Informist, Wednesday, Jul. 23, 2025

NEW DELHI – India must reduce the share of rice in the feedstock basket used for making ethanol to improve economic efficiency and cut food loss while making biofuel, Nagaraj Meda, the chairman and managing director of commodity research firm TransGraph, said. He suggested the country focus on more sustainable alternatives like maize and sugarcane-based feedstocks.

Though nearly 25% of ethanol is currently made from rice, it comes at a cost, he said. Ethanol producers using broken rice in Purnea, Bihar, are making nearly INR 1.6 per litre of ethanol as net loss while those using maize are earning INR 5.5 per litre in Purnea and up to INR 9 per litre in Nizamabad, Telangana, Meda said.

Amid piling rice stocks in the country, the government earmarked 5.2 million tonnes of rice, up from the earlier 2.4 million tonnes, for ethanol production in 2024-25 (Nov-Oct). However, the government is selling rice at a highly subsidised rate of INR 2,250 per 100 kilogram to attract distillers. This price is way below the economic cost of INR 3,975 per 100 kilogram.

Meda said the government is "giving away the valuable food" at a highly subsidised rate to make biofuels. "Instead of wasting money on rice, a better strategy is giving 50-50 (share) to maize and sugar," he added.

India needs about 10.5 billion litres of ethanol for blending requirements in 2024-25, of which around 73% will be sourced from grain-based and 27% from sugar-based feedstocks, Meda said. India is estimated to need 12.1 billion litres in 2025-26, he added. India blends ethanol with petrol to promote green mobility and reduce its dependency on crude oil imports.

Meda urged the ethanol industry to seek indirect financial incentives, such as tax credits, from the government. Every tonne of ethanol saves about 1.3 tonnes of carbon emissions, worth an estimated $120 million at current carbon credit prices, he said. "The time is very ripe for the ethanol companies to start asking the government to give some additional tax credits. We should not focus only on increasing (ethanol) price," Meda said. Oil marketing companies are reluctant to hike ethanol procurement rates consistently, he added.

Meda also cautioned the industry against only catering to ethanol blending requirements. He suggested the industry invest in advanced ethanol technologies like Alcohol-to-Jet used to make sustainable aviation fuel, a cleaner fuel derived from non-petroleum feedstocks such as crops, agricultural residue, and plant oil.

After achieving 20% blending with petrol, the next frontier is sustainable aviation fuel, he said. It is estimated that a 5% sustainable aviation fuel blending target by 2030 would require 1.2 million tonnes to 1.3 million tonnes of ethanol annually, he added. India generates about 500 million tonnes of agricultural waste annually, of which about 250 million tonnes could be tapped for ethanol production, offering an additional source for sustainable aviation fuel, he said.

Meda added that ethanol derived from farm waste could fetch higher carbon credits than ethanol made from food crops. A carbon market allows companies to buy and trade carbon credits, which can be used by companies to offset their carbon emissions.

He also noted that used cooking oil holds huge potential as a feedstock for both biodiesel and sustainable aviation fuel production, with the improvement of collection mechanisms and better policy support. End

Reported by Afra Abubacker

Edited by Ashish Shirke

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