Fuel Prices Heat on Indian Tea

Energy Costs to Shoot up:

Energy costs are going to keep increasing faster than the rest of the cost components in the tea industry. The industry needs to take urgent & bold decisions on energy policy to mitigate this cost escalation. The countdown has begun. We are already the highest costing in the international market.
Crude Oil has tested $100 a barrel; Coal is already showing signs of increased demand that will push prices up very fast; Gas too will keep climbing & as it is, the natural gas supplies in the tea areas that have traditionally been on gas, are not getting their requirements . As an industry these prices are not in our hands but they will certainly make us feel the heat.
Let us look at the scenario:
1. India is set to become the 3rd largest importer of oil by 2025 (just behind the USA & China) - International Energy Agency (IEA).
2. Power requirement will more than triple by 2030. Most of this generation is on coal – coal requirement will increase more than 300% by then. And the prices ?!!!
3. Natural gas that has been the preferred fuel in many tea growing districts is now being diverted to other industries (like Fertilizers) and the industry is being forced to go onto alternative fuels.
4. Alternative sources of energy –
i. Wind Energy – a wonderful clean source that is largely going un-tapped. However, this has had very little success in the country as i) it is uncertain ii) high up-front costs (low load factor of 20-25%) & iii) Large land requirements (20 acres per MW).
ii. Solar energy – technology for the future but we have to wait a long time to see the technology improving and this becoming a source that is economical. At present the cost per unit is between Rs.15/- to Rs.30/- as compared to Rs.2/ to Rs.6/- for thermal energy. And then the photovoltaic cells & panels have to be replaced every 7 to 8 years.

In this scenario what are the options to the industry:
1. Those on oil firing need to switch to Coal immediately.
2. Those on gas too need to take off some of their driers onto coal & seeing the writing on the wall, fully convert over a period of 2 years.

But the coal prices are also going to keep increasing dramatically. Remember the industry has no control on the prices of oil, gas & coal. It is the market forces (tea is an insignificant player) that will drive these. But are our competitors also going to be affected as bad as us? Yes and no. Their fuel prices will rise with the market like in our case, BUT some of them depend on self generated fuel wood-for a major part of their energy requirement. The fuel-wood cost is in your hands and it is not going to increase very much.
So, as starters, I suggest that the industry may need to –
1. Generate as much fuel wood as possible.
2. Supplement the coal fuel with fuel-wood, ‘brickets’ of whatever is available locally (like ‘bagas’ from sugarcane, etc.)
3. Install steam boilers for all the energy needs except transport fuel. This would be the best and most sustainable, as long as you generate enough fuel. But in case you do not have enough at present, then put in a smaller boiler & supplement your energy requirements.
4. How do we increase our fuel-wood:
a. Reduce your shade replacement cycle. Keep planting new rows so that in 8 to 10 years shade trees are replaced. As the weather has become more erratic shade regulation must also be adopted to reduce the effect of the vagaries of weather & to increase crop.
b. Plant all road sides, fencings (use trees for posts that can be periodically lopped for fuel & then replaced), vacant areas with quick growing fuel trees that can take pollarding / coppicing.
c. Plant fuel-wood in vacant areas and manage them by regenerating fuel by doing intensive management of fuel. This entails irrigation (when required), fertilizer application, retaining the root system while harvesting and regenerating fuel at least 3 times. Then doing replacement planting just a year before the 3rd round of harvesting.
d. Encourage workers to grow these fuel trees in their compounds and then buy these off them at an agreed price.

Some estates have already started on large scale plantations of ‘bio-fuels’. What I would like to ask is that for plantations where we could be using fuel-wood as direct source of fuel, is it going to be more economical for us to grow bio-fuels or go in for Fuel-wood ? The industry needs to take a call on this and also take the government on board for subsidies for fuel-wood generation. And if in these fuel plantations we are following a 7 year cycle is there any chance of Carbon Credit for at least part of the area?