs to be

continually updated and disseminated for wider use.

3.5.2 Enable sustainable and affordable supply of waste agricultural biomass to points of applicationBy its nature, waste agricultural biomass is generally available in rural whereas the opportunities for using it to replace fossil fuels is more in urban and industrial areas. Thus provisions have to be made so that waste agricultural biomass is available in urban and industrial areas. Since biomass is very bulky material (low bulk density), transporting it in loose form may be quite expensive and inefficient. Thus collection centres for collecting and densifying (e.g. baling, briquetting, pelletising) relatively dry biomass (such as rice straw, wheat straw, husks etc.) may be required.

3.5.3 Technology modernisationFuture penetration of biomass technologies will depend vitally on the cost and reliability of delivered energy services. Foremost option for this is the efficient conversion technologies



that deliver reliable, better quality and higher level of energy services for the same biomass input. This will need modernization of biomass conversion technology and taking advantage of applications such as co-generation in sugar mills and wood processing units. A softer but effective response to improve productivity is better management of biomass systems through options like:

i) Shift of ownership from government to private, co-operative and community organizations,

ii) Professional management of biomass plantation and end-products systems,

iii) Improved institutional support by co-ordination with multiple agencies,

Research for development of innovative technologies which are simpler to operate and less capital intensive needs to be promoted as investment capacity of entrepreneurs in this sector is much lower compared to that of usual industrial entrepreneurs. Research should also extend to agricultural engineering to develop farm machines which facilitate collection and pre-processing of waste agricultural biomass.

3.5.4 Price regulation of waste agricultural biomassIt has been experienced globally, and especially in India, that as long as a productive use of any waste is not identified, the generators of the waste pay for disposing it. However, as soon as a productive and value added use for such waste is found, the prices of such waste have escalated. This is further complicated by the fact that many users jump in to the fray, thus creating a higher demand for such waste, and the suppliers resort to escalating the prices of such waste. Over a period of time, the project on utilizing waste becomes economically unviable.

Particularly in case relatively large scale projects such as power projects the price of biomass increases very fast after the commissioning of the project. The government should, therefore, implement a biomass tariff policy with provisions for periodic revisions.

Transportation cost constitutes a significant portion of the costs associated with the establishment and running of biomass power plants. There is need of processing in form of shredding the biomass onsite before transportation to increase its density when procurement is done from more than a particular distance. Transportation of waste agricultural biomass of any kind and in any form becomes unviable over distances of 50 Km. European power plants are importing their biomass in form of pellets and briquettes from other countries to meet the requirement of the huge bio-power plants.

To ensure that the benefits of such technology development are transferred to the farmers, and providing them a competitive cost of the agricultural waste, local entrepreneurs should be motivated to take up the responsibility of supplying biomass to pre-processing facilities. Collection centres covering a group of villages can be set up to facilitate decentralization of biomass pre-processing and supply mechanism.



Another area which indirectly affects the pricing of waste agricultural biomass is the subsidies being given to fossil fuels. In India, the substitute commercial fuel for biomass in the domestic cooking sector is kerosene. In commercial energy market, the biomass competes with kerosene in domestic use and with diesel in irrigation pumping and rural electricity generation. Both diesel and kerosene enjoy substantial subsidy as these are considered to be the fuels for meeting the needs of poor strata of society. The implicit price of biomass on the market is equivalent to replacement price of kerosene and diesel. With subsidies under-pricing kerosene and diesel, the energy producers from biomass are unable to fetch economic prices in commercial energy markets.

3.5.5 Fiscal IncentivesSome fiscal incentives for the biomass power generation projects have already been provided. These include accelerated depreciation, income tax holiday, customs/excise duty exemption, exemption from central and state sales taxes etc. These should be continued. Additionally, exempting the biomass power plants from payment of electricity duty will help in accelerating the growth of this sector.

