The bio-energy segment is now focusing on overcoming its challenges and drawbacks

28 Oct 2021

Achieving sustainability is a core challenge for most development programs, partly as it is not a measurable target or an accurate science. Sustainability can only be achieved if, at the planning and implementation stages, there is as clear an understanding as possible of the expected and potential impacts of the intervention – both positive and negative. The term sustainability itself is subjective; depending as it does on the desired outcomes of the end user, which means a relatively strict framework for use is vital. The objective of planning for sustainability at the onset is to foster and preserve the social ecological system in which the project or program is to occur so that it remains dynamic, adaptive, resilient and therefore durable over time.

This new area of impact assessment methodology builds on all previously used procedures, particularly the Objectives-led SEA; looking to optimise the process for a more sustainability oriented outcome. This method, entitled Sustainability Assessment (SA) aims to identify the entry point or goal for a particular area and bring sustainability into the planning procedure from the very outset to accomplish that goal. Separate targets are set, which are deemed markers for sustainability and, importantly, outlined by those stakeholders affected. So ideally this framework comes in to the planning process before a particular project or development is conceived, and is used to establish as many options for meeting the goal as possible. In addition, and in practice this may prove to be a common use of the tool, planning for sustainability can also be used to see whether a particular project, which has already been conceived, represents the most sustainable way of achieving the identified goal and what potential alternatives are available.

It is in this way, outlined above, that SA differs from the conventional approach to EIA; which is used to provide information for decision making, based on the level of potential environmental impacts that are considered acceptable, or which can be managed through mitigation. Although the more traditional assessment tools such as EIA or Life Cycle Analysis (LCA) have their place in the SA framework, the planning process throughout is expressly sustainability led, rather than having as its goal the identification and mitigation of potential negative environmental effects.

Building on the successes of the SIA and SEA approaches, the participatory element of SA has been incorporated as intrinsic to the process. Going even further than the previous methodologies, this approach seeks to identify and consult with stakeholders at the point of setting goals and targets, ideally before individual projects are even conceived, so that the participation is evident at all stages of the developmental planning procedure.

As well as in terms of the process objectives, SA differs primarily from the first two generation tools in that it focuses on the sustainability of the intervention under investigation, rather than having only an environmental focus. Further, in the case of the EIA approach; the lack of consideration of cumulative effects has been seen to be a major downfall. The SEA approach has attempted to address the imitations of EIA, in part at least, by considering environmental concerns from a strategic perspective and thus incorporating them in the planning process. Though the SEA process has contributed towards incorporating environmental concerns in development planning, it does not necessarily contribute towards planning for sustainability, as it is driven by the strategies formulated for individual projects at its core rather than sustainability. The developments of Objectives-led SEA and Integrated Assessment, however, have proved to be important steps towards SA and the notion of planning for sustainability.

Sustainability is the desired outcome of the SA approach rather than merely the mitigation or minimization of potential adverse environmental impacts. The approach is inherently integrative, participatory, positive and future-oriented. The first and most important step in this direction is for all stakeholders to jointly define a sustainability goal (or vision), namely the desired outcomes of the intervention upon which the planning for it should be focused.

Next, in order to assess whether the proposed intervention achieves the goals, sustainability principles and criteria would need to be defined. These criteria would be context specific, taking into account local economic, social and environmental conditions, as well as the relationships between these components for the given set of stakeholders. Understanding the interrelationships between economic, social and environmental components is critical and should influence the setting of the sustainability goals and criteria. It has been strongly advocated by proponents of the SA approach that it must be focused on these interrelationships and their character, resilience to change and adaptability, and the sustainability goals should embody such an orientation. Therefore, the SA process has to be iterative and cyclic in nature so that the learning generated at each of the steps can be fed back into the process, thus allowing for goals and criteria to be revised as necessary. The SA approach is clearly a challenging one both practically and intellectually, but in order to incorporate sustainability as the key driving element in the development planning process, it is a crucial step that that authors believe must be taken for achieving sustainable development. India is a fast-developing country, with high economic andindustrial growth, energy demand is also growing. Non-renewable resources have used frequently in India due tolack of awareness and acceptability of renewable energy sourcesby power consumers. There are many disadvantages of using non-renewableenergy resources as they have limited existence inenvironment, non-eco-friendly and not economical as India importall these type of energy resources. Therefore, it is essential toexplore many others sustainable energy sources. One of those non-conventional sources is bioenergy which can provide firmpower of grid quality.As concerns about climate change and energy security rise, bioenergy is often as a renewable energy source that can be cost-effectively scaled up to a level that would allow it to contribute signi?cantly to meeting global energy demand.

