Copyright 2021 by P. Murali, Bakshi Ram, Puthira Prathap, K. Hari, and V. Venkatasubramanian. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. Sugarcane Based Ethanol Production for Fuel Ethanol Blending Program in India by P. Murali, Bakshi Ram, Puthira Prathap, K. Hari, and V. Venkatasubramanian
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Copyright 2021 by P. Murali, Bakshi Ram, Puthira Prathap, K. Hari, and V. Venkatasubramanian. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies.
Sugarcane Based Ethanol Production for Fuel Ethanol Blending Program in India
by P. Murali, Bakshi Ram, Puthira Prathap, K. Hari, and V. Venkatasubramanian
1
Title: Sugarcane based Ethanol Production for Fuel Ethanol Blending Program in India
Authors: Dr. P. Murali1, Dr Bakshi Ram2 and D Puthira Prathap3, Dr.K. Hari4 and Dr. V. Venkatasubramanian5
Date: August 28 , 2021 at 12:30 p.m. –12:50 p.m.
Palanichamy Murali | Sugarcane Based Ethanol Production for Fuel Ethanol Blending Program in India
Abstract:
The energy strategy of India aims to chart the way forward to meet the Government’s
recent ambitious announcements in the energy domain such 175GW of renewable energy
capacity by 2022. Globally, biofuels assume importance due to growing energy demand and
environmental concerns. India aims 20 %blending of biofuel by 2030 to reduce the
commitment made in the Paris agreement. In India, bioethanol is mainly produced from
sugarcane. India has achieved 5 % blending of bio ethanol in 2019 ambitiously, awaiting to
achieve 20 %blending by 2030. The policy paper highlights sustainability issues related to
biofuel program in India encompassing the success story of ethanol blending program in
Brazil, production and feed-stock availability in India, potential of different feed-stocks for
ethanol production, role of sugarcane varieties in sustaining sugar & ethanol production, 2G
ethanol, price and procurement policy for ethanol and constraints in the EBP Program. Finally,
food security, energy security and climate change mitigation are critical to social, economic
and environmental sustainability. A successful resolution of these challenging issues requires
the goodwill and commitment of all nations. This policy paper will be immensely useful in
assessing the long-term sustainability of ethanol production and EBP in India.
Affiliations (usually as footnotes):
1Palanichamy Murali, senior scientist, Economics and statistics Section, ICAR-Sugarcane
Breeding Institute, Coimbatore, India,
2Bakshi Ram, Director, ICAR-Sugarcane Breeding Institute, Coimbatore, India
3Duraisamy Puthira Prathap, Principal scientist, Extension Section, ICAR-Sugarcane
Breeding Institute, Coimbatore, India
4K. Hari Principal scientist, Microbiology, Division of Crop production, ICAR-Sugarcane
Breeding Institute, Coimbatore, India and
5V. Venkatasubramanian, Director, ICAR- ATARI, Bengaluru, India
2
Sugarcane based Ethanol Production for Fuel Ethanol Blending Program in India
Dr. P. Murali, Dr Bakshi Ram and D Puthira Prathap
Abstract
The energy strategy of India aims to chart the way forward to meet the Government’s recent ambitious
announcements in the energy domain such 175 GW of renewable energy capacity by 2022. Globally,
biofuels assume importance due to growing energy demand and environmental concerns. India aims 20
% blending of biofuel by 2030 to reduce the commitment made in the Paris agreement. In India,
bioethanol is mainly produced from sugarcane. India has achieved 5 % blending of bio ethanol in 2019
ambitiously, awaiting to achieve 20 % blending by 2030. The policy paper highlights sustainability
issues related to biofuel program in India encompassing the success story of ethanol blending program
in Brazil, production and feed-stock availability in India, potential of different feed-stocks for
ethanol production, role of sugarcane varieties in sustaining sugar & ethanol production, 2G ethanol,
price and procurement policy for ethanol and constraints in the EBP Program. Finally, food security,
energy security and climate change mitigation are critical to social, economic and environmental
sustainability. A successful resolution of these challenging issues requires the goodwill and
commitment of all nations. This policy paper will be immensely useful in assessing the long-term
sustainability of ethanol production and EBP in India.