Equally important is the shift of the emphasis of the MNES from direct financial subsidy and demonstration projects to relying more on fiscal subsidies which usually encourage serious renewable energy developers and users. The provision of soft loans will leverage private-sector investment, and increase the funds available with IREDA. Though financial subsidies will have to be continued to be provided for some more time, these should be phased out fairly rapidly as the fiscal incentives being strengthened.

3.5.6 Financial subsidiesThe rationale for financial subsidies in this field should be based on the scope, potential and

impact on:

Reducing greenhouse gas emissions;

Making energy available to every nook and corner of the country;

Environmental co-benefits like biodiversity, natural resource conservation; and

Supporting or strengthening of various socio-economic initiatives, such as rural

income generation and rural employment creation.

Financial subsidies may also be required to promote technological innovation ad reducing technology costs. However, such incentives should be given only to the first few and original developers of a specific concept and process. It is because an analysis of the past rend in India has revealed that there is a mad rush by unscrupulous players who are just interested in the incentive. The ventures undertaken by such players have often failed.

The financial subsidy schemes (and also the fiscal incentives) should be so designed so that it

facilitates a balance between creating demand for energy from waste agricultural biomass and

feedstock supply. The schemes should specifically target areas where fossil fuels are Awareness raising workshop: Policies for converting waste agricultural biomass into energy

19th September-2013


favoured because of the corresponding subsidies. It should be ensured that the technologies

used conform to appropriate international standards, and that there are codes of best practice

in place to ensure that carbon savings are delivered and wider environmental benefits are

maximised. Clear lines of communication should be established between technology and

feedstock suppliers, processors and potential users, and also across relevant government

agencies responsible for the bio-economy, especially agriculture, environment, energy,

industry, science and technology.

The transportation costs are the primary reason for not using all of the available biomass

which is spread across the country, mainly on economic and cost grounds. Financial subsidies

to promote the application and use of compaction and other pre-processing technologies for

waste agricultural biomass can be provided under specific incentive schemes.

Such financial incentive measures will help close the gap between production costs and

market prices for biomass products relative to those based on fossil fuels. The policies should

aim at focused maximisation of environmental benefits, encourage innovation and reduce

technology costs in the utilisation of biomass for bioenergy.

3.5.7 Awareness raisingThe rate of development of agricultural biomass and related bio products, are also considered

to be influenced by institutional infrastructures and public education. Developing a sound

institutional infrastructure for the biomass industry can act as an engine of growth,

particularly if the institutional links are developed both horizontally and vertically in the

industry. Raising public awareness of the benefits of biomass, particularly for the local

communities where production and processing capacity might be developed, is also viewed

as an important prerequisite to engage local communities in trying to achieve the success of

these projects. Such a step would also help in decelerating the exodus of rural population to

larger towns and cities.

3.5.8 Capacity buildingThere is an acute shortage of trained manpower in the field of converting waste agricultural biomass to energy. Intensive capacity building is required in all areas ranging from assessment and characterization of waste agricultural biomass to design and implementation of technologies.

There are a number of institutions which develop and deliver such capacity building programmes. For example, The National Small Industries Corporation (NSIC), under the Ministry of Industry and Commerce, provides assistance through a number of schemes,



which include financial and marketing services, technical services and training, etc. Specifically NSIC arranges training in technical trades, both traditional and high-tech.

Capacity building materials that need to be developed should include; compilation of best practices and guidelines for replication, assessment tools such as Life-Cycle Analysis (LCA) and Sustainability Assessment of Technologies (SAT).

Capacity building schemes should also take in to account the potential for productive deployment of various provisions under other governmental institutions like the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA), many other rural employment schemes, provisions under the Ministry of Rural Development, the Industrial Training Institutes (ITIs), The National Small Industries Corporation (NSIC) etc.

Such an approach will help serve some major objectives of possible employment shortage of semi-skilled workers by training the rural youth and providing them with bio energy specific technical knowhow.

Indirect programmes like awareness-raising activities such as seminars and business meets, technical support like making available services of international experts and organizing interaction meetings among the stakeholders like state governments, utilities, financial institutions, manufacturers, consultants and project parties should also be promoted.

