The fuel dilemma

The in­dus­try and the gov­ern­ment shot them­selves in the foot with the ban on fur­nace oil and pet­coke, which only re­sulted in shut­ting down of units. The an­swer lies some­where else—in find­ing cheaper al­ter­na­tives to gas


IN De­cem­ber 2016, In­dia’s apex en­vi­ron­men­tal body En­vi­ron­ment Pol­lu­tion Con­trol Au­thor­ity (EPCA) re­leased a 14-page study about the ill-ef­fects of Fur­nace Oil (FO or HFO) and pet­coke on the air qual­ity of NCR re­gion, en­ti­tled “Man­dat­ing ac­cept­able fuel to be used in NCR for air pol­lu­tion con­trol”. The EPCA body com­prises of mem­bers from civil ser­vices, academia, in­dus­try and NGO rep­re­sen­ta­tives, among them be­ing Su­nita Narayan, Di­rec­tor Gen­eral Cen­tre of Sci­ence and En­vi­ron­ment (CSE), In­dia’s lead­ing en­vi­ron­men­tal NGO that made the highly pub­li­cised find­ings of pes­ti­cide residues pop­u­lar aer­ated drinks.

The Re­ports

The EPCA re­port on the at­mo­spheric ef­fects of FO and pet­coke com­bus­tion, con­trary to the CSE pub­li­ca­tions, was sur­pris­ingly am­a­teur­ish, al­most a cut and paste job that steered away from pro­vid­ing any hard numer­i­cal data, sources or anal­y­sis. It fo­cused solely on evan­ge­lis­ing the ill-ef­fects of sul­phur present in the two most used in­dus­trial fu­els, FO and pet­coke. The sec­ond para­graph of the re­port claims that “The key con­tam­i­nant in fuel that is re­spon­si­ble for high lev­els of pol­lu­tion is sul­phur—this is emit­ted in the form of par­tic­u­lates and also in the form of gas, sul­phur diox­ide (SO ). De­pend­ing on the level of mois­ture in the air, gas gets con­verted into par­ti­cles. These ‘sec­ondary’ par­ti­cles are a key source of air pol­lu­tion in Delhi/NCR. Ac­cord­ing to the IIT-Kan­pur re­port, as much as 25-30 per cent of the win­ter sources are sec­ondary par­ti­cles, which are emit­ted from ve­hi­cles, power plants and in­dus­tries. Any fuel, which is high in sul­phur will also have heavy me­tals, which will add to con­tam­i­na­tion of the en­vi­ron­ment.” But with­out pro­vid­ing the per­cent­age of sul­phates present in the par­tic­u­late mat­ter. It doesn’t re­ally take an en­vi­ron­men­tal­ist or a chemist to dis­cern that the state­ment is a gross over­sim­pli­fi­ca­tion, to say it mildly. Though sul­phur-de­rived SO and SO are po­tent pol­lu­tants and green­house gases, as are solid sul­phates, the fact re­mains that most of the par­tic­u­late mat­ter (PM), both PM 10 (10 mi­crons size) and PM 2.5 (2.5 mi­crons size) sus­pended in Delhi’s air are com­posed of mi­cro­scopic par­ti­cles of soot (un­burned car­bon), ash and dust with only the sec­ondary par­ti­cles hav­ing traces of sul­phates. The 334-page IIT Kan­pur re­port, ti­tled “Com­pre­hen­sive Study on Air Pol­lu­tion and Green House Gases (GHGs) in Delhi”, used by the EPCA to jus­tify their claims, does in­deed say that the main sources of pol­lu­tion dur­ing win­ter in Delhi are sec­ondary par­ti­cles (25-30 per cent), but also in­cludes PM from ve­hi­cles (20-25 per cent), biomass burn­ing (17-26 per cent), mu­nic­i­pal solid waste burn­ing (9-8 per cent) and soil and road dust. Sources of pol­lu­tion dur­ing sum­mer in­clude, coal and fly ash (37-26 per cent), soil and road dust (26-27 per cent), sec­ondary par­ti­cles (10-15 per cent), biomass burn­ing (7-12 per cent), ve­hi­cles (6-9 per cent) and mu­nic­i­pal solid waste burn­ing (8-7 per cent). The IIT re­port clearly men­tions, “It was ob­served that SO con­cen­tra­tions were low and meet the air qual­ity