Ky words: Bio ethanol, sugarcane, ethanol blending program and policy options
3
1. INTRODUCTION
The energy strategy of India aims to chart the way forward to meet the Government’s recent
ambitious announcements in the energy domain such 175 GW of renewable energy capacity by 2022,
reduction in energy emissions intensity by 33%-35% by 2030 and share of non-fossil fuel-based
capacity in the electricity mix is aimed at above 40% by 2030. However, conventional or fossil fuel
resources are limited, non-renewable, polluting and therefore, need to be used prudently. On the other
hand, renewable energy resources are indigenous, eco-friendly and virtually inexhaustible.
The Paris Agreement is a landmark environmental accord that was adopted by nearly every
nation in 2015 to address climate change and its negative impacts. The deal aims to substantially reduce
global greenhouse gas emissions in an effort to limit the global temperature increase in this century to
2 degrees Celsius above preindustrial levels, while pursuing means to limit the increase to 1.5 degrees.
The agreement includes commitments from all major emitting countries to cut their climate-altering
pollution and to strengthen those commitments over time.
India is endowed with abundant renewable energy resources. Therefore, their use should be
encouraged in every possible way. Government of India has prepared a road map to reduce the import
dependency in Oil & Gas sector by adopting a five-pronged strategy which include, increasing domestic
production, adopting biofuels & renewables, energy efficiency norms, improvement in refinery
processes and demand substitution. This envisages a strategic role for biofuels in the Indian energy
basket.
Globally, biofuels assume importance due to growing energy demand and environmental
concerns. To encourage use of biofuels, several countries have put forth different policy options
mechanisms, incentives and subsidies suiting to their domestic requirements. As an effective tool for
rural development and generating employment, the primary approach for biofuels in India is to promote
indigenous feedstock production.
In India, bioethanol can be produced from multiple sources like sugar containing materials,
starch, celluloses and lignocelluloses. However, the present policy of Ethanol Blended Petrol (EBP)
Programme allows bioethanol to be produced from sugarcane juice, B-molasses and non-food feed
stock like molasses, cellulose and lignocellulosic materials including petrochemical route.
In the meanwhile, wonder sugarcane variety Co 0238 of ICAR- SBI has broken yield and
recovery barrier in the sub-tropical India. The yield has almost been doubled with progressive farmers
and average sugar recovery was improved more than 1.5 units (15%) which has resulted in significant
sugar surpluses in the country. Hence it needs to be diverted in a meaningful way for the production of
fuel ethanol and to sustain sugarcane production. It would help to reduce sugar surpluses as well as
significant quantity of fuel ethanol production to meet out blending target of EBP. All these existing
scenarios need to be addressed in a comprehensive way to provide solution to sugar surpluses, meeting
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the demand of ethanol blending program and to bring a balance between food and fuel production with
a price stability leading to doubling income of the sugarcane farmers in the country.
Began in 2003 as a pilot project, the EBP programme has now been extended to the entire
country. It is implemented through a network of 186 depots of Oil Marketing Companies (OMCs),
drawing ethanol from 179 distilleries with an installed ethanol producing capacity of 305 crore litres.
National Policy on Biofuels will help the Indian sugar industry to (a) improve liquidity of
sugar mills by way of value addition to their revenues from supply of ethanol for EBP and reduce import
of fossil fuels (b) reduce sugar inventories and facilitate timely clearance of cane price dues of farmers
& improve their income (c) generate employment through setting up of new distilleries, including
expansion of existing distilleries (d) promote a cleaner and healthier environment, reducing greenhouse
gas emissions.
