Informist, Wednesday, Aug 21, 2024

By Afra Abubacker

NEW DELHI – Having launched the Global Biofuel Alliance, India needs to ramp up production of ethanol and stick to the blending targets, industry officials said. They believe a hike in price of ethanol made from sugarcane-based feedstocks is long overdue and that the government must remove restrictions on diversion of sugar for ethanol production.

"India cannot take a passive position on ethanol when the US and Brazil are going big," Prakash Naiknavare, the managing director of the National Federation of Cooperative Sugar Factories, said. Though India is only third to the US and Brazil in ethanol production, it had "grabbed the G20 opportunity and spearheaded the alliance," he added.

On the sidelines of the G20 Summit in September, India launched the Global Biofuel Alliance, along with the US, Brazil, Italy, Argentina, Singapore, Bangladesh, Mauritius, and the United Arab Emirates to drive the development and deployment of biofuels.

However, the government's decision to ensure sufficient availability of sugar in an election year has proved to be a setback for its ethanol blending programme. In December, the government capped diversion of sugar for ethanol production in the year 2023-24 (Nov-Oct) at 2.5 mln tn due to concerns over lower sugar production. In 2022-23, India had diverted about 4 mln tn of sugar for production of ethanol.

"The December restrictions are still valid," Naiknavare said. The industry has been urging the government to clarify whether the restrictions on making ethanol from B-heavy molasses and sugarcane juice will continue in the next season as well.

The government is likely to announce its policy on ethanol production from molasses for 2024-25 in the coming weeks. It will announce the upper limit on sugar diversion for making ethanol and clarify if the restrictions imposed on molasses feedstocks will be removed or extended to the next season.

Given the government's push for green energy, the industry is hoping to get back B-heavy molasses and cane juice to the ethanol feedstock basket in 2024-25. However, amidst the rising food versus fuel debate, the Centre has highlighted the need to have multi-feedstock based distilleries and move away from food crops. On the occasion of International Biofuel Day on Aug 10, Minister of Cooperation Amit Shah urged mills to go for multi-feedstock, including biomass, to make second-generation ethanol.

Earlier on Aug 9, the Union Cabinet approved an amendment to the "Pradhan Mantri JI-VAN Yojana" to promote the establishment of second-generation bioethanol facilities that use agricultural and forestry residues, industrial waste, synthesis gas, and algae to produce advanced biofuel, moving away from food crops used in the production of first-generation biofuels.

The push for diversification comes as India seeks to reduce its dependence on fossil fuels and achieve an ambitious target of net-zero greenhouse gas emissions by 2070. To reduce dependence on crude oil, the government has set a target of achieving 15% blending of ethanol with petrol in 2023-24, 18% in the subsequent year, and 20% in 2025-26.

As of Aug 1, India has achieved a cumulative blending of 13.3% in the ethanol supply year 2023-24 (Nov-Oct), according to the Petroleum Planning & Analysis Cell.

Building on the progress made in ethanol blending with petrol, the government is planning to launch a new initiative to blend 5% ethanol with diesel. According to media reports, in early August, the Prime Minister's Office had discussions to evaluate the plan to blend 5% ethanol with diesel.

"We are still at 13%, we can easily go to 15% if ethanol prices are lucrative. More sugarcane juice can be converted to ethanol," Ravi Gupta, executive director, Shree Renuka Sugars, said. Gupta said that ethanol pricing will largely determine the production of biofuel.

"Feedstock is not an issue for next year. This year we have added 3 mln tn sugar to our opening stocks and ISMA (Indian Sugar Mills & Bio-Energy Manufacturers Association) estimates gross sugar (output) at 33.3 mln tn in 2024-25 which is much higher than sugar consumption," Gupta added. India's annual sugar consumption is around 29 mln tn.

The industry has been demanding a hike in ethanol price and increase in the minimum selling price of sugar citing the hike in fair prices of sugarcane. Fair and remunerative prices are paid by sugar mills to farmers on sugarcane purchases.

In February, the Cabinet Committee on Economic Affairs approved a hike of 25 rupees in the fair and remunerative price of sugarcane to 340 rupees per 100 kg for the 2024-25 (Oct-Sep) sugar season. Last year, it was raised by 10 rupees to 315 rupees per 100 kg.

Naiknavare said a hike is long overdue. For the ethanol year 2023-24, the government only increased prices of ethanol from C-heavy molasses by 6.87 rupees to 56.28 rupees a ltr. Currently, ethanol made from sugarcane juice is priced at 65.61 rupees a ltr and that from B-heavy molasses at 60.73 rupees a ltr, unchanged from 2022-23.

According to government officials, the government is likely to increase prices of ethanol made from sugarcane-based feedstocks for the upcoming season starting in November. "Discussions are ongoing. At the current moment, nobody has decided prices," a senior official told Informist on Tuesday. End

Edited by Ashish Shirke

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