Bioenergy can be generated in myriad ways; however, using various feedstocks and various energy technologies, few conclusions can be drawn about its environmental effects. One can easily imagine biomass production systems that are ideally suited to their environment, and even contribute to improving the environment by revegetating barren land, protecting watersheds, providing habitat for local species, and sequestering carbon, all while contributing to livelihoods of rural communities. Yet one can just as easily imagine biomass production systems that are fossil fuel intensive, exhaust the soil of nutrients, exacerbate erosion, deplete or degrade water resources, reduce biodiversity by displacing habitat, increase greenhouse gas emissions, and threaten the livelihoods of local communities.

The growth of municipal waste is directly linked to the population and economic progress of a town, city, state or a country. With a population of around 1.35 billion, India generates about 80 million tonnes of waste each year. This is expected to grow up to 430 million tones per year by 2050. Of the total waste generated per year, 80 percent goes into landfills while less than 20 percent is treated or recycled. Therefore, the existing landfills are reaching their maximum capacity and there is a growing industry consensus that proper waste disposal techniques will be needed in the near future. Waste to Energy plants have rapidly emerged as an effective solution for waste disposal. India has the potential to generate about 1700 MW of energy from urban waste including municipal solid waste, sewage and industrial waste.

The total installed capacity of Waste-to-Energy (WtE) in India stood to contributes 140.20 MW as of March’ 2019.The achievement is quite below the target, which is far behind the target 10 GW by 2022. The quantum of waste generated in India has been one of the biggest drivers for the development of this segment. The India’s dally waste generation is thereby offering a huge potential for conversion of waste into energy. Various factors have contributed to low capacity additions in the bio-energy segment. The bio-energy segment has long suffered from neglect due to preference being given to the solar and wind segments. The advent of competitive bidding for both solar and wind, and the discovery of low tariffs have almost put a stop to the utilization of this renewable resource.

Government of India deployed different policies and executed that the strategies for bioenergy generation. Such approaches have included the whole biomass energy sector which incorporatedthe bio gas, bio diesel etc. in the policies. Government of India has focused on the deployment anddevelopment bioenergy sector with strategic policy and program. Manysubsidies are provided for establishment of the biogas plant. Newbiomass gasification Technology was also evolved which convertsbiomass in to syngas, which are more efficient. Environmental degradation, public health concerns and inadequate land availability for garbage dumping have increased interest in the waste-to-energy sector in recent years. This can be attributed to poor choice of technology by developers, lack of institutional capacity for collecting and managing the waste of municipalities and the municipalities inability to define the roles of various agencies in the value chain, undertake proper baseline cost and cost-benefit analysis before bidding out a bankable Waste to Energy (WtE) project and ensure compliance with waste disposal guidelines. In addition, high capital costs, low internal return due to low feed-in-tariff, and other related issues limit the development of WtE projects in the country.

Government aim to increase the use of environmentally sustainable biogas power generation technologies in the country and enhance electricity supply through renewable energy sources. Scope of biogas generation is to meet the requirement of captive power and thermal power. The setting up of biogasand west-to-energy projects is to be promoted in industry, with at least 50% of power for confined use, and a stipulation for the surplus power to be selling to grid. This will amplify the use of non-conventional energy sources and conserve the use of fossil fuels such as natural gas, coal and oil.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. 