2. Sugarcane and sugar scenario
Sugarcane and sugar production in the country is fluctuating since start of the 21st century.
Severe drought in 2003 and 2004 have reduced sugarcane and sugar production necessitate import of
sugar for domestic consumption and has stalled the ambitious bioethanol program in the country.
Nevertheless, the sugarcane production has resurged in 2006 -07 with record sugarcane and sugar
production in the country. (Table1.)
Table No 1. Total cane production, sugar demand and surplus cane production in India
Year Total Sugarcane
Production (Mt)
Total sugar
demand (Mt)
Sugarcane required
to meet the demand
(Mt)
Surplus sugarcane
availability for seed, feed
and traditional sweeteners
and other uses (Mt)
2000-01 296 16.2 170 126
2003-04 234 17.5 179 45
2006-07 355 20.2 205 150
2011-12 361 22 216 145
2018-19 400 25.5 233 163
2019-20 377 24 222 155
2024-25 410 30 273# 137
2029-30 425 32 291# 134
* Estimated as per actual sugar recovery in India
# sugar recovery of 11.0 % was assumed for calculation purpose for future period
India is producing surplus sugar since 2011-12. The table above reveals that production of
sugarcane and sugar was surplus up to 30 % in this decade. It has become problems to the sugarcane
farmers and sugar millers due to fall in sugar prices less than production cost. It led to huge cane
payment arrears to the farmers and financial losses to the millers.
2.1. Vicious cycle of sugarcane production
India has witnessed 3-4 years of surplus cane production which led to excess supply over
demand and huge cane price arrears. Usually this scenario creates a shortage in cane production and
rise in sugar price in the next few years. This alternate surplus and deficit sugarcane production in India
5
is popularly called as vicious cycle of cane production (Fig.1). we have witnessed the cycle in almost
all the preceding decades
Fig.1. Vicious cycle of sugarcane production in India
This vicious cycle has impediment to bioethanol production from sugarcane in India, in order
to mitigate this problem, Government of India has permitted juice to ethanol production since 2018-19
sugar season. The flexi policy of sugar cum ethanol production expected to bring stability and
sustainability of sugarcane production which will help to achieve EBP target in the coming years.
2.2. Positive Impact of Variety Co 0238 and EBP program
The sugarcane variety Co 0238 developed by ICAR-Sugarcane Breeding Institute, Regional
Centre, Karnal, has revolutionized sugar production in the country especially in the subtropical India.
It gives high average yield (> 81 t/ha) with a sugar recovery of > 12 percent. Co 0238 has greatly
contributed towards achieving the highest ever sugar production (32.1 million tonnes) in the country
during 2017-18. The historical sugarcane and sugar yield has caused huge cane price arrears and excess
buffer stalk of sugar during past three seasons. However, the crisis also favoured Governments’ Policy
decision on permitting direct conversion of sugarcane juice into ethanol.
Government is keen on implementing ethanal blending program (5 %) in gasoline since 2003.
However, it could not be implemented due to vicious cycle of sugarcane and sugar production. The
variety Co 0238 has broken the inverse relationship of yield and sugar recovery and mesmerised
sugarcane production through yield improvement and sugar production by very high sugar recovery
and has helped to attain surplus sugar production since its adoption. So, the Government has allowed
diversion of B heavy molasses and juice to ethanol program to produce required quantity of fuel ethanol.
For the first time, the country has achieved 5 % blending target during 2018-19 and soon it may touch
10 % level, which was made possible due to cultivation of high quality variety Co 0238 in the sub-
tropical India. The record production is continuing in the country that necessitates to divert the excess
sugarcane production to bring balance in demand and supply and price stability for sugarcane
production system. Further, fuel ethanol production program is complementary to the record sugarcane
production realised in the country in the recent period. It is helpful to divert excess sugarcane which
will bring balance in demand and supply of sugar.
