In future, all or some of the Jatropha oil may be refined into biodiesel by the Company. That decision depends on continual analysis of where the best return on capital will be achieved – by expanding the Jatropha oil business or in refining to biodiesel. Producing biodiesel may add a measure of market security which will be taken into account in the prevailing circumstances.
If all of the current production of all of the food oils – palm, soya, Canola and sunflower – in the world were converted to biodiesel, it would represent about 10% of the world’s use of diesel. Consequently the market for biodiesel is effectively unlimited if pricing is competitive with diesel, or if governments intervene to ensure that pricing remains competitive.
Jatropha Oil Production
Seed production
Curcas Energy believes that the most economic way to procure seeds for oil extraction is by contract farming. Under this method, the Company supplies the farmer with seedlings and guarantees to buy the resulting seeds and the grower agrees to sell exclusively to the Company.
In practice in Thailand, the Company operates through an intermediary Thai company owned by local people. The local company provides the interface with the growers and provides the logistics for fruit collection and seed separation. The detailed logistics for dealing with large numbers of growers is therefore handled by locals. There is a centuries old administration hierarchy in Thailand with provinces, districts and villages. Each has a head man and this greatly simplifies communication with individual growers.
The Company will support the growers with technical assistance on fertilizer requirements and agronomic practices, and anticipates the cooperation of the Department of Agricultural Extension.
Curcas Energy has joint ventured into a University breeding programme which started in 2004, and as superior cultivars become available these will be introduced to improve both yield of seeds per hectare and yield of oil per unit weight of seeds. Such improvements are regarded as essential for the long-term growth and success of the Jatropha industry.
Oil extraction and electricity generation
The extraction process relies on expellers very similar to those in use in palm oil mills.
The crude oil is then refined by simple processing to make it suitable for most biodiesel production plants.
The seed residue contains toxins which make it unsuitable for animal feed without treatment. It is however suitable for use as an organic fertilizer and can be burnt to generate electricity, part of which can be used to power the extraction plant. The remainder would be sold into the National Grid and contribute to profits. Once the initial oil extraction facility is established, the Company plans to extend its operations to power generation from the seed residue. The oil extraction and electricity generation would be located on the same site. However, the power generating component is capable of being scaled, and may in future handle husks and prunings in addition to seed residues.
Carbon Credits
The source of energy for the electricity generation allows carbon credits to be claimed for the whole of the amount generated. The sale of such credits is well established and in Thailand there are about a dozen biomass generation facilities. The Company has had discussions with a number of carbon trading companies and has found keen interest in purchasing the rights.
The price of carbon credits fluctuates but within the ranges quoted their sale makes a useful contribution to the return on capital.