stan­dard,” (on pages 24, 38, 51, 65, 78, 91, 105) with re­gards to six lo­ca­tions in the re­gion where air sam­ples were drawn in sum­mer and win­ter. In­ci­den­tally, fig­ures re­leased by the Cen­tral Pol­lu­tion Con­trol Board (CPCB) also show that the SO (sul­phur ox­ides) fig­ures in the NCR re­gion were well within lim­its. With re­gards to sul­phates in sec­ondary par­ti­cles, the IIT re­port lays the blame squarely on petroleum re­finer­ies and ther­mal power sta­tions lo­cated in the pe­riph­ery of the NCR re­gion. “What are the sources of sec­ondary par­ti­cles, the ma­jor and con­sis­tent con­trib­u­tors to Delhi’s PM? These par­ti­cles source from pre­cur­sor gases (SO and NO ), which are chem­i­cally trans­formed into par­ti­cles in the at­mos­phere. Mostly, the pre­cur­sor gases are emit­ted from far dis­tances from large sources. For sul­fates, the ma­jor con­tri­bu­tion can be at­trib­uted to large power plants and re­finer­ies. The preva­lent wind from north-west and south-east can bring in the sec­ondary sul­phates and ni­trates from large power plants and re­finer­ies al­most from all sides in Delhi.” (Page 275-276)

THE re­port fur­ther sug­gested a com­plete ban on mu­nic­i­pal waste burn­ing (MWB) and switch­ing to low sul­phur au­to­mo­tive fu­els, the need to im­pose emis­sion con­trols in in­dus­tries to re­duce PM from in­dus­trial stacks and the need to mon­i­tor NO lev­els. But nowhere does it in­di­cate Pet­coke or FO as the main cul­prits for the Cap­i­tal’s ter­ri­ble air qual­ity. Ac­tu­ally the re­port doesn’t men­tion the two fu­els at all. What is most sur­pris­ing in the EPCA re­port is that it largely glosses over the role of NO , which is pro­duced by ev­ery kind of com­bus­tion from in­dus­trial to ve­hic­u­lar, even if us­ing the clean­est fu­els, and is one of the key com­pounds re­spon­si­ble for the for­ma­tion of smog, pho­to­chem­i­cal smog and acid rains. In short, the EPCA re­port makes no secret that its clear-cut agenda is: Ban the usage of Pet­coke and FO in the en­tire NCR re­gion and force the In­dus­try to con­vert to Nat­u­ral Gas. Res­i­dents of Delhi would re­mem­ber that dur­ing both au­tumn 2016 and 2017, when dark smoke and smog en­veloped the cap­i­tal bring­ing life to a stand­still, the dom­i­nant smell in the air was not of sul­phur but that of burn­ing veg­e­ta­tion with an acrid tinge. The for­mer was the smell

of un­burned car­bon and volatile or­ganic car­bon from the agri­cul­tural stub­ble set on fire in the sur­round­ing ar­eas, the lat­ter caused by a po­tent chem­i­cal soup of meth­ane (CH ), car­bon monox­ide (CO), ni­tro­gen ox­ides (NO ) and other aerosols of cre­osote and sil­ica. The smell of sul­phur and sul­phurous com­pounds can be ex­pe­ri­enced mostly in ar­eas that burn coal, es­pe­cially nearby coal-burn­ing ther­mal power sta­tions or in­dus­tries with coal-fired boil­ers, ir­re­spec­tive of how many pol­lu­tion con­trol equip­ment they have in­stalled.

