Ethanol - Demand, Market Size, Opportunities & New Goverment Policies (Part-2)

Ethanol production capacities, impact on Farmers, and Government Plans

Twitter Handle: @shuchi_nahar

Ethanol was rarely discussed in the country about 7-8 years ago. But now ethanol has become one of the major priorities of 21st century India. The focus on ethanol is having a better impact on the environment as well as on the lives of farmers.

India’s requirement of ethanol for petrol blending will increase from 173 crore liters in 2019-20 to 1,016 crore liters in 2025-26. To enable the rollout of ethanol production across India, ethanol may be supplied from surplus to deficit states based on the requirements to ensure uniform availability of ethanol blends in the country.

To achieve the Modi Administration’s E-20 blending goal by ethanol supply year (ESY) (December-November) 2025, India would need to procure approximately 11 billion liters (BL) of ethanol for blending with petroleum. As of November 2021, India’s concentrated ethanol production capacity totaled slightly above 6 billion liters. Of that amount, approximately 5.25 BL (88% share) is ascribed to distillation units (projects) that use sugar and molasses feedstocks. Conversely, the current grain-based (e.g., corn) distillation capacity consists of 750 million liters.

To address the production gap, the government has looked to increase India’s grain-based ethanol unit capacity by 5-5.5 billion liters.

Ministry of Petroleum and Natural Gas to notify a plan for availability of E10 fuel (blend of 10% ethanol and 90% petrol) by April 2022. Further, the Ministry is to notify a plan for the continued availability of fuel for older vehicles. Fuel blended with 20% ethanol (E20) should be launched in a phased manner from April 2023 to ensure the availability of E20 by 2025. The rollout of higher ethanol blends may be done in a phased manner, starting with the states with surplus production of ethanol.

The process to procure Ethanol

Increase in Production Capacity

State Production Capacity The number of new grain-based ethanol projects varies by state. At present, Punjab has 16 grain-based ethanol plants, the largest amount, with an installed capacity of 620 million liters. Since January 2021, roughly 35 projects have been approved in Maharashtra which would increase the state’s annual capacity by 1.07 BL, according to Post sources.

Additionally, 29 projects were approved in Uttar Pradesh with an additional estimated annual capacity of 1.08 BL, while 20 new projects totaling 1.02 BL of potential capacity were approved in Chhattisgarh. An additional 26 various projects are approved throughout Bihar, Odisha, and West Bengal. To achieve the estimated 8.59 BL of ethanol produced annually through the new plants, India would need to balance interests in procuring additional surplus grain stocks for fuel against feed/human consumption.

India currently has 113 grain-based distilleries (Table 1) with a cumulative annual capacity of 2.58 billion liters (Table 1). More than half of these units produce potable liquor (i.e., spirits), which is also among the top tax revenue streams for state governments across India.

Boost farmer’s Income

Remunerative prices of ethanol to suppliers have more than doubled in the last six years-a major boost to farmers’ income. An eight-fold jump in procurement in the last six years and the price of procurement going up by nearly 2.5 times, has led to a significant jump in the income of farmers.

Ethanol supplies and blending percentages have increased more than five times in the last six years. While 38 crore liters of Ethanol were procured during the year 2013-14, in 2020-21 this jumped nearly eight times to 322 crore liters.

Ethanol distillation capacities have almost doubled, and the number of distilleries increased by 40% in five years. The decision to allow diversion of B heavy molasses, sugarcane juice/sugar/sugar syrup for ethanol production in 2018-19 enabled a reliable supply of feedstock and the price stability of sugar.

There are measures taken to expedite regulatory clearances for ethanol production such as expediting the issuing of consent to establish distilleries by state governments. Further, a single-window system may be formulated by the Department for Promotion of Industry and Internal Trade to facilitate speedy clearances for new projects and expansion of current projects for ethanol production.

Sources - AIDA

Agriexchange India

Twitter Handle: @shuchi_nahar

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