In summation, what is needed in India is a shift in perspective of biomass energy strategies in the following respects:

i) T reating biomass as a competitive modern energy resource rather than a traditional, inefficient unclean and non-commercial "poor man's fuel",

ii) Enlarging biomass energy applications beyond decentralized niche markets to competitive energy service markets, and,

iii) Reorienting the technology policy from supply push to demand (market) pull approach,

iv) Integrating biomass energy policies with developmental and environmental policies.

3.6 Implementation and delivery mechanism

The following implementation mechanism is proposed to achieve the objectives of the strategy through addressing the various elements

Implementing Mechanism

Strategy Objective Strategy Element Actions Expected time frames

Level of funds required

1. Establishment a. Comprehensive i. Identify potential institutions On-going Low



of efficient collection and transportation system for waste agricultural biomass, from the point of generation to the point of application

data base on availability of waste agricultural biomass

to support on-going work.

ii. Earmarked budgetary provisions

b. Enable sustainable and affordable supply of waste agricultural biomass to points of application

i. Identify appropriate densifying technologies

3-5 years Moderate

ii. Establish collection centres for collecting and densifying

iii. Identify users of densified biomass

b. Development, promotion and wide-scale implementation of technologies to either convert waste agricultural biomass directly into energy (such rice-husk or bagasse fired boilers) or convert it into more easily usable fuel

a. Technology modernisation

Identify appropriate technologies

5-10 years High

b. Enhancing funding sources

Support technical institutions to adapt the technologies to suit local socio-techno-economic conditions

c. Promoting efficient technologies such as briquetting, biomass cooking stoves, etc.

Establish research projects to develop innovative, cost-effective technologies

c. Price equalisation, fiscal incentives and financial subsidies to create greater business interest in waste agricultural biomass to energy projects.

a. Price regulation of waste agricultural biomass

Establish biomass tariff policy with provisions for periodic revision

3-5 years Low

b. Fiscal Incentives

Strengthen existing fiscal incentives and establish (e.g. exemption from electricity duty) as required.

3-5 years High

c. Financial subsidies

Establish financial subsidy 5-8 years High schemes to promote

technological innovation and reduction in technology



costs. establish schemes so as to

create a balance between demand and supply of biomass

establish subsidy schemes to bring about a parity in price of biomass and fossil fuel for the same thermal value

d. Raising awareness among all energy and fuel users to switch over from fossil fuels to fuels derived from waste agricultural biomass

a. Awareness raising

i. Develop awareness raising materials

3-5 years Low

ii. Launch awareness raising programmes through mass media, workshops and distribution of materials

e. Building capacity to support increased application of waste agricultural biomass as a source of energy

b. Institutional capacity buildgin

i. Identify appropriate institutions

ii. Assess capacity building needs

5-8 years Moderate

iii. Develop capacity building materials and deliver capacity building programmes



4 Next stepsBased upon the deliberations in the workshop, the group identified the following steps needed for future stress in this area.

4.1 Organise similar workshops for mass awareness raising.

Organise such similar workshops for mass awareness raising. This can be done in three phases, viz:

4.1.1 Phase I workshops

In this phase, the agriculture intensive activity zones like agricultural universities, large organized farms, forest departments, food processing industry units, remote backward areas etc. be identified. A proper characterization of the types of biomasses available in such areas be undertaken. Subsequently, appropriate technologies be implemented in such areas, which will be more need based and practical. This will also solve the problems of either shortage of or non availability of electrical energy sources in such areas.

4.1.2 Phase II workshops

In this phase, similar awareness workshops be organized for organized sectors like the various governmental agencies like the ministries of agriculture in states, agricultural activity based industry clusters like the oil extraction units, Large vegetable market yards, Large Saw mills, Rice mills, Dal mills etc. These again are the areas where the captive availability of rich biomass is assured. And

4.1.3 Phase III workshops

In this phase, nationwide awareness raising programmes would be conducted. For this phase, the conventional lecture oriented approach is not advised, but the use of mass media, Mobile telephony, TV channels, Road shows etc. should be used as the media of awareness.

