- Sugar mills’ sale of ethanol to oil marketing companies helped them earn additional revenue and clear cane price arrears to farmers, the Department of Economic Affairs said in the annual Economic Survey placed in the Parliament on Monday.
- The department said that in the past four sugar seasons ending 2020-2021, sugar mills/distilleries generated revenue of about ₹35,000 crore from the sale of ethanol to oil marketing firms, which helped in clearing the sugar cane price arrears owed to farmers.
Status in India:
- Although the country has made steady progress in raising the share of ethanol in auto-fuels, having increased it to 8.1% in Ethanol Supply Year (ESY) 2020-21 (December-November) from 5% a year earlier, several issues will need to be addressed if the target of 20% blending by 2025 is to be achieved.
- A recent report of the International Energy Agency (IEA) highlighted that the country had tripled ethanol demand to an estimated three billion litres between 2017 and 2021.
- It added, “India will find it challenging to implement its 20% blending mandate in just five years, but even reaching 11% blending would make it the world’s third-largest ethanol market behind the United States and Brazil.”
- As per the Niti Aayog’s report on ‘Roadmap for Ethanol Blending’ dated June 2021, use of E20 leads to an estimated loss of 6-7% in the fuel efficiency of four-wheelers originally designed for regular petrol.
- The Society of Indian Automobile Manufacturers (SIAM) had informed the think tank that with modifications in engines (hardware and tuning), the loss in efficiency due to ethanol blending can be reduced.
- Vehicles made in India since 2008 are material compatible with E10 and fuel-efficient compliant with E5.
- However, according to SIAM, retro-fitment on existing vehicles to make them compatible with higher blends is a challenging task.
- Developing parts with upgraded material for large volumes of vintage variants with numerous variations in design and then making customers upgrade their vehicles is seen to be “an unrealistic scenario”.
- Also, 20% blending would require supply of around 1,000 crore litres of ethanol per year.
- According to analysts at ICRA, such quantities of ethanol would necessitate 16% CAGR in the capacity of molasses-based distilleries and a steep 30% CAGR in the capacity of grain-based distilleries.
- To boost the programme, the government has reintroduced an administered price mechanism for ethanol procurement, allowing ethanol production from multiple feedstock like heavy molasses, sugarcane juice, sugar, sugar syrup, damaged foodgrains, maize and surplus rice stocks with the Food Corporation of India.
- Sugar mills and distilleries are also free to set up ethanol plants after obtaining statutory clearances, with the government notifying an interest subvention scheme to assist companies.
- The procurement price of ethanol for ESY 2O2O-21 was Rs 62.65/litre for sugarcane juice, Rs 51.55/litre for damaged foodgrains, Rs 56.87/litre for rice available with FCI, Rs 51.55/litre for maize and for heavy molasses it is in the range of Rs 45.69-57.61/litre.
Source The Hindu