Policy initiatives: In recent years, India’s energy consumption has been increasingat a relatively fast rate due to population and economic growth.With rapid urbanization and improving standards of living formillions of Indian households, the demand is likely to raise a lot.Therefore, Govt. of India is now making various planning andpolicies in energy sector. Since Sustainable Development is nowthe key target of the world, therefore Renewable Energy Resourcesare considering for power generation. Ministry of New & RenewableEnergy (MNRE) of India has developed many project and policies inthis field and promoting to adopt these methodologies for generation of electricity through biogas by providingvarious subsidies and incentives.

MNRE providesCentral Financial Assistance in the form of capital subsidy and financial incentives to the biomass and bioenergy projects in India.Central Financial Assistance is fixed to the projects on the basis of installed capacity, energy production mode and its application etc. Economic supportwill be made accessible selectively through a transparent andcompetitive procedure.The government provides a onetime capital subsidy based onthe installed capacity of the project. The entire capital subsidyamount is transferred directly to the lead bank/lending financialinstitution for the purpose of offsetting the loan amount afterwinning commissioning of project. In case the project is situatedby the promoters through their personal resources, the Central Financial Assistance wouldbe transferred directly to promoters after commissioningof the project.

Besides the Central Financial Assistance, fiscal incentives such as 40% accelerated depreciation, concessional import duty, excise duty, tax holiday for 10 years etc., and are available for biomass and bioenergy power projects. The benefit of concessional custom duty and excise duty exemption are available on equipment’s required for initial setting up of bioenergy 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 biogas power projects and WtE projects. Moreover, IREDA permits a reduction in the interest rate based on project grading. The recent policy announcements from the MNRE might help to address some of challenges facing by the bioenergy segment. The government has also announced a National policy on Bio-fuels, 2018. To encourage the uptake of WtE projects, the MNRE in July’ 2018 approved the continuation of a dedicated WtE programme. The programme, Energy from Urban, Industrial and Agricultural Waste/Residue, has been approved with modified terms and conditions from 2017-18 to 2019-20.

The main objective of biogas and Waste-to-Energy programme is to create a conductive policy and financial environment for the development and demonstration of energy recovery through waste utilization. The programme will promote the installation of energy recovery projects from urban, industrial and agricultural waste to generate power and biogas, bio-CNG, enriched biogas, as well as promote the utilization of waste for thermal use through gasification in industries. The programme will also promote bio-mass gasifier-based power plants to cater to the unmet energy demand of industrial captive power and thermal demands of rice mills and other similar industries. In addition, the plants will provide electricity in rural areas for lighting, water pumping and running micro enterprises.

The bio-energy segment is now focusing on overcoming its challenges and drawbacks through the introduction of new schemes and regulations aimed at promoting waste management and energy generation initiatives such as the Swachh Bharat Mission and Smart Cities Mission have served as pivots to revamp interest in the sector by offering grants and raising awareness towards creating healthy competition between districts for better management of waste. This has, in turn, increased the number of new WtE projects significantly. The Solid Waste Management Rules released in 2016 have defined roles, responsibility and duties of all the stakeholders in the urban and rural waste management segments. Further, the time frames for implementing these rules as well as the environmental emission norms have been decided. Other key initiatives include the National Tariff Policy, 2016, that mandates 100 percent procurement of power from WtE projects for all discoms. In addition, the GST Counsel has set a low rate schedule of 5 percent for WtE plants and equipment. Meanwhile, NITI Aayog in its three year action agenda, FY 2017-18 to FY 2019-20 has suggested setting up the Waste to Energy Corporation of India which function will be to set up WtE plants in public-private-partnership mode to clean up MSW.

The Ministry of Housing and Urban Affairs offers a 35 percent grant/viability gap funding for developing municipal solid and waste management projects, including waste collection segregation, disposal and energy recovery. These comprise projects based on municipal solid waste, industrial waste and the installation of biomass co-generation projects. Non-banking financial institutions also play a vital role in providing investments for projects in the WtE segment. These projects are financially viable and can obtain central financial assistance from the government to enhance their returns.

Barriers to biogas technology: Barriers to biogas penetration differ based on the utilization area, substrate, resource potential, technological maturity, scale and region. There are socio-cultural barriers like objections to the use of animal and human waste as raw material in specific regions. Some barriers are specific to the utilization of biogas in transport or heat production. A number of filling stations are not willing to use biogas as vehicle fuel.

