Baxi emphasized the need for robust government policies, including carbon credits, to accelerate India's shift from fossil fuels to sustainable energy, while also highlighting the company's strategic use of technology to ensure consistent quality and supply of biomass. This move comes as part of BioFuelCircle's commitment to bolstering India's renewable energy capacity while also ensuring economic benefits for farmers. Here are some edited excerpts from the interview:

 

 

Can you provide an overview of BiofuelCircle's business model and its alignment with India's energy sustainable goals?

 

BiofuelCircle was established with the vision to address the gaps in the bioenergy supply chain. Our aim was to organize the supply chain to make it reliable and trustworthy, which is essential for attracting significant investments into new bioenergy plants. The unreliability stems from the fragmented nature of the supply chain, the seasonality of biomass production, and the lack of focus on quality and timely delivery. To overcome these issues, we created a digital platform to facilitate democratic participation and deploy a combination of digital and physical tools to solve the challenges of working capital, financing, and quality. Our business is designed to contribute to India's sustainable energy goals by ensuring a steady supply of bioenergy resources.

 

What are the sources of your supplies, and how do you optimize the collection and delivery system?

 

Our primary supply comes from agricultural residue biomass, which is available in abundance post-harvest season. We deal with a variety of 59 different agricultural residues that can be converted into biofuels. The optimization of our collection and delivery system is threefold: incentivizing producers to ensure collection, providing storage near the collection points, and facilitating direct purchases by buyers from the producers. This streamlined process ensures a consistent and efficient supply chain for biofuels.

 

 

How much do you pay to farmers annually, and what are the criteria for selling biomass to BiofuelCircle?

 

On our platform, we average transactions worth 200 crores annually, with last year's transactions amounting to around 170-180 crores. Approximately 10% of this went directly as income to the farmers. The criteria for selling biomass are based on the fuel value of the agricultural waste and its proximity to the point of consumption. For instance, groundnut shells have a higher calorific value, hence fetching a higher price. Conversely, a lower calorific value product like cotton stalk would yield less income. The distance from the consumption point also plays a role in determining the cost-effectiveness of the biomass due to transportation costs.

 

Which geographical areas do you mainly operate in, and where do you source most of your biomass from in India?

 

Our operations span across Maharashtra, Gujarat, Uttar Pradesh, Punjab, and Tamil Nadu, with the most extensive reach in Gujarat, followed by Maharashtra. We have initiated our presence in Uttar Pradesh as well. We have engaged with over 20,000 farmers, with land holdings ranging from 2 to 5 acres. Each farmer has the capacity to supply between 5 to 9 metric tons of biomass per season. The income earned from the biomass is directly transferred to the farmers' bank accounts, with the amount influenced by logistics and transportation considerations.

 

What are the key obstacles to scaling up biofuel use in manufacturing, and what policy reforms could help overcome these challenges?

 

The primary hurdle is ensuring a consistent and reliable biomass supply throughout the year. Industries accustomed to the assurance of year-round coal or oil supply need the same reliability with biomass. This consistency is not just in supply but also in the quality of the biomass. Industries cannot operate efficiently if the biomass quality fluctuates. Government incentives are crucial here. Policies promoting carbon and green credits can greatly incentivize the transition from fossil to green fuels. The government's roll-out of such mechanisms would be a significant policy boost for biofuel adoption.

 

Is there anticipation for a Production-Linked Incentive (PLI) scheme for the biofuel sector?

 

Our expectations lean towards policies facilitating carbon credits. If consumers can earn and monetize credits for CO2 savings, it would incentivize the use of biofuels. Such a mechanism can reshape the industry's approach to biofuel usage.

 

Recently, India has announced the Global Biofuel Alliance, how do you perceive its impact on Indian biofuel companies, considering the market potential and tapping into this opportunity?

 

The potential is vast, ranging from $40 to $45 billion at the lower end, to the higher estimates you mentioned. The Global Biofuel Alliance is pivotal in introducing necessary technology, financing mechanisms, and transitioning know-how. The challenge is to utilize biomass effectively, to convert it to biofuel using various technologies, and to transition from fossil fuel-based systems to biofuel-based ones. This involves certifying equipment for biofuel use and securing adequate financing for both capital and operational needs. The alliance is a critical step towards creating a global market for local solutions, benefiting India and other countries with strong biofuel solutions, thus fostering a robust, sustainable green fuels market.

 

Could you outline BiofuelCircle's five-year plan in terms of sales, business development, and market expansion?

 

Over the next five years, Biofuel Circle aims to establish operations across all states in India. Our current presence spans six states, and we intend to extend this network nationwide by 2028. The goal is to increase our franchise count from 20 to 500, thereby connecting a million farmers to our network. This scale-up is projected to bring 10% to 20% of India's available biomass onto our platform, creating a robust supply chain for the industry.

 

What are your revenue expectations for the coming years, and what investments will BiofuelCircle make?

 

Transactions on our platform currently stand at approximately 200 crores, and we anticipate this to grow to a billion-dollar worth of transactions annually within the next five years. Last year, our revenue was around 1.5 million US dollars, and we expect this to exceed 50 crores this year. As transaction volumes increase, we foresee our revenue growth to be proportional, assuming a 40X growth in the next five years.

 

In the context of stubble burning, which has affected cities like Delhi and Mumbai, what role does technology play, and how is BioFuelCircle utilizing it?

 

The key is providing farmers with a reliable alternative to burning stubble. If a farmer receives a firm commitment that their fields will be cleared in time for the next crop, the incentive to burn diminishes. This is where technology comes in. Much like the Uber model changed taxi services, we believe technology can transform stubble collection into a reliable service. Trust in this service is crucial, and that's what we're working to establish through our platform.

 

Given India's achievement of 12% ethanol blending, and the goal of reaching 20% by 2025, what infrastructure or policy changes are required?

 

Significant investment is needed to expand production facilities for ethanol and other biofuels. Financial closures for these projects take time, and we need policies to expedite this process. Ensuring financial closure, creating capacity, and activating reliable supply chains are essential steps. Government initiatives to promote the blending of biofuels with fossil fuels will catalyze the development of a sustainable ecosystem.

 

What is the potential role of biomass pellets in thermal power, and what is BiofuelCircle's involvement in this sector?

 

Biomass pellets could play a substantial role in reducing coal consumption if thermal power plants adopt co-firing. With India using 700 million metric tons of coal annually, a 10% co-firing rate represents a significant opportunity for biomass pellets. Our work with NTPC aims to create a reliable supply chain from farmers to pellet manufacturers, ensuring consistent delivery to power plants.

 

What support does BiofuelCircle seek from the government to enhance the biomass pellets segment?

 

We urge the government to provide incentives for non-fossil to green fuel transitions, such as carbon credits. Additionally, the biofuel sector requires support in supply chain and working capital financing. For instance, a pellet manufacturer's working capital requirements are disproportionately high, necessitating policy intervention for more affordable financing options.

 

How does BiofuelCircle ensure sustainability and food security in the context of biofuel production?

 

The focus should be on deriving biofuel from waste, not food. Policy should incentivize waste-to-fuel conversion, steering investments towards utilizing abundant waste rather than food resources. This approach will prevent the food versus fuel debate and contribute to both energy and food security.

 

With concerns about feedstock for cattle depleting due to biofuel production, what is your stance on this issue?

 

The biofuel industry should not compromise cattle feed. Of the various biomass types suitable for biofuel, those that serve as fodder should be excluded. Our market estimation considers only the surplus biomass after fodder and other applications, ensuring that cattle feed is not affected by biofuel production.