Bio-ethanol blending challenges in India

Bio-ethanol blending challenges in India

• FROM THE current 5 percent, the Centre has set targets of 10 percent bio-ethanol the blending of petrol by 2022 and 20 percent by 2030 under the ethanol blending program to curb carbon emissions and reduce India’s dependence on imported crude oil. 1G and 2G bio-ethanol plants are key in making bio-ethanol available for blending but face challenges in attracting investments from the private sector.
• 1G bio-ethanol plants utilize sugarcane juice and molasses, a byproduct in the production of sugar as raw material, while 2G plants utilize surplus biomass and agricultural waste to produce bio-ethanol. Currently, the domestic production of bio-ethanol is not sufficient to meet the demand for bioethanol for blending with petrol Indian OMCs.Sugar mills,key-domestic suppliers of bio-ethanol to OMCs, were only able to supply 1.9 billion liters of bio-ethanol to OMCs equating to 57.6 percent of the total demand for 3.3 billion liters.
• Experts point out that many sugar mills which are best placed to produce bioethanol do not have the financial stability to invest in biofuel plants. Further, investors are uncertain about the price of bio-ethanol in the future.
• Experts say the government could provide greater visibility on the price of bio-ethanol that sugar mills can expect by announcing a mechanism by which the price of bio-ethanol would be decided

About BioFuels

• Biofuels are fueled/energy derived from biomass which is basically organic material that comes from plants and animals and it is a renewable source of energy. Biofuels can be produced from any carbon source that can be replenished rapidly such as plants (or maybe animals). 

Examples of biomass and their uses for producing biofuels:

• Wood and wood processing wastes—burned to heat buildings, to produce process heat in industry, and to generate electricity
• Agricultural crops and waste materials—burned as a fuel or converted to liquid biofuels
• Food, yard, and wood waste in the garbage—burned to generate electricity in power plants or converted to biogas in landfills
• Animal manure and human sewage—converted to biogas, which can be burned as a fuel

Bioethanol is the principle fuel used as a petrol substitute for road transport vehicles. Bioethanol fuel is mainly produced by the sugar fermentation process and the main sources of sugar required to produce bioethanol comes from fuel/energy crops like sugarcane, corn, maize, wheat, etc.

1G bio-ethanol plants utilize sugarcane juice and molasses (which is a byproduct in the production of sugarcane) as a raw material.

2G bio-ethanol plants utilize agricultural wastes/residues like rice & wheat straw to produce bio-ethanol.

The current blending target of bio-ethanol with petrol is 5%, which govt has planned to increase it to 10% by 2022 and 20% by 2030. The ethanol blending program (with petrol) helps in curbing carbon emissions and reduce India's dependence on imported crude oil.

Why Indian plants are not able to meet the demand for bio-ethanol?

• Many sugar mills do not have the financial stability to invest in biofuel plants
• There are concerns among investors on the uncertainty of the price of bio-ethanol in the future. This is because, in India, Govt regulates the price of bio-ethanol which is presently from Rs. 43.46 per liter to Rs. 59.48 per liter depending on which biomass (raw material) it has been produced. Investors want that govt should give a mechanism on how the prices of bio-ethanol will be decided in the future so that it is predictable.
• In India, govt also regulates the price of Sugarcane through MSP and FRP. MSP/FRP always increased annually but when prices of bio-ethanol are not increased proportionately, then it becomes unviable to produce bio-ethanol. Further, when the petrol prices are down then the Oil companies do not want to procure bio-ethanol for blending purpose because blending makes sense only when the product used for blending has price advantage (less price)
• Sometimes, the price of agricultural waste required for the production of bio-ethanol at 2G plants is too high for it to be viable for private investors in the country as it is not properly managed (or is made available). The experts have said that state governments needed to set up depots where farmers could drop their agricultural waste and that the central government should fix a price for agricultural waste to make investments in 2G bioethanol production an attractive proposition. This will prevent the farmers from having to burn agricultural waste which can be a major source of air pollution, and it will provide a greater source of income for farmers.

Source: Indian Express