From the editor’s desk: Government’s sweet move to boost ethanol production

Ethanol has become a key fuel for a sustainable future. It helps to reduce our dependence on fossil fuels, making it an important part of eco-friendly living. India’s goal of meeting ethanol blending targets appears attainable now that the government has lifted restrictions on ethanol production for the upcoming ethanol supply year (ESY).

In a previous editorial, I wrote on government’s strong confidence in reaching its ethanol blending target, and this confidence is now reflected in recent policy decisions. Notably, the Department of Food and Public Distribution has allowed sugar mills and distilleries to produce ethanol from sugarcane juice/sugar syrup, B-Heavy Molasses, and C-Heavy Molasses during the ESY 2024-25. Additionally, the government permitted the sale of up to 23 lakh tonnes of rice from Food Corporation of India (FCI) stocks to grain-based ethanol distilleries, reversing a previously imposed ban. This change is anticipated to enhance ethanol production significantly.

The government is swiftly progressing towards its goal of a 20 percent ethanol blend in petrol and is optimistic about achieving this target.

Through the Ethanol Blended Petrol (EBP) Programme, the government has actively promoted the mixing of ethanol with petrol, with Public Sector Oil Marketing Companies (OMCs) now selling ethanol-blended petrol. Since the programme began, there has been a significant increase in ethanol blending.

India’s current ethanol production capacity is 1,589 crore litres annually and is projected to expand. The government believes growing capacity will meet the country’s domestic ethanol needs. However, to reach the 20 percent blending target, around 1,016 crore litres of ethanol will be needed, totaling 1,350 crore litres when accounting for other uses. By 2025, it is estimated that an ethanol production capacity of around 1,700 crore litres will be necessary, assuming plants operate at 80% efficiency.

According to recent data, ethanol blending in petrol reached 15.8 percent in July, and the cumulative ethanol blending from November 2023 to July 2024 was 13.3 percent.

The imposition of ethanol restrictions had previously hindered industry investment and growth. However, this recent decision is expected to restore confidence in the industry, potentially stimulating growth in the biofuel sector and encouraging investments in ethanol production facilities and related infrastructure. This could lead to new business opportunities and job creation.

The decision will not only enhance ethanol production, thereby reducing reliance on imported crude oil and saving foreign exchange, but also increase ethanol demand, which could provide a stable market for farmers and lead to higher incomes and job creation in the agricultural sector. Although not directly economic, the environmental benefits of reduced emissions could translate into long-term economic gains through improved public health and lower healthcare costs associated with pollution.

Moreover, increasing ethanol prices could further boost production and help accelerate the achievement of blending targets.

The Indian government’s track record reflects a long-term vision and effective execution. For example, ethanol blending has increased from 1.4% in 2014 to 15% today, with the 20% target now advanced to 2025-26 from the original 2030 deadline.

The Government of India is working to boost ethanol production through initiatives like the Pradhan Mantri JI-VAN Yojana. Recently, the Union Cabinet, led by Prime Minister Narendra Modi, approved an amendment extending the scheme’s timeline by five years, now running until 2028-29. To attract more investment and incorporate the latest advancements in 2G ethanol technology, the Pradhan Mantri JI-VAN Yojana, notified on March 7, 2019, will now cover a wider range of biofuels. It will now include a broader scope for biofuels derived from lignocellulosic feedstocks such as agricultural and forestry residues, industrial waste, synthesis (syn) gas, and algae. The scheme will also support “bolt-on” plants and “brownfield projects,” allowing them to utilize their existing infrastructure and enhance their feasibility.

This decision is a significant relief for the industry. India’s target of achieving a 20 percent ethanol blend by 2025 is a noteworthy step toward sustainable energy. The government’s proactive strategies and efforts to increase ethanol production underline its strong commitment to this goal. With the progress achieved so far, the outlook is promising. This move highlights the government’s dedication to sustainable development and its vision for a greener future.