Expert study points to roadblocks in ethanol blending programme

The government’s agenda to implement a 20 per cent mandatory ethanol blend in petrol will require an integrated approach in the Ethanol Blending Programme (EBP), according to an expert report on ‘fuel blending in India’.

The report notes that there has been a consistent shortfall in supply of ethanol in the past, mainly on account of the cyclical nature of the sugarcane harvests in the country. The report also notes that there is “lack of an integrated approach in the EBP across its value chain.”

The report was prepared by the University of Petroleum and Energy Studies, Dehradun, and the Centre for Study of Science, Technology and Policy, Bengaluru.

As per the projection made by the expert study, there would be a deficit in supply of ethanol to the tune of 822 million litres (27 per cent) when demand from domestic chemical and potable alcohol industry is also factored in. India’s current domestic ethanol capacity stands at approximately 2,240 million litres annually.

In 2016-17, demand from the chemical and potable alcohol industries is projected to be around 1,252 million litres and 1,030 million litres respectively.

The National Policy on Bio-fuels has set a target of 20 per cent blending of biofuels, both for bio-diesel and bio-ethanol. However, India is projected to achieve an average blending rate of close to 5 per cent by the end of 2016.

“There are significant regulatory hurdles in programme implementation stemming from varied administrative and duty requirements by different states.

These requirements, in conjunction with lack of a coherent pricing framework have previously dissuaded sugar mills from directing their supplies towards blending,” the report said.

Projecting significant potential for an overall improvement in balance of trade with increased blending in the context of a global crude oil price recovery, the report has called for a cogent and consistent policy and administrative framework in the program implementation for the success of EBP.

Highlighting the benefits of the programme, the report estimates a foreign exchange saving to the tune of $6.12 billion from India’s oil import bill by 2021-22 if the targeted 20 per cent ethanol mix in transportation fuel is achieved on schedule.