The Union Cabinet decision to advance by five years its target for achieving 20 per cent ethanol blending in petrol is a significant attempt to minimise India’s dependence on import of petroleum products.
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..
Introduced in 2018, the National Biofuel Policy is aimed at reducing dependence on imports by encouraging fuel blending. With bioethanol, biodiesel and bio CNG in focus, its key parts include ethanol blending programme (EPB), production of second generation ethanol (derived from forest and agricultural residues), increasing capacity for production of fuel additives, R&D in feedstock, which is the starting material for ethanol production, and financial incentives for achieving these goals.
After setting a 20 per cent blending target for 2030 initially, the Central Government had announced premium rates for ethanol produced from sugar syrup, cane juice as well as B heavy molasses. Molasses is the sticky liquid formed during sugar production from cane juice, and depending on the percentage of sugar left, it is categorized as B heavy and C.
Molasses is the feedstock used by sugar mills to produce ethanol. The policy also allows usage of excess rice or damaged foodgrains as feedstock for ethanol production. The National Biofuel Coordination Committee (NBCC), with the Union Minister for Petroleum and Natural Gas as its head, is the agency to coordinate this blending programme.
The amended policy introduces several changes. Apart from advancing the 20 pc blending date by five years, introduction of more feedstock for production of biofuels; production of biofuels under the ‘Make in India’ programme in Special Economic Zones, Export Oriented Units; and permission to allow export of biofuels in specific cases are some other changes.
Apart from addition of new members to the NBCC, the committee has now been given the permission to change the policy which it earlier lacked.
Given the skyrocketing fuel prices, the blending programme has a dual purpose – to reduce the crude oil import bill and to allow consumers access to environment friendly fuel. For this, oil marketing companies (OMCs) have already been mandated to buy ethanol from sugar mills and clear payments within 21 days.
The decision would help sugar mills diversify their portfolios faster from just sugar production and become self-reliant in paying cane-growers.
“This move has the potential to change the face of the sugar industry and make it self-reliant,” said Bhairavnath B Thombare, President of the West India Sugar Federation, the apex body of private sugar mills in Maharashtra.
Achieving the new target will not be easy. In order to achieve 20 pc blending, India would require a consistent supply of 1,500 crore litres of ethanol annually.
Niti Aayog has talked about managing 760 crore litres from sugar and 740 crore litres from grains to meet this ethanol requirement. Once 20 per cent blending is achieved, 60 lakh tonnes of sugar would have to be diverted annually to produce the fuel additive.
At present, the all-India average blending as per the Ministry of Petroleum and Natural Gas stands at 9.90 per cent. Letters of Intent for supply of 468.56 crore litres of ethanol were issued at the start of this ethanol supply year out of which 415.88 crore litres has been contracted and 186.21 crore litres supplied so far. Ethanol derived from sugarcane juice/sugar syrup and from C heavy molasses forms the bulk of this supply, with that from surplus rice and damaged foodgrains being a distant second.
At present, the installed capacity that sugar mills have for ethanol production is 460 crore litres. It is expected that another 260 crore litres would be added to this once the 46 new distilleries become operational.
