{"id":25681,"date":"2018-09-20T17:35:42","date_gmt":"2018-09-20T12:05:42","guid":{"rendered":"http:\/\/blog.forumias.com\/?p=25681"},"modified":"2018-09-20T17:35:42","modified_gmt":"2018-09-20T12:05:42","slug":"ethanol-blending-programme-and-sugar-industry","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/ethanol-blending-programme-and-sugar-industry\/","title":{"rendered":"Ethanol Blending Programme and Sugar Industry"},"content":{"rendered":"<p><b>About Ethanol<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Ethanol\/ <\/span><b>anhydrous ethyl alcohol<\/b><span style=\"font-weight: 400;\"> having chemical formula <\/span><b>of C<\/b><b>2<\/b><b>H<\/b><b>5<\/b><b>OH<\/b><span style=\"font-weight: 400;\">, can be produced from crops like sugarcane, maize, wheat, etc\u00a0which have high starch content.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In India, ethanol is mainly produced from sugarcane molasses by <\/span><b>fermentation process<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Since ethanol is produced from plants that harness the power of the sun, ethanol is also <\/span><b>considered as renewable fuel<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">As the ethanol molecule contains oxygen, it allows the engine to more completely combust the fuel, resulting in fewer emissions and thereby reducing the occurrence of environmental pollution<\/span><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<p><b>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0EBP<\/b><\/p>\n<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-25684\" src=\"https:\/\/i0.wp.com\/blog.forumias.com\/wp-content\/uploads\/2018\/09\/th.jpg?resize=407%2C258\" alt=\"\" width=\"407\" height=\"258\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/09\/th.jpg?w=407&amp;ssl=1 407w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/09\/th.jpg?resize=150%2C95&amp;ssl=1 150w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/09\/th.jpg?resize=300%2C190&amp;ssl=1 300w\" sizes=\"auto, (max-width: 407px) 100vw, 407px\" \/><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Ethanol Blended Petrol<\/b><span style=\"font-weight: 400;\"> programme was <\/span><b>launched in 2003<\/b><span style=\"font-weight: 400;\"> on a pilot basis and has been subsequently extended to <\/span><b>21 states<\/b><span style=\"font-weight: 400;\"> and <\/span><b>4 Union Territories<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The programme sought to <\/span><b>promote the use of alternative and environment friendly fuels <\/b><span style=\"font-weight: 400;\">and to reduce import dependency for energy requirements.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government has been notifying the administered price of ethanol <\/span><b>since 2014.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">India has set a target of <\/span><b>10 percent<\/b><span style=\"font-weight: 400;\"> ethanol blending in petrol by <\/span><b>2022.<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b>Procurement of Ethanol<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The OMCs are to procure ethanol from domestic sources. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The Government fixes the price of ethanol which the OMCs have to pay to procure ethanol.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0Ethanol production in the country would increase threefold to 4.5 billion liters by 2022 from 1.41 billion liters now.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The procedure of procurement of ethanol under the EBP has been simplified to streamline the entire ethanol supply chain.<\/span><\/li>\n<\/ul>\n<p><b>Government Initiatives<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government has reduced\u00a0Goods and Services tax (GST) on ethanol targeted for blending from 18 percent to 5 percent in July 2018.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">To ensure the clearance of dues of farmers the government brought \u00a0out a comprehensive package of about Rs.7000 crore which includes a plan of Rs.4400 crore for increasing the ethanol capacity in the country.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In September 2018,<\/span><b> Cabinet Committee on Economic Affairs (CCEA)<\/b><span style=\"font-weight: 400;\"> has taken a decision to provide incentives for the production of ethanol from sugar cane.<\/span><\/li>\n<\/ul>\n<p><b>CCEA Recommendations<\/b><\/p>\n<ol>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Government has announced <\/span><b>three progressive rates<\/b><span style=\"font-weight: 400;\"> for ethanol procurement <\/span><b>based on their purity.<\/b><\/li>\n<\/ol>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Ethanol produced from <\/span><b>100 per cent sugarcane juice <\/b><span style=\"font-weight: 400;\">will be priced the highest. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Ethanol produced from <\/span><b>B grade molasses<\/b><span style=\"font-weight: 400;\">: They are made from partial sugarcane juice and will be priced lower than those produced from 100 per cent sugarcane juice.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Ethanol produced from <\/span><b>C grade molasses<\/b><span style=\"font-weight: 400;\">: Inferior than B heavy molasses will be priced the least<\/span><\/li>\n<li><b>Advisory to Oil Market Companies (OMCs): <span style=\"font-weight: 400;\">They have been advised to prioritize ethanol procurement based on the purity and give preference to ethanol made from 100 per cent sugarcane juice.<\/span><\/b><\/li>\n<\/ul>\n<p><strong>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 National Policy on Biofuels 2018<\/strong><\/p>\n<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-25685\" src=\"https:\/\/i0.wp.com\/blog.forumias.com\/wp-content\/uploads\/2018\/09\/nat.jpg?resize=353%2C196\" alt=\"\" width=\"353\" height=\"196\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/09\/nat.jpg?w=353&amp;ssl=1 353w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/09\/nat.jpg?resize=150%2C83&amp;ssl=1 150w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/09\/nat.jpg?resize=300%2C167&amp;ssl=1 300w\" sizes=\"auto, (max-width: 353px) 100vw, 353px\" \/><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The Policy <\/span><b>expands the scope of raw material for ethanol production<\/b><span style=\"font-weight: 400;\"> by allowing use of Sugarcane Juice, Sugar containing materials like Sugar Beet, Sweet Sorghum, Starch containing materials like Corn, Cassava, Damaged food grains like wheat, broken rice, Rotten Potatoes, unfit for human consumption for ethanol production.<\/span><\/li>\n<\/ul>\n<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-25686\" src=\"https:\/\/i0.wp.com\/blog.forumias.com\/wp-content\/uploads\/2018\/09\/ca.jpg?resize=492%2C271\" alt=\"\" width=\"492\" height=\"271\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/09\/ca.jpg?w=492&amp;ssl=1 492w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/09\/ca.jpg?resize=150%2C83&amp;ssl=1 150w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/09\/ca.jpg?resize=300%2C165&amp;ssl=1 300w\" sizes=\"auto, (max-width: 492px) 100vw, 492px\" \/><\/p>\n<p><b>Benefits of EBP<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The move will encourage the production of ethanol and will thus reduce excess sugar in the country.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It will increase the liquidity with the sugar mills and will help them settle the arrears of the farmers.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It will incentivize ethanol output and will increase Investment in capacity addition of the sugar mills.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Being one of the biggest polluters in the world and a signatory of the Paris Climate deal India&#8217;s ethanol dependence can certainly help it reduce the pollution problem.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">According to a\u00a0<\/span><b>Bloomberg New Energy Finance<\/b><span style=\"font-weight: 400;\">\u00a0study<\/span><b> \u2018<\/b><b><i>Next-Generation Ethanol: <\/i><\/b><b>What\u2019s in it for India<\/b><b><i>?\u2019,<\/i><\/b> <span style=\"font-weight: 400;\">the increase in ethanol production has the potential to\u00a0<\/span><b>create over 700,000 jobs\u00a0<\/b><span style=\"font-weight: 400;\">when targeting only the base potential.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">India will save at least 120 billion through EBP, thus cutting down on its import bill.<\/span><\/li>\n<\/ul>\n<p><b>Challenges of EBP<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Sugar Mills will have to invest in distillery capacity and this will require investment which they might not afford.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">They will also have to invest in pollution control, storage and logistics which will require additional investment.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Ethanol in India is derived from rectified spirit which in turn comes from cane molasses. Rectified spirit is also used for potable alcohol production.A higher ethanol production could have an impact on the manufacture and sale of potable alcohol which is a major source of state revenue.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The country\u2019s targets for ethanol-blended petrol continue to be missed largely on account of inadequate ethanol production.<\/span><\/li>\n<\/ul>\n<p><b>Problems with diverting cane to produce ethanol<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The main challenge in ethanol business is its pricing: Since ethanol is a substitute for petrol from imported crude, its pricing should be linked to the <\/span><b>import parity price of petrol (IMPP).