Ethanol - Demand, Market Size, Opportunities & New Goverment Policies (Part-1)
Ethanol - The next big tailwind story
Twitter Handle: @shuchi_nahar
Introduction
Ethanol, also
called ethyl alcohol, drinking alcohol, or simply alcohol is simple alcohol
that is often abbreviated as EtOH. Ethanol production in India is mainly
dominated by sugary feedstock, and C-heavy molasses available from sugar mills. Ethanol
produced by fermentation of renewable food crops such as sugarcane, maize,
wheat, sorghum, beet, and other starches is called bioethanol, and it is the eco-friendly
alternative biofuel. The product is primarily used as a solvent in various
industries such as:
In addition,
ethanol is gaining popularity as an efficient alternative fuel. It has
significant penetration in the major end-use industries such as automotive,
foods and beverages, chemicals, personal care and cosmetics, and
pharmaceuticals. According to the reports, the global ethanol market is
projected to grow at a robust CAGR of 4.5% to reach USD 117 Billion by the end
of 2027. The primary factors favoring the growth of the global ethanol market are
the increasing demand for the product in the rapidly growing end-use industries
such as automotive, food and beverages, and chemicals.
In Chemistry terms, ethanol or
ethyl alcohol is the 2nd member in the family of molecules
containing OH (hydroxyl) group attached to a carbon atom, with the chemical
formula C2H5OH. This molecule has three widely known
applications –
As fuel ethanol where is mixed
with gasoline as an oxygenate to boost octane number and in higher proportions,
to replace gasoline. As beverage alcohol where is the principal component of
alcoholic beverages like whiskey, rum, and vodka. In industrial applications like
paints, varnishes, perfumes, pharmaceuticals, industrial solvents,s, etc.
Sugar
Process Flow chart
In a fermentation process sugar (glucose, fructose or other monosaccharides) is converted to ethanol by microbes (mostly varieties of the yeast Saccharomyces cerevisiae), which are inoculated to the feedstock. The monosaccharides originate either directly from disaccharides, which are broken up via invertase enzymes, or from starch which is hydrolyzed with amylase enzymes. In addition to ethanol, water and carbon dioxide are produced also.
The feedstock for ethanol production can be any material containing appreciable amounts of sugar or substances that can be converted to sugar. Conventional production uses sugar (from sugar cane and sugar beet), starch (from corn, wheat, or potatoes), or other polysaccharides. The production process of second-generation ethanol, also called cellulosic alcohol, uses cellulosic feedstock (e.g. from agricultural residues) which requires further pretreatment.
Huge
runaway for Growth
The total annual installed capacity of Ethanol in India is 460 Cr. L In the next 5 yrs, OMCs Ethanol
requirement will be ~2000-2400 Cr. Lts as per 10% Ethanol blending India has a target of achieving 10% Ethanol blending by 2022 & 20% Ethanol blending by
2030.
India has preponed the target of
achieving 20% ethanol-blending with petrol by five years to 2025 as it looks to
cut dependence on costly oil imports. In 2014, less than 1% ethanol was being
blended with petrol against the target of 5%. In the last sugar year, this
ratio has reached 8.5% and next year it is 10%, Last year the government had
set a target of reaching 10% ethanol-blending by 2022 (10% of ethanol mixed
with 90% of petrol) - and 20% by 2030. "But now the 20% target has been
advanced to 2024-25.
When the nation achieves that ratio of blending,
India will be second only to Brazil in blending ethanol in petrol. But in
absolute terms, India will be higher than Brazil. India is 83% dependent on
imports for meeting its oil needs. Doping petrol with ethanol will cut down the
import requirement. Also, ethanol being less polluting fuel, it will cut down
carbon emissions.
The government has announced the 5 year tender for procurement. There's a big push
on the ethanol side. High interest for grain-based ethanol plants following the
Government announcements regarding the use of surplus grains. The current
ethanol blending rate in India has reached a level of 5.1% amounting to 200
crore liters in the current year. With the Government’s plan to reach 10% by 2022
and 20% by 2030 there is a significant capacity that needs to be built to cater
to the additional blending requirement by 2022. With a view to achieving blending
targets Government is encouraging sugar mills and molasses-based standalone
distilleries to enhance their ethanol distillation capacity. Based on the
ethanol supply offers, Public Sector Oil Marketing Companies (OMCs) have
allocated 325.5 crore liters for Ethanol Supply Year (ESY) (period from Dec. to
Nov.) 2020-21 to be blended with petrol under the EBP Programme.
Source:GIA Research & ISMA
In
fact, to meet the target of 20% ethanol blending, the industry will fall short of
sugarcane and will have to depend on grains too. Distillery margins have been
strong, so despite just 15% revenue contribution, the profit contribution is
more than 50%. Most sugar companies are already working on expanding ethanol
capacity. This will give them the flexibility to shift production between sugar and
ethanol to maximize profitability.Thus the ethanol distillation capacity in the country
would increase from 426 crore liters per annum to about 590 crore liters per
annum by 2022. To encourage sugar mills to divert excess sugarcane to produce
ethanol for blending with petrol, the Government has allowed the production of
ethanol from B-heavy molasses, sugarcane juice, sugar syrup, and sugar and has
also fixed the remunerative ex-mill price of ethanol derived from these
feed-stocks. The state-wise targets for ethanol manufacture have also been
fixed.
Ethanol Process
Source: Novozymes
In order to enhance the ethanol production
capacity in the country, DFPD has informed that Government has notified a the modified scheme on January 14,2021 for extending financial assistance in the
form of interest subvention on loans advanced by Banks/NCDC/IREDA/NBFCs and any
other financial institutions to project proponents for different activities
viz. setting up of new distilleries, expansion of existing capacity,
installation of Zero Liquid Discharge (ZLD) System and Molecular Sieve
Dehydration (MSDH) Column, etc. for production of first-generation (1G) ethanol
from feedstock such as cereals (rice, wheat, barley, corn, sorghum), sugarcane
and sugar beet, etc. including granaries and surplus rice with Food Corporation
of India (FCI).Enzyme Biotechnology: https://myweekendspot.blogspot.com/2020/12/what-are-enzyme-biotechnology-market.html
Source: ISMA
Novozymes
ET Now
GIA Research
Twitter Handle: @shuchi_nahar
Disclaimer: The information provided on Shuchi Nahar’s Weekend Blog is for educational purposes only. The articles may contain external links, references, and a compilation of various publicly available articles. Hence all the authors are given due credit for the same. All copyrights and trademarks of images belong to their respective owners and are used for Fair Educational Purpose only.
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