Centre advanced its 20% ethanol blending target by five years

The Union Cabinet advanced by five years its target for achieving 20% ethanol blending in petrol. The amended National Biofuel Policy-2018 has now set the new target for 2025-26 instead of 2030, apart from allowing more feedstock for production of biofuels and export of biofuels in specific cases. A closer look at the amendments and what they mean for the sugar industry.

What is ethanol blending?

• Ethanol blending is a process of adding ethanol to petrol.
• Because of the growing environmental concerns, the use of ethanol as a motor fuel or as an additive is gaining rapid popularity.
• Properties of Ethanol closely resembles petrol. Moreover, ethanol can be obtained from various plants making it a renewable fuel.

• India has first tested the feasibility of 5% ethanol blended petrol in the year 2001.
• In the year 2002, India launched Ethanol Blended Petrol (EBP) Programme and began selling 5% ethanol blended petrol in nine states and four UTs and extended to twenty states four UTs.
• In 2015, the Ministry of Road Transport and Highways notified that E5 [blending 5% ethanol with 95% gasoline] petrol and the rubber and plastic components used in gasoline vehicles produced since 2008 be compatible with the E10 fuel.
• In 2018 National Biofuel Policy has set the target of 5% ethanol blended petrol by 2030.

• Introduced in the year 2018, aimed to reduce import dependency by encouraging fuel blending.
• Key components of biofuel policy includes:
  • Ethanol Blending Programme (EPB)
  • Production of second generation ethanol (from forest and agricultural residues)
  • Capacity building for production of fuel additives
  • R&D in feedstock
• Under this policy central government has set a target of 20%blending by 2030.
• Major sources of ethanol production:
  • Sugar syrup
  • Cane juice
  • B heavy molasses
• The policy also allows usage of excess rice or damaged foodgrains as feedstock for ethanol production.
• The National Biofuel Coordination Committee (NBCC) has been established with the Union Minister for Petroleum and Natural Gas as its head, as the agency to coordinate this blending programme.

• The most important proposal of the amendment is to advance the date of 20% blending target by five years from 2030 to 2025-26.
• Introduction of more feedstock for production of biofuels under ‘Make in India’ programme.
• NBCC has been empowered to change and modify policy framework to bridge the gap of earlier policy.

• Reducing the oil imports: Ethanol blending will help to reduce the oil import bill for India.
• Environmental friendly: Ethanol on combustion releases heat and power energy and provides an alternative to the polluted source of energy.
• Waste management: Ethanol can be produced by forest and agricultural residues. Usage of ethanol will cater the waste management system for agricultural sector and can create a circular economy, improving the income level of the rural household.
• Support to sugar industry: Major oil companies have been notified to purchase sugar from the sugar industry that will help to make sugar industry more sustainable and self-reliant

• As per the Ministry of Petroleum and Natural Gas stands at 9.90%. Letters of Intent for supply of 468.56 crore litres of ethanol were issued at the start of this Ethanol Supply Year (December 2021 to November 2022), out of which 415.88 crore litres has been contracted and 186.21 crore litres supplied so far. 
• In order to achieve 20% blending, India would require a consistent supply of 1,500 crores litres of ethanol annually.
• Once 20% blending is achieved, 60 lakh tonnes of sugar would have to be diverted annually to produce the fuel additive.

• Environmental Cost: Ethanol blending reduces the emission of carbon components at a significant level but there is no reduction in oxides of nitrogen which constitutes a significant proportion of air pollution.
• Ground water depletion: Sugar cane, a water intensive crop, is the cheapest source of ethanol in India. In order to achieve 20% blending sugarcane production needs to be increased which will impact the water availability and deplete the ground water table.
• Efficiency and usability of engines: At present the engines of cars and two wheelers are not compatible to 20% ethanol blended petro, thus, there will loss of efficiency of the engines.
• Affordability of cars and two wheelers: To make the cars and two wheelers engines compatible with 20% will increase the cost of production for the manufacturing companies, thus will lead to hike in prices of the vehicles for final consumers.
• Financial crunch: Various sugar mills in India have complained about formal funding crisis from the banks. Banks are not reluctant to provide formal credit line to the sugar industries due to weak balance sheet.

• Diversifying the source of Production: Diversification of source of production can reduce the impact on the ground water table and other several environmental costs.
• Strengthening formal credit line: Government should ensure formal credit facility to the sugar industry to provide a safer base to the 20% blending target.
• Availability and affordability of technology: More R&D development in the field of ethanol blended compatible engines and make available and affordable for all.

Since two decades, India has been moving towards putting in place an ecosystem to have more ethanol blended into petro for use of vehicles. According to the government records 75% of India’s 220 million vehicles are two wheelers and 12% four wheelers. However, it takes much more ethanol to power a vehicle’s engine than petrol. It also leaves residual by-products that can corrode and damage the vehicle which is why, while vehicles can be run on ethanol, they need to be tuned accordingly so that they don’t compromise on efficiency and usability. On the other hand, the gains are potentially significant as ethanol can be sourced from sugarcane, molasses, maize, which given India’s agricultural base, can substantially reduce Indi’s dependence on petroleum.