The After­math

By Fe­bru­ary 2017, the Supreme Court got into fray and asked the con­cerned gov­ern­ments of Ra­jasthan, Ut­tar Pradesh, Pun­jab and Haryana to pull up their socks and act on the rec­om­men­da­tions of EPCA in ban­ning FO and pet­coke, as Delhi had al­ready banned all high sul­phur fu­els in 1996. In Oc­to­ber 2017, the Supreme Court with­out much ado passed a rul­ing ban­ning the usage of both the fu­els in the en­tire NCR re­gion and fur­ther ex­tended the ban to en­com­pass the en­tire ter­ri­to­ries of the con­cerned States. The ban vir­tu­ally paral­ysed the en­tire man­u­fac­tur­ing sec­tor of the four States overnight due to the lack of fuel, as the only eco­nom­i­cal al­ter­na­tive—though it was still about 25 per cent more ex­pen­sive which could be used im­me­di­ately in place of FO—was Light Diesel Oil (LDO), while both Piped Nat­u­ral Gas (PNG) and Liq­uid Petroleum Gas (LPG) were 3-4 times more costly and re­quired ex­pen­sive re­fit­ting of pipe­lines and burn­ers. In the case of PNG, ad­di­tional fac­tors like avail­abil­ity of gas in a par­tic­u­lar area, pipe­line con­nec­tiv­ity and sup­ply con­tracts also play a ma­jor role for the con­ver­sion of a plant, and at a con­sid­er­able ex­pen­di­ture. In no time the re­finer­ies ran out of LDO as none man­u­fac­tured it in suf­fi­ciently large vol­umes. Hence, they were un­able to meet the sud­den spike in de­mand. The com­bined av­er­age monthly pro­duc­tion of LDO in all In­dian re­finer­ies is about 37,000 met­ric tones while that of FO is about 600,000 met­ric tonnes. Within a week, man­u­fac­tur­ing in the SME sec­tor al­most ground to a halt. Com­pa­nies that fired pet­coke in their fur­naces and boil­ers, were left with no al­ter­na­tive but to fish out their old liq­uid fuel burn­ers or buy new ones.

AS­SO­CI­ATED Cham­bers of Com­merce and In­dus­try of In­dia (Assocham) claimed that close to a 1,000 in­dus­trial units had tem­porar­ily closed down and over a lakh were af­fected by the ban, leav­ing 25 lakh work­ers job­less. By De­cem­ber end the Supreme Court re­laxed the ban par­tially for ther­mal power plants and ce­ment plants, but a com­pre­hen­sive so­lu­tion for the in­dus­trial fuel prob­lem is yet to be found. LPG and PNG, de­spite be­ing cleaner fu­els, are much costlier and their usage in in­dus­tries where fuel com­prises a ma­jor chunk of the man­u­fac­tur­ing costs, as in the case of iron and steel, makes them non vi­able.

Push for Gas

If viewed be­nignly, the EPCA re­port and the sub­se­quent Supreme Court ac­tion can be in­ter­preted as knee-jerk re­ac­tions to the peren­nial prob­lem of poor air qual­ity in the Cap­i­tal, fur­ther ag­gra­vated by the ter­ri­ble win­ter fog-turned-smog, the burn­ing of stub­ble and the pol­lu­tion caused by crack­ers and fire­works dur­ing Di­wali. But a crit­i­cal ap­praisal of the re­port and its after­math can only be in­ter­preted as bla­tant arm-twist­ing of the en­tire man­u­fac­tur­ing in­dus­try into switch­ing over to Nat­u­ral Gas, some­thing that In­dia pro­duces very lit­tle and is im­ported in the form of Liq­uid Nat­u­ral Gas (LNG). To­day LNG com­prises about 6.5 per cent of coun­try’s en­ergy mix and 19.7 mil­lion tonnes of it was im­ported in 2016, mak­ing In­dia the world’s fourth largest buyer. In 2015, the gov­ern­ment-owned Petronet suc­cess­fully rene­go­ti­ated a longterm im­port of 7.5 mil­lion tonnes of LNG from Qatar’s RasGas. Last year it con­vinced Exxon Mo­bil Corp to re­duce prices of LNG from the Gor­gon project in Aus­tralia. More re­cently, GAIL had also rene­go­ti­ated for lower prices for its

