Biofuels Junction eyes opportunities in decarbonisation drive

Biofuels Junction, which is focussing on industrial demand to replace coal and furnace oil, sees opportunities for growth in the decarbonisation drive and the Centre mandating the use of 5 per cent agri residue-based pellets in all power plants based on coal, said Ashvin Patil, Founder and Director of Biofuels Junction.

Biofuels Junction sources agriculture wastes and residues, otherwise known as biomass, for making briquettes or pellets by manufacturing companies located near the source of the material. Then, these are supplied to companies such as Hindustan Lever, Reliance, PepsiCo, ITC, and United Breweries for fuel purposes. 

The company has a strong presence in the central, northern, eastern and north-western parts of the country. “In the south, we have presence in Karnataka, Andhra and we have executed orders in Kerala. But we are looking to grow in this region,” he said.  

Biofuels Junction, whose turnover was ₹67 crore last fiscal, has plans for expansion through contract manufacturing or joint venture basis. 

Biofuels are helping to increase income in rural areas as farmers are now getting money for agriculture residues which otherwise would have been converted into manure or burnt on farms, Patil said.

Increasing rural employment

The rising popularity of biofuels offers additional employment in rural areas. “The collection is being run by the rural entrepreneurs or aggregators. They are labourers who do not have work after harvest. Collecting the raw material is an additional employment and they take it to the manufacturing plant,” said the founder of the company, which handles 7,000 tonnes of biomass every month. 

The briquettes and pellet manufacturing plants are run by rural entrepreneurs. “So they (aggregators/entrepreneurs) not only get employment but  also support 7-8 people at the plant for their employment throughout the year. So the major benefit is in the rural areas. It strengthens the rural economy,” said Patil, whose family has been into agriculture for generations.  

Shifting from coal

Biofuel gained prominence in 2022 when prices of coal, particularly from Indonesia, surged. That time, a major part of the unorganised market shifted to biofuel from coal. 

“Biofuels are getting accepted as main fuel over the last few years and investments in the manufacturing side or the technology side have got a boost. They are emerging as a mainstay fuel in the country,” said the company’s founder. 

There are three types of biofuels. The first is solid biofuel in the form of briquettes and pellets. The second is liquid biofuel such as biodiesel and the third is gaseous biofuel such as compressed biogas (CBG). 

Attracting investments

“Huge investments being discussed and talked about by large corporate groups in India. It is a good sign that this sector is attracting investments. I see large investments happening on the gas and the biodiesel side. With the advent of technology on the solid biofuel side, it will be scattered,” he said. 

Rather than a large group making investment, biofuels will help rural entrepreneurs to have more solid biofuel plants across the country and generate more employment. 

Stating that biofuel is acquiring the status of a primary fuel, he said earlier it was looked at as only some kind of fuel. “But after the net zero target set by all countries, every company wants to replace fossil fuels with biofuels for two reasons. One, they are huge environmental saving factors. So companies tend to reduce their emission norms. Two, pollution decreases with the usage of biofuel,” Patil said.

Satellite model

Biofuels Junction, which was launched in 2019 as a private firm by aggregating briquettes from small manufacturers, runs a satellite business model, where it does all the biomass procurement and biofuel through its platform.  

While procuring biomass, the company looks for briquette or pellet manufacturers in a nearby area, aided by its software. “Biomass has low bulk density. It is not viable to transport to longer distances as transportation costs will outstrip procurement costs. So, we look for a local producer,” Patel said.

Biofuels Junction, which works with 500 different manufacturers at locations across the country, supplies over 100 companies from Naba, Punjab in the North to Karnataka in the South and from Gandhidham in the West to Haldia in the East. “Basically what happens is that a client places an order for biofuel and we do the procurement using our platform. Our software does the planning of the location to source the biomass depending on the information built over the last four years,” said the founder of the company, which functions on quality, consistency and compliance parameters.

Demand for paddy straw

Such digital planning helps to optimise sourcing and reduce the distance of transporting it to the users. However, the supplies are billed to the company, which in turn bills the end-user. 

Biofuels Junction aggregates all types of residues for use as feedstock. Large quantities of raw materials used in solid biofuel are mustard husk, soya husk, coffee husk and groundnut shells. “These are the primary materials which are used,” he said.

Corn plant leaves, sugarcane trash, and cotton plant waste can also be used in different formats, particularly as CBG. “Currently, there is a huge demand for paddy straw as a feedstock,” said Patil, who along with his co-founder decided to look at the post-harvest management side when they decided to do business.  

Patil said lending to rural entrepreneurs should be brought under priority lending sector. “It will help reduce the cost of funds for all rural entrepreneurs and this could be a big boost to the industry,” he said, adding that the norms of environment protection or pollution should be strictly implemented.