<\/b><span style=\"font-weight: 400;\"> IMPP represents the price that importers would pay in case of actual import of product at the respective Indian ports.<\/span><\/p>\n<p><b>Criticism<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The oil companies will want to pay lower for ethanol when the fuel prices in the market declines, thereby affecting Ethanol producers.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The decline in ethanol price will reduce the profit margin of sugar mills, as the sugarcane purchase price remain fixed.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">If the government forces the oil companies to pay the same ethanol price even when the fuel prices fall, the oil companies will suffer losses.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Bad weather can damage cane resulting in decline in sugar output and market price of sugar will thus increase.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">As per the estimates given in <\/span><b>Auto Fuel Vision and Policy 2025 <\/b><span style=\"font-weight: 400;\">issued in May 2014, blended petrol is available only in 13 states and the average blend is 2%. During the sugar year 2014-15, OMCs have achieved a blending percentage of just 2.3%.<\/span><\/li>\n<\/ul>\n<p><b>Why ethanol blending in petrol might not work for India<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">India might be able to save on oil import costs by going for a greater petrol-ethanol mix, but that could strain the country\u2019s water resources and affect food availability<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">While India has become one of the top producers of ethanol in recent years, it lags top producers, the US and Brazil, by a huge margin and remains inefficient in terms of water usage.<\/span><\/li>\n<\/ul>\n<p><b>Impact on Net Sown Area<\/b><\/p>\n<ol>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">To raise the ethanol blend rate to 10% India will have to increase its net \u00a0\u00a0sown area from present 3% to 7%.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In order to achieve 20% blend rate, almost one-tenth of the existing net sown area will have to be diverted for sugarcane production which will put a stress on other crops and might increase food prices.<\/span><\/li>\n<\/ol>\n<p><b>Way Forward <\/b><\/p>\n<ul>\n<li><b><span style=\"font-weight: 400;\">Biofuels offers a sustainable energy option and there is an urgent need to leverage its benefits to push the Indian economy forward.<\/span><\/b><\/li>\n<li><span style=\"font-weight: 400;\">Government should invest in R&amp;D and incentivise the adoption of modern technologies like 2nd generation Ethanol plants etc to increase the efficiency of its Ethanol Blending Program.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">India should adopt the recommendation of Rangarajan Committee and the National Policy on Biofuel 2018, to achieve ethanol blending target of 10 percent set for 2022.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Over all a robust ethanol ecosystem makes great sense for India in achieving \u00a0energy security and socio-economic benefits and India should make all efforts to become a world leader in this field.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>About Ethanol Ethanol\/ anhydrous ethyl alcohol having chemical formula of C2H5OH, can be produced from crops like sugarcane, maize, wheat, etc\u00a0which have high starch content. In India, ethanol is mainly produced from sugarcane molasses by fermentation process Since ethanol is produced from plants that harness the power of the sun, ethanol is also considered as&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/ethanol-blending-programme-and-sugar-industry\/\">Continue reading <span class=\"screen-reader-text\">Ethanol Blending Programme and Sugar Industry<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":25683,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[27],"tags":[],"class_list":["post-25681","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured-editorials","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/09\/dd-1.jpg?fit=1041%2C507&ssl=1","views":{"total":0,"cached_at":1700792631,"cached_date":1702467494},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/25681","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=25681"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/25681\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/25683"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=25681"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=25681"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=25681"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}