long-term Sale and Pur­chase Agree­ment of up to 2.5 mil­lion tonnes per year with Rus­sia’s gas giant Gazprom, which was signed in 2012 with sup­plies start­ing from May 2018. It is prob­a­bly per­ti­nent to re­call that im­port, sale and dis­tri­bu­tion of Nat­u­ral Gas is also one of the core busi­ness in­ter­ests of the Adani Group, which with its re­cent joint ven­tures with State-owned com­pa­nies has formed an al­most mo­nop­o­lis­tic gas com­bine. In 2016, In­dian Oil Cor­po­ra­tion and GAIL signed an agree­ment to pur­chase a 49 per cent stake in Adani Group’s 6,000-crore Dhamra LNG project in Odisha. In Au­gust 2017, the IOC board ap­proved ac­quir­ing up to 50 per cent stake in Adani Group-backed Mun­dra LNG im­port ter­mi­nal in Gu­jarat for an es­ti­mated 750 crore. So, by im­pos­ing a blan­ket ban on the two cheap­est in­dus­trial fu­els in the four in­dus­trial north­ern States, whether by ac­ci­dent or in­tent the gov­ern­ment through EPCA rec­om­men­da­tion and the Supreme Court rul­ing has pro­vided a huge and ready cap­tive mar­ket to the newly formed gas car­tel. Fur­ther, the EPCA in its ad­vo­cacy of the ban has been ret­i­cent about the fact that In­dia, thanks to her huge re­fin­ing ca­pac­ity, pro­duces co­pi­ous quan­ti­ties of pet­coke and FO as they are the in­escapable by-prod­ucts of the petroleum re­fin­ing process. Nei­ther have they men­tioned what to do with re­sul­tant stock­pile of these fu­els as In­dian Oil re­fin­ers pro­duced over 11.7 mil­lion met­ric tonnes of FO and 12.9 mil­lion met­ric tonnes of pet­coke in 2016-17.

Dirty Fu­els, Dirt­ier Emis­sions

On the other hand, one can­not ab­solve the In­dian man­u­fac­tur­ing in­dus­try, es­pe­cially the SMEs, from their role in lead­ing to such a sit­u­a­tion. For decades, vir­tu­ally the en­tire In­dian SME in­dus­try had bla­tantly flouted all at­mo­spheric and ef­flu­ent dis­charge pol­lu­tion norms, both with and with­out the con­nivance of the of­fi­cials of var­i­ous gov­ern­ment pol­lu­tion con­trol boards. Most of their pol­lu­tion con­trol equip­ment was just dec­o­ra­tive, at the most work­ing in­ter­mit­tently only dur­ing day to save on elec­tric­ity. Pri­vate agents ap­pointed by the pol­lu­tion con­trol boards came monthly, col­lect­ing cash en­velops and in turn pro­vid­ing re­ports with im­mac­u­late read­ings. Mean­while, waste was dis­posed off by con­trac­tors in unau­tho­rised land­fills or just by the side of the road. The fuel of choice is in­vari­ably se­lected solely on prin­ci­ple of “the cheap­est is the best” and most in­dus­tries sup­ple­ment their pur­chases from re­finer­ies with those pro­vided by generic oil traders who, in turn, sup­ply var­i­ous petro­chem­i­cal con­coc­tions con­tain­ing any­thing from marine waste oil to used en­gine oil, stolen crude, chem­i­cal waste, pitches and a mot­ley col­lec­tion of in­gre­di­ents, to­gether con­sti­tut­ing what goes by trade monikers like ‘Campa, Pit Ka Maal’ or sim­ply ‘Palti’. Fuel trans­porters too had a field day moon­light­ing as adul­ter­ators as vir­tu­ally no fuel ever reaches the des­ti­na­tion with­out some amount of pil­fer­age or mix­ing. The last decade also saw ex­ten­sive usage of an oil de­rived from the py­rol­y­sis of used tyres known as Tyre Oil, which matched the char­ac­ter­is­tics of LDO ex­cept that it is full of sol­vents like ben­zene and a host of other car­cino­genic agents. The plants ex­tract­ing it are them­selves im­mensely pol­lut­ing, con­tam­i­nat­ing the ground with car­bon wastes and dis­charge ef­flu­ents, and the air with nox­ious leak­ages from the py­rol­y­sis unit.