 High capital cost, unavailability of long-term financing options, high interest rate and high-risk perception by financial institutions are the major financial barriers to biogas dissemination in urban areas. The high capital cost and low revenue accrual act as entry barriers for small private players/developers. The lack of access to long-term financing and high interest rates and low internal rate of return affect the economic viability of biogas projects.

The government initiated a demonstration programme to test the economic and technical viability of bio- methanation technology. However, the industry still does not have a well-established commercialized biogas technology functioning at the industrial scale for processing heterogeneous waste in urban India. Some financial institutions are reluctant to give credit for biogas projects in the absence of well-developed technology and due to the high failure ratio.

Biogas is not as competitive as other fuels in the electricity sector such as coal and natural gas. The operations and maintenance coasts of biogas-based power plants are quite high compared to thermal power plants. Also, electricity from other renewable sources like solar, hydro and wind is cheaper than electricity produced using anaerobic digestion due to government support like fixed feed-in tariff and renewable purchase obligations. Biogas power plants cannot compete with large scale coal power plants. Even though feedstock is availability for free, the cost of handling and transporting waste over long distances is high, negatively affecting power plant economics.

In the absence of a government mandate specific to biogas-based power, it is difficult to sell electricity generated from biogas plants to offtakes, and maintain a continuous revenue stream. Through slurry can be used as an organic fertilizer, it has to complete with heavily subsidized chemical fertilizers. Anaerobic digestion technology faces competition from other low cost waste treatment technologies such as composting, vermi-composting, and waste-to-pellets that can also be used for treating organic municipal and industrial waste.

Incentives like guaranteed feed in tariffs and regulatory power purchase obligations are necessary for the diffusion of the technology in this relatively immature market. This is evident in the case of solar and wind technologies in India where strong potential will and investment friendly policies of the government have driven growth in the past decade. Government incentives like feed in tariff, long term financing, capital grant, viability gap funding and tipping fee for waste collection and handling are not in place. In the absence of these, biogas projects cannot become economically viable on a large scale, which discourages private investment in this sector.

There are also uncertainties related to feedstock supply and quality due to inefficient supply chains and low collection efficiency in India, which can hamper the production efficiency of plants and their profitability in the long run.

Municipal corporations are responsible for waste management in urban areas. Due to their limited financial and technical capabilities, it is challenging to manage the growing solid waste in an integrated manner without the involvement of private players. There is also a lack of coordination between central and state governments

A generic tariff for electricity generated from biogas and waste-to-energy projects was announced by the central government in 2016. However, the state electricity regulatory commissions have still not fixed a generic tariff for electricity generated from anaerobic digestion-based power plants. Thus, it is difficult to assess the project viability at the pre-investment assessment stage due to the unpredictability related to the power purchase agreement prices determined by the state commissions. Risks associated with revenue streams, technology and feed supply are primarily borne by private players.

Biogas can be upgraded, bottled and utilized as bio-CNG, without modification in vehicles. But it is only recently that a bio-CNG policy has been introduced in India. In addition, there should be proper legal standards in place, and preferably a single window regulatory approval system for grants and permissions from different government departments like the Petroleum Explosives Safety Organisation, the Ministry of Environment, Forests and Climate Change, etc.

The segregation of organic and non-organic waste is not done in urban households resulting in low quality organic feedstock. Dust and inert material also exist in varying degrees. Thus, sorting of waste is required before digestion at the plant, further increasing the overall generation cost and complexity. Moreover, poor collection and unorganized transportation of waste, especially in medical/small cities, increase the supply chain disruption risk.

The failure to supply the committed quantity of waste to plants by municipal authorities was identified as one of the reasons for the shutdown of waste-to-energy plants. Process standardization is challenging due to large variations in waste characteristics across different regions. Also, there is a lack of available land space faced by the utilities. Therefore, local officials are strongly encouraging the use of biogas plants in commercial establishments in the city. Local council officers have set up demonstration plants, which use local food waste and provide gas for making tea for officials and their visitors.