Fuel ethanol imports by Indian industries from the US rebounded to record volumes in the current calendar year after declining consecutively in 2022 and 2023, freeing up domestic production to be utilised for the ethanol-blend petrol (EBP) programme.
In its latest report, the US Energy Information Administration (EIA) noted that India is among the top three export destinations for fuel ethanol.
“The largest increase in fuel ethanol exports has been to India, which has ambitious fuel ethanol blend targets under its EBP programme,” it noted.
After decreasing in 2022 and 2023 due to increasing supply chain costs and elevated US fuel ethanol prices, the exports to India have rebounded to record volumes in 2024, slightly exceeding the highs from 2017 to 2020, it added.
Although India’s EBP programme prohibits the use of imported ethanol to meet blend targets, India uses imported ethanol for industrial purposes, freeing up domestic product for its transportation blend targets, the US EIA said.
“With reduced production of sugarcane and rice recently, India has relied more on imports of US fuel ethanol to meet industrial sector demand and free up domestic ethanol production for EBP targets,” it added.
Fuel ethanol is a renewable fuel produced by fermenting sugar from biomass, typically corn, in the US. In addition to blending with petrol, ethanol is also used by the pharmaceutical, cosmetic, and chemical industries.
Spike in ethanol demand
According to the International Energy Agency (IEA), ethanol demand in India tripled between 2017 and 2021. In 2017, blending stood at 2 per cent, but by the summer of 2021, it touched 8 per cent.
In ESY 2023-24 (November-October), the provisional total ethanol supply is 647.66 crore litres, including 231.58 crore litres by sugar mills. This is to achieve 15 per cent blending.
Mills supplied 81.81 crore litres of B-heavy molasses (BHM), 27.58 crore litres of C-heavy molasses (CHM), and 55.98 crore litres of sugar syrup. In the current year, around 24 lakh tonnes of sugar were used for ethanol production.
Currently, India’s ethanol production capacity is around 1,683 crore litres, which is more than sufficient to meet the 20 per cent blending mandate until October 2026. However, to achieve a 20 per cent blending of ethanol with petrol in the ESY 2024-25, around 990 crore litres of ethanol will be required.
Oil marketing companies (OMCs) have placed orders for 837 crore litres of ethanol so far. To produce this much quantity, around 3.7 million tonnes (mt) of sugar, 2 mt of rice, and 11.3 mt of maise will be required.