The Eco­nom­ics of Gas

It is a fact that both FO and pet­coke are low grade re­fin­ery by-prod­ucts and rel­a­tively dirty fu­els when com­pared to dis­til­lates and gas. FO does con­tain up to 3 per cent sul­phur and the fig­ure goes up to 7 per cent in the case of pet­coke. FO com­prises of resid­ual oils left from the dis­till­ing pro­cesses, while pet­coke is a so­lid­i­fied car­bon residue man­u­fac­tured in re­fin­ery coker units and used as re­place­ment of coal due to its higher

Though sul­phur-de­rived SO2 and SO3 are po­tent pol­lu­tants and green­house gases, as are solid sul­phates, the fact re­mains that most of the par­tic­u­late mat­ter (PM), both PM 10 (10 mi­crons size) and PM 2.5 (2.5 mi­crons size) sus­pended in Delhi’s air are com­posed of mi­cro­scopic par­ti­cles of soot (un­burned car­bon), ash and dust with only the sec­ondary par­ti­cles hav­ing traces of sul­phates

en­ergy con­tent. Both are cheap and hence ex­ten­sively used by the in­dus­try. Sim­ply ban­ning them would do lit­tle to clear up the Cap­i­tal’s air qual­ity but would force many in­dus­trial con­sumers to close shop. As per data re­leased by the Petroleum Plan­ning and Anal­y­sis Cell, in the pe­riod April 2016-March 2017, In­dian re­finer­ies pro­duced 11.75 mil­lion tonnes of FO and the in­dus­try con­sumed 7.15 mil­lion tonnes, the ex­cess be­ing ei­ther ex­ported or stock­piled. In the same pe­riod, the in­dus­try con­sumed al­most 24 mil­lion tonnes of pet­coke, of which 12.9 mil­lion tonnes was do­mes­tic, the rest be­ing im­ported. There is no State-wise con­sump­tion data of these two fu­els, but con­sid­er­ing the large num­ber of in­dus­tries and in­dus­trial clus­ters in the four north­ern States where they have been banned, it wouldn’t be wrong to as­sume that it can be any­where be­tween 1/3rd to 1/4th of the coun­try’s con­sump­tion.

AS the cur­rent price for in­dus­trial PNG is ap­prox­i­mately 1,000 per mmbtu (mil­lion Bri­tish ther­mal units) plus taxes ( source: Adani Gas web­site), its kilo calo­rie (Kcal) cost is about 39 for 10,000 Kcal, or the gross Kcal of 1 kg of FO which costs 30 plus taxes ( source: BPCL web­site). This means a straight 23 per cent hike in prices, not for­get­ting ad­di­tional ex­penses of any­where be­tween a few lakhs to over a crore for equip­ment re­fit­ting costs for burn­ing gas. When com­par­ing nat­u­ral gas prices with pet­coke—cost­ing about 11 per kg con­tain­ing 8,000 Kcal—again on the ba­sis of 10,000 Kcal, its a straight in­crease of Rs.22.50 or 236 per cent hike, plus the ad­di­tional cost of equip­ment. Even if we com­pare the cost ap­pre­ci­a­tion us­ing LDO, which costs about 38 per litre and is in very short sup­ply, the price dif­fer­ence on Kcal ba­sis with FO and pet­coke is Rs. 4 and 20, re­spec­tively. The ham-fisted ap­proach of de­mand­ing a blan­ket ban on the two cheap­est in­dus­trial fu­els may seem jus­ti­fi­able to en­vi­ron­men­tal­ists and learned judges, but the fact re­mains that all LNG is im­ported, is ex­pen­sive, re­quires ex­ten­sive and ex­pen­sive retrofitting of equip­ment, which many com­pa­nies may sim­ply not be able to af­ford and, best of all, is not even avail­able ev­ery­where. Ecol­o­gists and clean air ad­vo­cates may ar­gue that the in­crease in fuel cost is a small price to pay for health and clean air, but for most of the in­dus­tries al­ready reel­ing in re­ces­sion, this strikes a deadly blow if not the death knell. A more grounded ap­proach for the EPCA and the Supreme Court would have been learn­ing from In­ter­na­tional Mar­itime Or­gan­i­sa­tion (IMO), which is en­act­ing its 2020 global sul­phur limit for ships by spec­i­fy­ing PM, NO and SO emis­sion lim­its with­out ban­ning or rec­om­mend­ing any spe­cific fuel, but with strict mon­i­tor­ing and en­force­ment.

