US-based True North Venture Partners eyes ethanol investment

New Delhi: True North Venture Partners will invest “hundreds of millions of dollars” to produce low-cost ethanol in India and is looking for local partners, hoping to gain from the government’s plan to increase the chemical’s blending with petrol, the US venture capital firm’s founder said.

The government has targeted 10% blending of bioethanol in petrol by 2022, which will rise to 20% by 2030, to reduce dependence on oil imports and cut carbon emissions. Currently, the US Department of Agriculture pegs the rate at 5.2%, according to its annual report on biofuels.

“[For] these biotech plants that we’re looking at are hundreds of millions of dollars’ worth of investment. We’d be investing, but alongside Indian partners … There will be an investment to build the factory, the laboratories and production facilities as well,” Michael Ahearn, founder of TNVP, told ET.

In India, TNVP acquired Synata Bio, which claims to provide much cheaper ethanol production from syngas compared with traditional methods. Syngas is synthesised from the gasification of coal.

“If we look at our models, what we have moderated at small scales, in India we can do 20-30% cheaper,” Ahearn said, adding that the price point could be driven lower once it can demonstrate a considerable output from high-ash coal, which is abundant in India’s domestic reserves.

The company has reached out to public sector stakeholders Coal India and GAIL, which have signed agreements to utilise coal to produce ethanol. TNVP will look for technological and distribution partners, he said.

Traditionally, Indian production of ethanol comes from its wide-ranging sugar factories, which are backed by hefty political support. However, their production is not able to keep up with demand from oil companies in India. Ahearn said that he hopes the coal-based process complements sugar, rather than competes against it.

“It’s important to not go against that. If the goal is to achieve E20 by 2030, then as much as sugar-based ethanol as can be produced should come into the market. But there’s going to be a sizeable gap,” he said.

In the long term, the company hopes to fulfil the Indian need for ethanol and make the country an export hub for ethanol as well.

“We think there’s an opportunity to bring the technology to the Indian market to build factories and production centres in India and to create a pace in India that can serve not only the Indian market, but potentially global export markets,” Ahearn said.