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Biodiesel in India: value chain organisation and policy options for rural development

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  • Altenburg, Tilman
  • Dietz, Hildegard
  • Hahl, Matthias
  • Nikolidakis, Nikos
  • Rosendahl, Christina
  • Seelige, Kathrin

Abstract

India promotes the production of biodiesel from tree-borne oilseeds. This is seen as an option for substituting fossil fuels, reducing CO2 emissions, afforesting wastelands, and generating rural employment. Critics, however, claim that it may lead to food scarcity and seizure of common lands by corporate investors. This report shows that biodiesel production in India has mainly positive effects. As it is promoted on the basis of non-edible oil seeds on marginal lands, the risks of driving up prices for edible oil or crowding out food production are relatively low. However, the actual development effects may vary greatly, depending on how value chains are organized. This study identifies 13 different ways of organizing biodiesel value chains, ranging from cultivation on large plantations to contract farming, smallholder production for rural electrification, and social forestry projects – each of them having different effects on income generation, participation and empowerment, food security, natural resources management, and climate change. To date, biodiesel production is not a lucrative business, except for some niche markets. This may change in the future, depending on fossil fuel prices, government pricing policies, and agricultural yields. The study describes and assesses a range of federal and state policies aimed at enhancing the economic viability of biodiesel production and ensuring positive development effects.

Suggested Citation

  • Altenburg, Tilman & Dietz, Hildegard & Hahl, Matthias & Nikolidakis, Nikos & Rosendahl, Christina & Seelige, Kathrin, 2009. "Biodiesel in India: value chain organisation and policy options for rural development," IDOS Studies, German Institute of Development and Sustainability (IDOS), volume 43, number 43, June.
    • Handle: RePEc:zbw:diestu:43
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    References listed on IDEAS

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    1. Chaurey, Akanksha & Ranganathan, Malini & Mohanty, Parimita, 2004. "Electricity access for geographically disadvantaged rural communities--technology and policy insights," Energy Policy, Elsevier, vol. 32(15), pages 1693-1705, October.
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    1. Kolasa, Marcin, 2014. "Real convergence and its illusions," Economic Modelling, Elsevier, vol. 37(C), pages 79-88.
    2. Dalemans, Floris & Muys, Bart & Verwimp, Anne & Van den Broeck, Goedele & Bohra, Babita & Sharma, Navin & Gowda, Balakrishna & Tollens, Eric & Maertens, Miet, 2018. "Redesigning oilseed tree biofuel systems in India," Energy Policy, Elsevier, vol. 115(C), pages 631-643.
    3. Ariza-Montobbio, Pere & Lele, Sharachchandra, 2010. "Jatropha plantations for biodiesel in Tamil Nadu, India: Viability, livelihood trade-offs, and latent conflict," Ecological Economics, Elsevier, vol. 70(2), pages 189-195, December.
    4. van Eijck, Janske & Romijn, Henny & Balkema, Annelies & Faaij, André, 2014. "Global experience with jatropha cultivation for bioenergy: An assessment of socio-economic and environmental aspects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 32(C), pages 869-889.
    5. Kumar, Sunil & Chaube, Alok & Jain, Shashi Kumar, 2012. "Sustainability issues for promotion of Jatropha biodiesel in Indian scenario: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(2), pages 1089-1098.
    6. Dalemans, Floris & Muys, Bart & Maertens, Miet, 2019. "Adoption Constraints for Small-scale Agroforestry-based Biofuel Systems in India," Ecological Economics, Elsevier, vol. 157(C), pages 27-39.
    7. Soto, Iria & Achten, Wouter M.J. & Muys, Bart & Mathijs, Erik, 2015. "Who benefits from energy policy incentives? The case of jatropha adoption by smallholders in Mexico," Energy Policy, Elsevier, vol. 79(C), pages 37-47.
    8. Altenburg, Tilman, 2011. "Interest groups, power relations, and the configuration of value chains: The case of biodiesel in India," Food Policy, Elsevier, vol. 36(6), pages 742-748.
    9. Sorda, Giovanni & Banse, Martin & Kemfert, Claudia, 2010. "An overview of biofuel policies across the world," Energy Policy, Elsevier, vol. 38(11), pages 6977-6988, November.
    10. Charlotte Stead & Zia Wadud & Chris Nash & Hu Li, 2019. "Introduction of Biodiesel to Rail Transport: Lessons from the Road Sector," Sustainability, MDPI, vol. 11(3), pages 1-20, February.
    11. Lohan, Shiv Kumar & Ram, T. & Mukesh, S. & Ali, M. & Arya, S., 2013. "Sustainability of biodiesel production as vehicular fuel in Indian perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 251-259.
    12. Brüntrup, Michael & Becker, Katharina & Prothmann, Jan & Ostermann, Silja & Gaebler, Martina & Herrmann , Raoul, 2016. "Policies and institutions for assuring pro-poor rural development and food security through bioenergy production: case studies on bush-to-energy and Jatropha in Namibia," IDOS Studies, German Institute of Development and Sustainability (IDOS), volume 90, number 90, June.
    13. Baral, Saroj S. & Singh, Kaustub & Sharma, Prabudh, 2015. "The potential of sustainable algal biofuel production using CO2 from thermal power plant in India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 1061-1074.
    14. Shishusri Pradhan & Shaun Ruysenaar, 2014. "Burning Desires: Untangling and Interpreting ‘Pro-Poor’ Biofuel Policy Processes in India and South Africa," Environment and Planning A, , vol. 46(2), pages 299-317, February.

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