What is Ethanol blending ?
Ethanol (also called ethyl alcohol, or alcohol) is a biofuel with chemical formula C2H5OH. It is naturally made by the fermentation of sugar. In India, it is largely derived while extracting sugar from sugarcane. However, other organic matter like food grains can also be used for its production.
The government has launched the Ethanol Blended Petrol (EBP) Programme to mix this biofuel with petrol to reduce the consumption of fossil fuel. The E10 target achievement means that the petrol we use now has 10 percent ethanol mixed in it.
Why is ethanol mixing important ?
India has put forward the audacious goal of considerable cutting in carbon footprint. However, in pursuit of the goal, its dependency on fossil fuel is a major roadblock. According to 2021 data published by NITI Aayog in report titled ‘Roadmap for Ethanol blending in India 2020-25’, 98 per cent of the fuel requirement in the road transportation sector is currently met by fossil fuels and while only 2% by biofuels.
As ethanol supports complete combustion, the report points out that higher reductions in carbon monoxide emissions were observed with E20 fuel–50% lower in two-wheelers and 30% lower in four-wheelers. Hydrocarbon emissions scaled down by 20%, but nitrous oxide emissions did not show a substantial trend as it depended on the vehicle/engine type and engine operating conditions.
Need for Ethanol blending in India:
- Ethanol has become one of the major priorities of 21st Century India.
- Mixing 20 percent ethanol in petrol holds multiple attractions for India.
- First, it can potentially reduce the auto fuel import bill by a yearly $4 billion, or Rs 30,000 crore.
- Second, it also provides for farmers to earn extra income if they grow produce that helps in ethanol production.
- Third, and no less important, is the fact that ethanol is less polluting than other fuels and, per the NITI Aayog paper, “offers equivalent efficiency at lower cost than petrol”.
- Use of ethanol-blended petrol decreases emissions such as carbon monoxide (CO), hydrocarbons (HC) and nitrogen oxides (NOx), the expert committee noted. Higher reductions in CO emissions were observed with E20 fuel — 50 per cent lower in two-wheelers and 30 percent lower in four-wheelers.
- Spelling out the opportunity for India for embracing ethanol, the paper stresses that “availability of large arable land, rising production of foodgrains and sugarcane leading to surpluses, availability of technology to produce ethanol from plant-based sources, and feasibility of making vehicles compliant to ethanol blended petrol make E20 not only a national imperative, but also an important strategic requirement”.
- In Europe, biofuels have been seen as a measure to reduce emissions of greenhouse gases from road transport because they were considered CO2-neutral fuels once lifecycle emissions are considered.
- Less Production: Currently, domestic production of bioethanol is not sufficient to meet the demand for bio-ethanol for blending with petrol at Indian OMCs.
- Sugar mills, which are the key domestic suppliers of bio-ethanol to OMCs, were able to supply only 57.6% of the total demand.
- Sugar mills do not have the financial stability to invest in biofuel plants.
- There are also concerns among investors on the uncertainty on the price of bioethanol in the future as the prices of both sugarcane and bio-ethanol are set by the central government.
- Compatible vehicles: vehicles need to be produced with rubberised parts, plastic components and elastomers compatible with E20 and engines optimally designed for use of E20 fuel”
- The NITI Aayog paper said that two-wheelers and passenger vehicles that are now being made in the country “are designed optimally for E5 (5 percent ethanol blend with petrol) while rubber and plastic components are “compatible with E10 fuel”.
- Water Footprint:While India has become one of the top producers of ethanol but it lags top producers, the USA and Brazil, by a huge margin and remains inefficient in terms of water usage.
- India’s water requirements for producing ethanol are not met through rainwater and the groundwater is used for drinking and other purposes.
- Water footprint, that is water required to produce a litre of ethanol, includes rainwater at the root zone used by ethanol-producing plants such as sugarcane, and surface, ground water, and fresh water required to wash away pollutants.
- Limited Sugarcane Availability:Sugarcane is another limited resource that affects the ethanol blending in the country.
- In order to achieve a 20% blend rate, almost one-tenth of the existing net sown area will have to be diverted for sugarcane production. Any such land requirement is likely to put a stress on other crops and has the potential to increase food prices.
- India’s biofuel policy stipulates that fuel requirements must not compete with food requirements and that only surplus food crops should be used for fuel production, if at all.
The sugar industry, once an unattractive sector for investment due to its natural and induced (cane arrears) cyclicality, is transforming -- with a change in the business model from high capex to higher growth. This will aid its re-rating.
Enhanced ethanol blending is leading the current growth, thanks to the constructive government policies with a focus on clean energy. This emphasis on bio-energy has made the industry self-reliant and less cyclical. We believe that the rising sugar offtake by OMCs (oil marketing companies), coupled with a progressively declining inventory, will lead to long-term sectoral sustainability.
The industry faced a number of roadblocks, including exorbitant sugar stocks, blockage of funds of sugar mills and non-payment of cane arrears to farmers. In order to overcome these challenges, the government allowed the production of ethanol from B-Heavy Molasses, sugarcane juice, sugar syrup and sugar.
After achieving 10 percent ethanol blending before time, the government has targeted to divert more than 60 lakh metric tonnes or LMT (20 percent blending) of surplus sugar to ethanol by 2025.
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