The Alternative Seeker
New Delhi 01-May-2010
FOSSIL FUELS ARE THE BIGGEST culprits when it comes to climate change. So, if anything, oil companies would have to be in the vanguard in improving their production processes and making their fuels energy efficient. Indeed, that's what many are doing today. They're looking for alternative fuels and also getting into alternative energy forms, such as wind power and geo-thermal power. That's why BP's tagline today reads Beyond Petroleum! IndianOil Corporation (IOC) too is a part of this brigade. But alternative energy is still a small part of its operations. For the most part, it continues to be an oil refiner and marketer.
"Every oil company, in its heart, knows that just crude is no longer a sustainable business," says Anand Kumar, Director {R&D), IOC. "Not because oil will get reduced but because of the kind of restrictions that will be put by governments as well as green activists."
At the Copenhagen summit, India did just that, committing to reduce its emissions by 20% from 2005 levels by 2020. And IOC, being state-owned, will need to comply as best it can with the government's commitment. To its credit, the company had begun the process even before Copenhagen. IOC has worked on biofuels since 1999-2000. Its R&D team came up with a 5% ethanol blend back in 2005. The same year, it started working on hydrogen CNG fuel. CNG does release greenhouse gases but in much smaller quantities than fossil fuels. Hydrogen is, by nature, clean. When it is burnt, it does not emit carbon dioxide (CO2). Hence, if the two are combined, the result is a cleaner fuel.
IOC's efforts to develop cleaner fuels are already showing some creditable results. In the last 10 years, Kumar says, Indian Railways has saved dose to Rs 1,000 crore on diesel because of IOC's multigrade lubricant. That achievement also gives it a competitive edge in the market, in terms of the efficacy of its lube.
Long-Term Vision
IOC is also trying to squeeze ethanol out of forest waste, which can then be blended in gasoline. Another of its clean-fuel initiatives involves using algae as a carbon scrubber. Algae naturally suck CO2 out of the atmosphere.
The company is working on using algae ponds to take out the carbon from its fuel here the carbon emission will be captured and fed into the pond. The algae process the CO2 and are then harvested. Next, the algae's oil is extracted for use as a biofuel. The residue will be usable as fertiliser. If successful, IOC will be able to lower its greenhouse gas emissions, while also generating revenue from the by-product.
"The ultimate aim is to fix CO2 emissions through algae, and if we can do 20% by 2012, it will be a big achievement," says Kumar. IOC is partnering with Petroalgae, an American company that Kumar says has some success in this field, on this project. The refiner's own scientists are working on 61 strains of algae to see which one is most suited for Indian conditions.
In recent years, IOC has also got involved in the marine oil segment, as well as in developing catalysts for refineries. In addition, IOC plans to make lubricants for nuclear plants in alliance with the Bhabha Atomic Research Centre. It also wants to develop windmill lubricants and thermal fluids (for solar). Biodegradable lubricants, which are in demand in the food processing industry, are another likely extension.
But it will take a few years for all these efforts to become commercially viable. When it comes to bio-diesel, for instance, Kumar believes the government goal of 20% blending by 2017 is close to impossible. Jatropha and pangomia are used in large quantities to make bio-diesel, but they are not widely cultivated, and hence there is a supply shortage. "To get 3 million tonnes, imagine how many hectares of land would be required for cultivation (of jatropha and pangomia)." The answer: at least 3 million hectares. Not feasible, herfce the focus on other alternatives.
Nevertheless, the company is serious about bio-diesel. "When we wanted to enter the biofuels space and cultivate jatropha, our company secretary said we couldn't do it legally"; recalls Dr DK Tuli, GM, R&D, IOC. "Our board took a resolution to the effect that this is also our business as we are an energy company" Outlining IOC's long-term vision, Tuli says: "We will go into any space that gives energy". IOC is sampling wind and solar already. It has 61MW of installed wind power and wants to set up a solar farm in Rajasthan.
Arthur Hanna, Industry Managing Director, Energy, Accenture, says that "renewable are going to be an agenda."
Companies in the oil realm will try and invest heavily in energy efficiency in their core businesses. "IndianOil companies in general, and the refinery and gas production industry in particular, have a significant task at hand. On the one hand, they will be expected to take up a large part of the carbon-reduction targets," says Deepak Mahurkar, Associate Director, and PricewaterhouseCoopers. "On the other, technology, funds and magnitude may prove to be constraints."
Many global majors have made sizeable investments (though small, as a percentage of total investments). Shell has invested $1.7 billion in the last five years in biofuels. Exxon is spending $600 million on algae-based biofuels. Kumar emphasises that there are no restrictions on IOC's budget it spends Rs 250 crore a year.
To emphasise the long-term nature of these efforts, Kumar recounts an anecdote: "When Bill Clinton opened the first hydrogen plant in the US, he was asked when American citizens would get to use vehicles running on hydrogen. He replied that an American child born today would use hydrogen-powered vehicles when he turns 18. It was a 20-year programme."
