Informist, Friday, Jun 18, 2021

By Preeti Bhagat

NEW DELHI – The government's aim to achieve 20% ethanol blending with petrol by 2025 may have seemed ambitious to begin with, but industry leaders say it could be possible if all stakeholders align their efforts and work in tandem. 

The Centre has brought the original target of 2030 forward by five years based on the progress in the ethanol blending programme in recent years. India's ethanol production capacity has almost doubled to 3.23 bln ltr over five years, with capacity increasing substantially from 2017-18 (Dec-Nov).

The government's push for the ethanol programme is useful at various levels. It not only saves millions of tonnes of greenhouse gas emissions each year, but also helps reduce the sugar glut in the domestic market and cut the crude oil import bill.

The Centre aims to save around 300 bln rupees in foreign exchange annually, once 20% blending is achieved by 2025, data from the food ministry showed.

"Sugarcane uses carbon dioxide for photosynthesis while growing, so using cane-derived ethanol as a fuel can lead to lifecycle greenhouse gas emission reductions of 19-48% compared to using pure gasoline," global supply chain firm Czarnikow said in a note.

Currently, the average blending in India is 7.7%, which is expected to touch 8.0-8.5% in 2020-21 (Dec-Nov), the food ministry data showed. Next season, the country aims to achieve 10% blending, 12% by 2022-23, and 15% by 2023-24.

To increase ethanol blending, Food Corp of India is providing rice to ethanol producers at a concessional rate of 20 rupees a kg. The government is also encouraging distilleries to produce ethanol from other feedstock such as sugar beet, sweet sorghum, and maize, apart from cane juice, B-, C-heavy molasses and damaged foodgrains.

"The government has expanded the range of feedstock... You have market available with robust policy framework put in place which will help in the ethanol programme. The government is streamlining the process," said Roshan Lal Tamak, executive director and chief executive officer (sugar business), at DCM Shriram Ltd.

So far this season, 3.23 bln ltr of ethanol has been supplied to oil marketing companies and a couple of more tenders are expected over the next few months.

To meet the government's 20% target by 2025, distilleries will have to supply 10-12 bln ltr ethanol.

States such as Uttar Pradesh, Maharashtra, Karnataka, Uttarakhand, and Bihar have achieved higher blending percentage of up to 10%, while others such as Kerala, Ladakh, and Kashmir lag behind.

"OMCs (oil marketing companies) are making efforts to reach these faraway states. They are revising transport rates also, and we need to now increase blending to 12-15% from here on in some states," said Abinash Verma, director general of the Indian Sugar Mills' Association.

Higher ethanol production means more distilleries will come up and around 400 bln rupees of investment is expected in the years to come, the food ministry said. As more and more distilleries come up and start producing the green fuel, oil marketing companies too need to work in tandem and increase their storage capacities.

"OMCs need to improve their tankage capacities in depots because currently, they are taking 10%... Automobile manufacturers also need to respond and roll out E20 compatible vehicles," Verma said.

Prime Minister Narendra Modi recently released the Roadmap for Ethanol Blending in India by 2025. It proposes a gradual rollout of ethanol-blended fuel to achieve E10 fuel supply by April 2022, and a phased rollout of E20 from April 2023 to April 2025.

"Augmenting the tankage capacities and promoting manufacturing of flexible fuel vehicles are the next steps that domestically need more focus going forward to achieve the 20% target apart from the capacity expansion," CARE Ratings said in a report.

Ethanol is the only solution for the sugar sector to manage the looming surplus. By 2025, the Centre aims to divert excess sugar to the tune of 6 mln tn produced annually for production of ethanol in order to make timely cane payment to farmers.

While the step towards green fuel might be environment-friendly, excessive diversion of sugarcane and foodgrain towards production of the biofuel may lead to high food prices in the long run.  End

Edited by Subham Mitra

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