6
It is approximately estimated that one tonne sugarcane will yield 600-700 litres of cane juice,
similarly, one tonne of sugarcane will yield 65–70 litres of ethanol under normal production scenario.
For Eg. One Kilo Litres Per Day (KLPD) ethanol distillery unit require 10.5 lakh kilo litre of cane juice
for production of ethanol on daily basis. Alternatively, one 100 KLPD needs about 1500 tonne of
sugarcane on daily basis and need about 4 lakh tonnes annually for its operation. Hence, 100 such
distilleries could divert about 40 million tonnes of surplus sugarcane during bumper production. It will
help to reduce about 4 to 4.5 million tonnes of surplus sugar production subject to sugar recovery in the
country. On other hand, operation of 500 plus sugar mills may also produce ethanol, in addition to sugar
production by establishing juice to ethanol distillery unit. These sugar cum ethanol production could
also be used to regulate the optimum sugar and ethanol production in the country.
2.3. Trade and Excess sugar production
Globally, Brazil leads the export market of sugar followed by Thailand and EU countries.
Though India is a leading producer of sugarcane and sugar, it doesn’t have competitive edge for
exporting sugar. Exporting of sugar heavily demanded policy support from government which may not
be a sustainable solution for sugar sector. Huge stock of sugar erodes profitability of the sugar mills
which leads to cane payment arrears to the farmers. On the other hand, demand for petrol is ever growing
in the country also widens the current account deficit in the trade account. So, implementing ethanol
blending program would be helpful to solve the twin problems of excess sugar production by diverting
excess juice to fuel ethanol production and reducing current account deficit by reducing our oil imports.
2.4. Global fuel ethanol production
The global ethanol production by a country or region, from 2007 to 2019 is depicted in the
Fig.3. Global production continues to increase to the market demand. Globally, The United States is the
largest producer of fuel ethanol since 2007 followed by Brazil. Together, the United States and Brazil
account for 84% of the world's ethanol production. European Union, China and Canada are the other
leading fuel ethanol producers and the category of other countries also progressing in fuel ethanol use
is visible in the global statistics.
7
Fig.3. Global fuel ethanol production since 2007
The most common ethanol production processes today use yeast to ferment the starch and
sugars in corn, sugar cane, and sugar beets. Corn is the main feedstock for fuel ethanol in the United
States because of its abundance and low price. The starch in corn kernels is fermented into sugar, which
is then fermented into alcohol. Sugar cane and sugar beets are the most common feedstocks used to
make fuel ethanol in other parts of the world. Because alcohol is made by fermenting sugar, sugar crops
are the easiest ingredients to convert into alcohol. Brazil, the world's second-largest fuel ethanol
producer after the United States, makes most of its fuel ethanol from sugarcane and its derivatives.
We witness that fuel ethanol production and use are increasing despite there was fluctuation in
the crude oil prices (Fig. 3). The scenario shows that though there was a marginal fluctuation in
production among leading countries, the cumulative figure has illustrated steady growth in fuel ethanol
use in the world. The fuel ethanol production in the leading countries in the world is depicted in the
Fig.4.
Fig.4. Fuel ethanol production by major countries in 2019
0
20000
40000
60000
80000
100000
120000
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
mill
ion
litre
s
Rest of world Canada China European Union Brazil USA
0
6000
12000
18000
24000
30000
36000
42000
48000
54000
60000
MIllio
n litre
s
Rest of world Argentina Thailand Canada India China European Union Brazil USA
8
USA leads in fuel ethanol production with about 60 billion litres, mainly produced from corn
and follows by Brazil with 33 billion litres fuel ethanol produced from sugarcane during 2019 (Fig. 4).
Though India ranked fifth in terms of fuel ethanol production, the volume of production is significantly
lower than USA and Brazil. India has presently achieved about 5.8 % blending during 2019 and aimed
to achieve 10 % blending by 2021-22.
