terravana

BIOENERGY

ABOUT

Terravana Bioenergy is a relatively new company seeking opportunities to develop integrated agricultural and bioenergy projects that primarily produce fuel-grade ethanol, and other by-products including electricity and biogas. We are starting our operations in India to cater to the growing demand for ethanol as the government increases the compulsory ethanol blending ratio to fuels. By 2020 we aim to set up and operate plants across South India with a combined annual capacity of 180 million litres.

As part of our goal to add 1,000,000 farmers to the value chain by 2020, we aim to create and build a farming, processing, and sales and distribution company of bioethanol from cassava in India. Terravana plans to set up four plants, with an annual capacity of 45 million metric litres of ethanol each, over the next two years.

Farming for cassava will begin with a plantation area of 2,500 hectares, expanding to 10,000 hectares in two years. This will enable us to provide local economies with a semi-automated farming system, alongside guaranteed jobs for local people.

Our distilleries – where enzymatic production of ethanol from cassava starch will take place – will see Terravana’s footprint expand across four South Indian states: Andhra Pradesh, Karnataka, Telangana, and Tamil Nadu.

Our sales and distribution network will encompass both public and private sector oil marketing companies in the local market, including Indian Oil Corporation, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited.

timeline

Our Bioenergy segment is our largest, and therefore our most cost intensive. We will be investing $200 million in 12 months across three tranches of investment - though much of this will be reinvestment of earnings to reduce cash outflow. The business will be at 3x scalability by 2020, with 100% top line growth year on year.

SECTOR OUTLOOK

Together, four countries produce almost 50% of the world’s greenhouse gas emissions: China leads with nearly half this figure, with the United States, India and Russia following in its wake. Coming into force on 4th November 2016, each country was required to submit its 2030 strategy for combatting climate change to the 22nd UN Conference in Marrakesh. Of the four largest contributors to emissions, China had the most ambitious target: a reduction of up to 65% of its greenhouse gas emissions per unit of Gross Domestic Product (GDP). India believes it can reduce emissions per unit of GDP by up to 35% by 2030 - but highlighted a requirement of at least $2.5 trillion in foreign direct investment to do so – while the United States intends to achieve up to 28% by 2025.

Fossil fuels make up more than 95% of transportation fuels worldwide, but biofuels are slowly gaining ground; bioethanol and biodiesel, the two main products, now account for almost 3% of fuels used for road transport. Bioethanol is an alcohol made by fermentation of carbohydrates produced in sugar or starch-based crops and, when used as an additive to petroleum fuel, increases octane levels and improves vehicle emissions. Biodiesel, meanwhile, is produced from oils or fats and is used as a diesel additive to reduce levels of particulates, carbon monoxide and hydrocarbons.

The International Energy Agency’s goal is for biofuels to meet more than one quarter of global demand by 2050. Although more than 30 countries worldwide have targets for blending fossil fuel-based fuels with biofuels, the United States and Brazil lead the pack, accounting for more than 90% of production combined. Fossil fuels are in limited supply, those which are easily extractable – without the need for environmentally damaging techniques such as hydraulic fracturing, also known as fracking – will run out in the next 50-100 years, according to estimates. Not only will blending help to ensure the future availability of these resources for longer, it will also advance the energy sustainability of countries employing such techniques.

Some of the world’s largest economies are net importers of energy: Japan, China, South Korea and India are in the top five and, despite having the largest shale gas reserves in the world, the United States’ vast appetite tops the list. The energy security of these and other countries remains vulnerable until alternative fuels, to at least supplement fossil fuel-based options, are developed; it is likely these will be based on indigenously produced, renewable feedstocks. According to India’s Ministry of New and Renewable Energy, biofuels are a “ray of hope in providing energy security”.

Biofuels are viewed as key to stimulating economic growth outside of urban centres, creating employment opportunities for thousands of rural workers. But such technologies do not come cheap - as highlighted by India’s prediction of a requirement for $2.5 trillion to achieve its 2030 targets. To facilitate this, the government is strongly encouraging foreign direct investment; internationally backed biofuel projects (for domestic use) will gain automatic approval for up to 100% funding.

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