4.2 Participants feed back

The participants feedback is provided in Annexure-3



Annexure-1

Schedule of Training Workshop on “Awareness raising about Policies for converting waste agricultural biomass into energy””

Awareness raising Workshopon

“Policies for converting waste agricultural biomass into energy”19th September 2013, Thursday

TIME ITEM

08:30 – 09:00 Registration

09:00 – 09:05 Welcome Remarks

09:05 – 09:20 Briefing on the WAB2E project of UNEP

09:20 – 11:00 Overview of technologies for converting waste agricultural biomass into energy and Physical Conversion Technologies, Green Coal and briquetting of waste agricultural biomass

11:00 to 12:00 The stakeholders and Basic supports needed to promote WAB2E

12:00 – 13:00 Lunch Break

13:00 – 14:45 Analysis of existing provisions in the policy

14:45 – 15:00 Tea Break

15:00 – 16:30 Suggested and proposed changes in Biomass policy to accelerate the promote WAB2E projects

16:30 – 17:00 Discussion, Question & Answers

17:00 – 17:30 Remarks from participants

17:30 End of Workshop



Annexure-2

List of participants

Sl No Name of the Employee Occupation1 Mr. Joydev Chatterjee Officer (Information Technology)2 Mr. Ramesh Kumar Verma Engineer (CHP)3 Mr. Sameer Kumar Chimman Lal Public Relation Officer4 Mr. Syed Izhar Husain Engineer 5 Mr. N Sivakumar Officer Accounts6 Mr. Sudhi Ranjan Chakraborty Officer (HR)7 Mr. Bikash Kumar Biswas Engineer 8 Mr. Nrusigha Charan Das Engineer C&I/ O&M9 Mr. Surendra Das Engineer (Elect.)10 Mrs. Jyotshnarani Mohanty Officer (Nursing)11 Mr. Damodara Rao Mavuru Officer (F&A)12 Mr. Padma Lochan Sala Engineer O&M13 Mr. Tanmoy Mukarjee Executive Secretary14 Mr. Dipak Biswas Engineer Mech.15 Mr. Ajit Kumar Sarkar Engineer16 Mrs. Manorama Nayak Officer (Nursing)17 Mr. Akashaya Kumar Prusty Asst. Manager O&M18 Mr. Hemant Kumar Parija Asst. Manager C&M19 Mr. Sudershan Behera Officer 20 Mr. Bashishtha Choudhury AM (C & M)21 Mr. Kodukula Prakasa Rao Executive22 Mr. Gopal Krishna Parashar Officer23 Mr. Nuram Verma Engineer (O&M)24 Mr. Jageshwar Prasad Patkar Engineer(O&M)25 Mr. Binu Tirkey Engineer (CHP) (O )Mech.26 Mr. Rajesh Kumar Chouhan Engineer



Annexure-3

Participants feed back

Positives AdditionsPractical and hands on experience of speakers made it very convincing and help understand the practical issues involved in implementing any WAB2E project

Sharing of personal and real life experience with policies, by at least one entrepreneur, would have further helped and enriched the workshop proceedings.

The active and positive interactions between speakers and participants helped in the learning

At least one field visit to demonstrate the working of a live system would have helped further. This was however not possible in a one day workshop. The duration of the workshop needs to be longer.

Provided an opportunity to be aware of the immense potential for WAB2E.

A detailed workshop for the entrepreneurs who have already implemented WAB2E technologies should be planned. Their experiences will help in identifying the weak areas in the policies and need for modifications in existing policies or need for devicing new schemes.

Clarity in understanding the impact of appropriate policy for promotion of WAB2E

A Group exercise involving role play by the participants would be welcomed. The group members will be playing the roles of government officials, Agricultural development officers, Renewable ministry representatives, entrepreneurs etc.

This was a good opportunity to meet members with diverse backgrounds and education levels. The mutual discussions amongst participants added to the knowledge base.The workshop was an effective forum for establishing contacts with professional working in the same area of interest.


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