2.5. The success story of ethanol blending program in Brazil
India is the first country to enact law for power alcohol mixture with petrol during 1948 and
the act enacted for the development of the power alcohol industry in India. The blending of not less
than 5 % ethanol was mentioned in the act, however, it was not enforced. During 1973, some members
of OPEC enacted an oil embargo that threw the world into a massive oil shortage. In response, the
Brazilian government decided to enact the pro alcohol program to phase out all automobile fuels derived
from fossil fuels. The government decided to use sugarcane due to its low cost and existing experience
with deriving alcohol from sugar.
The program itself provided three drivers for ethanol as a fuel. First, it guaranteed purchases
from farmers by the state-owned oil company of Petrobras. This allowed farmers to plant crops without
fear of market demand. Second, the government provided low-interest loans for firms producing ethanol
from sugarcane or other agricultural products for fuel. Finally, the government ensured that ethanol
would always fetch a price of at least 95% that of gasoline at the pump.
Since the 1980’s, the supply of gasoline versus ethanol has varied with prices. Today, most
vehicles in Brazil are flex-fuel vehicles, which are capable of running on gasoline or 100% ethanol.
With these incentives, Brazil had more than 4 million vehicles running on pure ethanol by the 1980's.
The market remains volatile due to a number of factors such as high prices for sugar, financial problems
that impact incentive and harvest quality. Brazil is still the largest single consumer of biofuel in the
world. Brazil is the largest market for FFVs followed by USA, Canada and Sweden. Currently, a large
proportion of its cars run on un-hydrous ethanol in the country. In total 74% of all vehicles in Brazil are
run on Flex Fuels while 24% run on gasoline and the remaining 2% on ethanol.
In order to control fuel prices, the Brazilian government switches to alternatives between
gasoline and ethanol. At times when gasoline prices go up, people opt for ethanol and vice versa, thereby
creating a self-correcting mechanism. Brazil, however, has the ability to lower its ethanol prices to
affordable rates because its sugar industry is run through the market mechanism.
India cannot emulate Brazil’s best practices as such in the ethanol economy. Since the context
is completely different. However, India can learn from Brazil in terms of making mandatory blending
and utilising this blended fuel in vehicles. Nevertheless, India is continuously striving to implement
ethanol blending program in the country.
2. 6. Biofuel policies, implementation and current scenario
In 2003, the Government of India launched the Ethanol Blended Petrol (EBP) programme
primarily to promote environment friendly fuels (by increasing the usage of ethanol) and reduce energy
9
imports. The programme, in general, was conceptualised with multiple objectives in mind. By
increasing the usage of biofuels, it aimed to reduce carbon emissions while also saving foreign exchange
and reducing import dependency. More specifically, the EBP programme injects liquidity into the sugar
sector by providing a sustained demand for ethanol. Thus, it armed in the reduction of accumulated
arrears and permits timely payments for cane farmers.
The commercial production and marketing of ethanol blended gasoline had started in January
2003, the first phase of the ethanol blended petrol (EBP) programme that mandated blending of 5 %
ethanol in gasoline in 9 states and 4 union territories. In August 2005, the government completed an
agreement between the sugar industry and petroleum companies to enable the purchase of ethanol and
the ethanol programme was restarted in a limited number of designated states and union territories.
With a strong resurgence in sugarcane/sugar production in 2006-07, the GOI announced the second
phase of the EBP programme in September 2006 that mandated 5% blending of ethanol with petrol
(gasoline) subject to commercial viability in 20 states and 8 union territories.
The GOI had initially planned to launch the third stage of the EBP from October 1, 2008
wherein (i) the ethanol blend ratio was to be raised from 5% to 10 % and (ii) 5% blending was to be
made mandatory across the country in all the states.
