India in slow lane in drive for greener fuels

By Mayank Bhardwaj

NEW DELHI (Reuters) - India's failure to agree a biodiesel policy has forced firms to shelve expansions plans, putting it way behind energy-hungry rivals like China in the drive to greener fuels, a top industry representative said.

The delay has also left edible oil processing companies, which have built capacity to turn 1.2 million tonnes of jatropha into biodiesel, in the lurch -- and 9 billion rupees ($227 million) poorer, said Sandeep Chaturvedi, head of the Biodiesel Association of India.

New Delhi is blending ethanol with petrol, but has been unable to forge a framework for biodiesel as ministers differ over subsidies needed to kickstart the sector.

"It is a clear example of how an indecisive government can jeopardise plans to popularise jatropha to reduce dependence on fossil fuel and pollution," Chaturvedi told Reuters in an interview.

One tonne of jatropha seed can yield 300 kg of biodiesel, he said.

India consumes 40 million tonnes of diesel a year, way above annual petrol demand of 8-9 million tonnes, and in 2003 announced plans to replace around five percent of its diesel consumption with biodiesel made from jatropha, a crop which thrives here.

"By not agreeing to a subsidy or on a policy, the government has dealt a blow to biodiesel which should have been treated at par with ethanol," he said.

Some countries believe biofuels hold out the promise of major cuts in greenhouse gas emissions and are an alternative to scarce and expensive fossil fuels.