With an estimated requirement of 1,700 crore litres to meet the 20 per cent target under the ethanol blending programme (EBP), the current national capacity is 867 crore litres. In this backdrop, a massive capacity addition is required to achieve the objective of reducing dependence on crude oil imports.

The latest data shows that the annual capacity of grain-based ethanol plants has increased by only 92 crore litres in the last eight years, to 298 crore litres now. On the other hand, molasses-based distilleries added 354 crore litres in the same period. The total capacity of ethanol is likely to increase to about 950 crore litres by December 2022 and 1,200 crore litres by December 2023, sources said.

Sugar molasses a succour?

“Ethanol production shall not be an issue to meet the demand. In case grain-based ethanol capacity does not keep pace with the plan, sugar molasses ethanol capacity can be stepped up, “said Ravi Gupta, Chairman of the ethanol committee of the All India Sugar Trade Association (AISTA).

He said India is likely to produce 39 million tonnes (mt) of sucrose this year and even after the diversion of 3.5 mt of sugar for ethanol, there is a surplus of 8 mt. So raw material availability is not an issue. “Maharashtra emerging as the largest sugar producer this season where cooperative mills are in a dominant position and need to build up more ethanol capacity. The Centre has already announced an extension of interest subvention for ethanol plants, which is a step in right direction,” Gupta said.

Issue with co-op banks

Though grain-based plants have shown greater interest in taking approvals under the interest subvention scheme of the Centre in recently opened windows, in which 46 projects (90 per cent are grain-based) were cleared last week that could add 170 crore litres, it is too little considering the target, experts said.

The Centre has already approved ethanol capacity expansion of 135 cooperative sugar mills of Maharashtra under interest subsidy scheme, out of which 37 have availed credit from banks, sources said. The problem is with cooperative banks now directly under the Reserve Bank of India, availing credit is no more easy by these sugar mills, the sources said. Maharashtra has 250 crore litre per annum ethanol capacity out of which 216 crore litre are from molasses-based plants.

“Assured ethanol production can be done from molasses-based plants since sugar mills are governed by the Centre and State under specific laws. On the other hand, there are several factors, including prices and availability of raw materials for the grain-based plants, where sustainable production is questionable, “said an industry expert, who cited instances of several closed biodiesel plants due to feedstock issue.

Due to advancements in the field of biofuels, various decisions taken in the National Biofuel Coordination Committee (NBCC) meetings to increase biofuel production, the recommendation of the Standing Committee, and the decision to advance to introduce Ethanol Blended Petrol with up to 20 per cent ethanol throughout the country from April 2023, amendments were made to the National Policy on Biofuels, the government said in a statement on May 18 after cabinet approved the changes.

Apart from bringing the advancement of 20 per cent target to ESY 2025-26 from 2030 in the policy, which was so far only on announcement, the cabinet also approved more feedstocks for production of biofuels and permitted the government to allow “export of biofuels in specific cases.”

Sources, however, said that as E-20 vehicles (compliant with 20 per cent ethanol blended petrol) will be rolled out from April next year, the oil marketing companies (OMCs) will make that fuel available at some places so that the programme can take off. There will be two variants of fuel E-10 and E-20 from April 2023, the sources said.

The Indian Automobile Industry welcomes the amendment of the National Biofuel Policy which aligns it with the milestones defined by the government and is fully ready to meet these timelines, said Rajesh Menon, Director General of the Society of Indian Automobile Manufacturers (SIAM).

In the current ethanol supply year (December-November), about 186 crore litres of ethanol have been blended with petrol until May 8, achieving 9.90 per cent blending. “In 2021-22, we will be achieving a 10 per cent blending target,” the food ministry said on May 19. In ESY 2020-21, as high as 302.30 crore litres of ethanol was supplied to OMCs, achieving 8.1 per cent blending levels.