The new Bio-fuel Policy, 2018 has fixed a target of achieving 20% ethanol blending with petrol by 2030. Internally the Government is targeting to achieve the first milestone of 10% of ethanol blending with petrol by 2022.
The new Bio-fuel Policy allows the use of other than molasses as a feedstock to manufacture ethanol in the country. This includes sugarcane juice, damaged foodgrains, rotten potato, corn, surplus foodgrains, etc.
For the first time, the Government had announced in July – August 2018, different prices, with a premium, for ethanol produced from ‘B’ heavy molasses and sugarcane juice (which involve the sacrifice of sugar production by diverting the same into ethanol) as well as ethanol produced from damaged foodgrains.
Against a requirement of 330 crore liters of ethanol for 10% ethanol blending in the country, excluding J & K, the North Eastern States and island territories, ethanol supply contracts have been signed for 237 crore liters for the ethanol supply period 2018-19 (December-November).
This is the highest ethanol supply contracts ever. The best ever achieved was last year when contracts for 160 crore liters were signed and 150 crore liters of ethanol were supplied in 2017-18 ethanol supply period (December-November). Average all India ethanol blending with petrol achieved last year in 2017-18 was 4.22%.
If all the 237 crore litres is successfully blended in the country in the current year, about 7.2% of petrol consumption will get substituted by this environment friendly bio-ethanol.
Out of total contracted ethanol supplies of 237 crore litres, 45 crore litres of ethanol have been contracted to be manufactured and supplied from ‘B’ heavy molasses and sugarcane juice, amounting to a reduction of around 5 lac tons of sugar production. Similarly, 16.5 crore liters of ethanol has been contracted to be manufactured and supplied from damaged foodgrains, unfit for human consumption.
In the first 4 months of the contracted supply period i.e from 1st December to 30th November 2019, the ethanol manufacturers have successfully supplied 75 crore liters to various depots of the oil companies across the country.
For the first time, 21 crore liters out of the total supply of 75 crore liters have been manufactured from ‘B’ heavy molasses/sugarcane juice/damaged foodgrains.
The average ethanol blending during the first four months of the current year i.e. from December 2018 to March 2019, has been more than 8% in 10 States in the country. It is more than 9% in Maharashtra, Uttar Pradesh, and Uttarakhand.
Considering a very bright future for the ethanol manufacturing industry and a fast expanding and increasing demand for the same considering continuous increase in petrol consumption, as well as the scope to increase the blending percentage to 20%, for which BIS standards have already been announced in July 2018, huge investments are being made to increase ethanol production capacities across the country.
Majority of the investments are being made by the sugar companies in their attached distilleries and some investments are also being made by stand-alone molasses based distilleries as also grain based distilleries to manufacture ethanol and supply to the oil depots
Considering the interest of investors in the sector, the annual ethanol production capacity is expected to grow from the current 355 crore liters to 600-700 crore liters in the next 2 to 3 years. This will then allow the country to achieve over 15% ethanol blending with petrol.
With the decision to start supplying 10% ethanol blended petrol in the North Eastern States and J & K, more and more ethanol production capacities will get set up in newer regions and areas of the country.
