Economics of Oil Production from Pongamia (Millettia pinnata) for Biofuel in Australia

Abstract

Pongamia (Millettia pinnata) has been widely studied as a potential feedstock for biodiesel fuel, though little is known about its feasibility at a commercial level. Capital budgeting and cash flow analysis was conducted for a potential Pongamia plantation and crushing plant in Queensland, Australia. For annual seed yields ranging from 20 to 80 kg (in shell) per tree, the delivered cost of Pongamia oil was estimated to be between AUD $2.22 and AUD $0.64 per litre. The seed yield range of 20 to 80 kg per tree is roughly equivalent to between 7 and 29 t per hectare at a planting density of 357 trees per hectare. Major components of the delivered cost of (Pongamia) oil are the capital expenses of land acquisition, plantation establishment and the crushing plant construction. The major operational costs include mechanical harvesting; fertiliser; control of weed, pests and diseases; seed crushing; and freight of oil to a refinery. The cost items with the greatest volume sensitivity are the capital expenses, overheads (consisting mostly of salaries and wages of employees) and the expenses associated with harvesting and crushing operations. These costs could be significantly reduced if the seed yield could be increased. Several scenarios were tested to demonstrate the effect of seed yield and oil price on the profitability and cash flow of the Pongamia enterprise. At most plausible oil prices and seed yields, Pongamia oil is not expected to be economically viable.

A framework for profitability evaluation of agroforestry‐based biofuel value chains: An application to pongamia in India

“…This inevitably leads to financial risks and uncertainties, as it does for jatropha-based systems (Borman et al, 2013;Muys et al, 2014). These observations emphasize the need for further regional-specific yield research and improvement (Abadi et al, 2016;Johnston, Foley, Holloway, Kucharik, & Monfreda, 2009…”

“…The seeds generally have an oil content between 30% and 40% (Table 2). Fruit and seed yields are vital parameters for profitability, yet their temporal pattern is highly variable and uncertain, and very little is known on the role of genetic and (a)biotic factors (Abadi et al, 2016;Gunatilake, 2011;Karmee & Chadha, 2005;Murphy et al, 2012;Rao, Shanker, Srinivas, Korwar, & Venkateswarlu, 2011). The BP's data on superior local accessions differ greatly from the yield project's data on a more random set of trees.…”

“…Therefore, two distinct yield scenarios are defined: a high yield scenario based on the former, and a low yield scenario based on the latter. These cover the yield range commonly reported in literature (Abadi et al, 2016;Gunatilake, 2011). Table 2 contains the corresponding yield figures at stabilization; the entire temporal pattern is listed in Table S1, and Table S2 provides yield correlations.…”

“…Furthermore, several life cycle assessment studies indicate that biodiesel production from pongamia plantations may lead to greenhouse gas emission reductions relative to fossil fuels, although potential emissions from land use change were not accounted for (Cox, Renouf, Dargan, Turner, & Klein-Marcuschamer, 2014;Farine et al, 2012;Pragya, Sharma, & Gowda, 2017). Despite the benefits, few studies have investigated the economic viability of pongamia cultivation (Abadi et al, 2016;Bohra, Sharma, Saxena, Sabhlok, & Ramakrishna, 2016;Gunatilake, 2011;Murphy et al, 2012), and financial outcomes remain unclear.…”

Selection of High Oil Yielding Trees of Millettia pinnata (L.) Panigrahi, Vegetative Propagation and Growth in the Field

“…However, it is not renewable and will be used up in coming decades if the trend of consumption continues to increase [6]. Rapid population growth has contributed to high energy demand and this needs to be anticipated to ensure the availability.…”