Saturday, 05 Oct, 2024
When the government took stock in December 2023, it reported that India's ability to produce ethanol had already climbed to 1,380 crore litres, of which 875 crore came from sugarcane and 505 crore from foodgrains. Image Source: IANS
Recent events have demonstrated that the food vs fuel issue still casts a shadow over the ethanol economy.
Considering the milestones reached in terms of blending percentages thus far and the growth in ethanol production capacity, India is on track to meet its aim of blending 20 percent of petrol with ethanol by 2025–2026. Recently, in May 2024, the percentage of ethanol in petrol exceeded 15 percent. According to data from the oil ministry, state-run oil marketing businesses blended 670 million litres of ethanol with petrol in May, achieving an average blending ratio of 15.4 percent. In order to attain a monthly blending ratio of 12.7 percent, 515 million litres of ethanol were consumed in April. This is a significant increase.
But as recent events have demonstrated, the food vs fuel issue still casts a shadow over the ethanol economy. For instance, during the period when maize was being used to create more fuel ethanol to make up for limits on utilising sugarcane products, imports of maize rose from April to June of this year compared to the same period last year. However, the sector believes that India has sufficient surpluses of sugar and grains.
The Niti Aayog's roadmap to accomplish ethanol blending targets stipulated that grain-based distilleries' capacity should rise from 258 to 740 crore litres, while sugarcane-based distilleries' capacity would need to increase from 426 crore litres in 2021 to 760 crore litres in 2026. Stated differently, there were going to be a lot more grain-based distilleries built. In addition to fuel ethanol, 310 crore litres will be required to produce ethanol for industrial and consumable spirits applications. When the government took stock in December 2023, it reported that India's ability to produce ethanol had already climbed to 1,380 crore litres, of which 875 crore came from sugarcane and 505 crore from foodgrains.
In decreasing order of sugar concentration, sugarcane yields three main related products: sugarcane juice and syrup, B-heavy molasses, and C-heavy molasses. Usually, the first two are used to produce sugar, and the third is used to produce ethanol. The government had begun allowing the first two to be diverted from the production of sugar to fuel ethanol in an attempt to increase the production of the fuel. The cost of ethanol is determined by the amount of sugar in the input. In 2022–2023, B-heavy molasses accounted for 63 percent of fuel ethanol, whereas molasses accounted for 33 percent. The government limited the first two's diversion in December 2023 due to concerns over declining sugar stocks.
The Union Government has laid a major emphasis on the production of ethanol in the country and also blending it with petrol. The government has taken various steps in providing a boost to the ethanol production and ethanol production capacity in the country. A “Roadmap for Ethanol Blending in India 2020-25” was released by the PM in June 2021 which laid out a detailed pathway for achieving 20 percent ethanol blending. Due to the coordinated efforts of the Public Sector Oil Marketing Companies (OMCs) and the increase in diversion of sugar for ethanol production, the target of 10 percent blending under the programme had been achieved much ahead (August 2022) of the targeted deadline of November 2022 wherein the Public Sector OMCs have attained an average 10 percent ethanol blending in petrol across the country.
Source: Ministry of Consumer Affairs, Food & Public Distribution and Ministry of Petroleum and Natural Gas
The ethanol production capacity in India has increased from 423 crore litres in 2019-20 to 1,380 crore litres in 2023-24. The Central Government has taken various steps to increase production and utilisation of ethanol. The Government has amended the Industries (Development & Regulation) Act to ensure free movement of ethanol in the country. The Government has also reduced the Goods & Service Tax (GST) on ethanol meant for Ethanol Blended with Petrol (EBP) Programme from 18 percent to 5 percent since 2018.
Under the ethanol blending programme, an indicative target of 20 percent blending of ethanol in petrol by 2030 was laid out. Subsequently, the target year for achieving 20 percent ethanol blending in petrol was also advanced to 2025. By blending 20 percent ethanol, the nation could experience significant benefits, including energy security, reduced carbon emissions, improved air quality, self-reliance, the use of damaged food grains, an increase in farmer incomes, the creation of jobs, and more investment opportunities
In addition to lowering greenhouse gas emissions, ethanol will support the rural economy by encouraging the production of a variety of crops by providing a guaranteed market, preventing an estimated $4 billion in annual foreign exchange outflow, according to estimates from the Maruti Suzuki firm. Many automakers claim that it is possible to meet the government's E20 (20 percent ethanol and 80 percent petrol) compliance deadline, but there are still concerns about how higher ethanol content might impair the performance of current cars.
Ethanol is environment friendly as one crore litre of ethanol blended petrol can save around 20,000 tons of carbon dioxide emission. Greenhouse gas emissions due to the EBP Programme were reduced by 318.2 lac tons during 2014 to November 2022.
Also, the Government of India is planning to blend 5 percent ethanol on diesel as it nears its goal of achieving 20 percent ethanol blending in petrol.
The sale of ethanol has brought in more than ₹94,000 crores in revenue for sugar mills over the past ten years.
Source: Press Information Bureau
The chart shows that there is a rise in payment to farmers enabled by the EBP Programme. From ₹1,119 crore in 2013-14, the payment to the farmers has increased to ₹16,793 crore in 2021-22. In addition to this, in the past six years, ethanol supplies and blending percentages have surged by more than five times. In past three Ethanol Supply Years (December- November), revenue of about ₹48,573 crore has been realised by sugar mills from the sale of ethanol to Oil Marketing Companies (OMCs), which has helped sugar mills/molasses based distilleries to make timely payment of cane dues of farmers.