A Ready So­lu­tion

In its zeal to ban FO and pet­coke and pro­mote nat­u­ral gas, EPCA com­pletely ig­nored the ex­is­tence of ma­ture and time­tested fuel mod­i­fy­ing pro­cesses like FuelWater Emul­si­fi­ca­tion and Fuel-Wa­ter Slur­ries that en­hance com­bus­tion and also dras­ti­cally re­duce emis­sions from PM to CO, NO and SO . Both are tech­nolo­gies that can be im­ple­mented at min­i­mum cost with lit­tle or no ap­pre­ci­a­tion in the fi­nal fuel price. FO can be eas­ily emul­si­fied and pet­coke can be con­verted into a Car­bon Wa­ter Slurry (CWS) fuel. Nu­mer­ous stud­ies from around the world—from the En­vi­ron­men­tal Pro­tec­tion Agency (EPA) of the US to the Kobe and Kana­gawa Uni­ver­si­ties of

Japan—at­test that emul­sions burn much cleaner than stock fuel. The EPA study on emis­sion fac­tors of Fuel Oil com­bus­tion stated that emul­si­fi­ca­tion of No 6 Fuel Oil (equiv­a­lent to our FO) with 9 per cent wa­ter, re­duced NO by 41 per cent, CO by 33 per cent and PM by 45 per cent. An­other EPA study says The CO emis­sion fac­tor was 24 per cent lower for the emul­si­fied oil com­pared to the base oil, the NO emis­sion fac­tor was 35 per cent lower for the emul­si­fied oil com­pared to the base oil, and the PM emis­sion fac­tor was 38 per cent lower for the emul­si­fied oil com­pared to the base oil.” Emul­si­fi­ca­tion of FO slightly re­duces SO emis­sion, though the process can be en­hanced to re­duce lev­els even fur­ther by adding cer­tain pro­pri­etary chem­i­cal for­mu­la­tion into the emul­sion.

THE CWS tech­nol­ogy had been ex­ten­sively de­vel­oped dur­ing the 70s and the 80s, but was largely side­lined when oil prices came down. To­day the tech­nol­ogy is widely used in coal gasi­fiers and in niche seg­ments as a re­place­ment for FO at a much lower price. Com­bus­tion of CWS re­duces NO emis­sion be­tween 35-40 per cent and PM by 30 per cent. SO lev­els emis­sions of pet­coke CWS can be partly re­duced by mix­ing spe­cial sor­bent ma­te­ri­als dur­ing prepa­ra­tion and by at­tach­ing a wet scrub­ber to the ex­haust duct to fur­ther clean the gas. The process can be un­der­taken cen­tralised lo­ca­tions where FO and pet­coke is pro­cured from re­finer­ies and con­verted into Emul­si­fied FO and CWS under strict qual­ity con­trol so that the end prod­uct meets the set emis­sion norms upon com­bus­tion, and shipped in tanker trucks to the end client. This way, the in­dus­trial fuel con­sumers would be spared the cost of pur­chas­ing the Fuel Emul­si­fy­ing or CWS equip­ment, thus sav­ing them a con­sid­er­able in­vest­ment. It would also en­sure that the units doesn’t lie idle or un­der­per­form like in the case of most pol­lu­tion con­trol equip­ment. Besides, they won’t have to in­crease their fuel ex­penses and cost of pro­duc­tion by con­vert­ing to gas, nor in­vest in gas burn­ers and an­cil­lary equip­ment. Though the emis­sion may not be as clean as in the case of Nat­u­ral Gas, there would still be an av­er­age of 40 per cent less PM and NO with a con­sid­er­able re­duc­tion in CO, CO and SO . At the same time, the coun­try re­duces its im­port bur­den of LNG and gets to utilise its en­tire FO pro­duc­tion with­out hav­ing to ex­port it at a dis­count. All that is re­quired is for the gov­ern­ment to set emis­sion norms for NO , PM and SO and to de­clare that the only way to use FO or pet­coke as fuel is to emul­sify or con­vert it into CWS.

In its zeal to ban FO and pet­coke and pro­mote nat­u­ral gas, EPCA com­pletely ig­nored the ex­is­tence of ma­ture and time-tested fuel mod­i­fy­ing pro­cesses like Fuel-Wa­ter Emul­si­fi­ca­tion and Fuel-Wa­ter Slur­ries that en­hance com­bus­tion and also dras­ti­cally re­duce emis­sions from PM to CO, NOx and SOx

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