The erstwhile National Policy on Biofuels (2009) permitted the procurement of non-food
feedstock like molasses, celluloses and lignocelluloses. However, due to the short supply of sugarcane
and sugar molasses in 2008-09 and forecast of short supplies in 2009 -10, the government has deferred
the proposed implementation of the third phase of the EBP. Since 2013, the GOI has mandated of 5 %
blending of ethanol in petrol for the fuel use in the country. Nevertheless, until 2017–18 ethanol for
EBP programme came from molasses, allowing utilisation of a by-product of the sugar industry. The
present output of molasses allows for the production of approximately 3 billion litres of alcohol/ethanol,
which is targeted at 10% blending.
Thus, India has different phases of ethanol blending policies and program since 2003, the
meaningful blending of ethanol with petrol was started after ten years of biofuel policy formulation.
With the available fuel ethanol production, ethanol blending was achieved only 0.67% in 2012-13 and
4.22% in 2017-18 (Table. 2).
Table 2: Details of Ethanol Supplied and Blending Percentages
Ethanol Supply
Year
Tendered Qty
by OMC’s*
(crore Lit)
Qty Allocated
(crore Lit)
Qty Supplied
(crore Lit)
Blending %age
PSU OMCs
2012-13 103.0 32.0 15.4 0.67
2013-14 115.0 70.4 38.0 1.53
2014-15 128.0 86.5 67.4 2.33
2015–16 266.0 130.5 111.4 3.51
2016–17 280.0 80.7 66.5 2.07
2017–18 313.0 161.04 150.5 4.22
10
2018–19 329.0 225.0 190.0 5.80
*Oil marketing companies (OMCs)
In the past, various measures have been undertaken by the GOI encourage the domestic
production of ethanol. These include amendments to the Industries (Development and Regulation) Act,
1951, to legislate exclusive Central control over denatured alcohol, reduction of the Goods and Services
Tax (GST) levied on ethanol for EBP to 5%, reintroduction of the administered price mechanism,
expansion of the programme and opening up alternate production routes. The government has also
adopted different pricing methods to boost the supplies of ethanol for the EBP programme. However,
the level of ethanol blending has remained low.
It has clearly indicated that 5 % of EBP was not achieved despite there was policy support and
surplus sugarcane and sugar production since 2012-13 in the country. As is evident from the Table 2
above, the quantity of ethanol supplied has been significantly lower than the tendered quantity. This is
largely due to supply-side constraints, which include limited distillation capacity and availability of
molasses. Finally, India has achieved five percent blending during 2019 due to new policy directives
coupled with fair pricing of fuel ethanol for blending EBP program.
2.7. Bioethanol demand in India
Recently, the country made sincere efforts in implementing bioethanol blending program to
achieve 10 % blending by 2021-22 and 20 % blending by 2030. The petrol demand also ever increasing
and future requirement of fuel ethanol is estimated based on petrol demand. The projected demand for
petrol and the amount of ethanol required for 5, 10 and 20 % blending for different time periods is given
in the Table 3.
Table: 3. Future petrol demand and ethanol requirement in India
Year Petrol demand
Million litres (M.L)
Ethanol blending requirements
Million litres (M.L)
5 % 10 % 20 %
2017-18 36015 1621 3241 6483
2024-25 49482 2227 4453 8907
2029-30 60203 2709 5418 10836
The above demands were worked out based on lag linear demand function fitted for petrol. The
bioethanol requirement was estimated by fitting a simple function of petrol demand. The ethanol
demand for 5%, 10% and 20% of the requirement would be 2709, 5418 and 10836 million litres in the
year 2030. Nevertheless, the country had already demonstrated potential alcohol production of 3200
Million litres in 2006-07 which was good enough to fulfil the 5 % blending requirement of the country.
The additional quantity required for fuel ethanol and other uses will be met through capacity building
with diversified feedstocks and new generation technologies.
2.8. National Policy on Biofuels – 2018
The poor implementation of ethanol blending program had its own impediments and
bottlenecks over a period of time. It has necessitated to bring out comprehensive policy capsule with
11
production support measures for sustainable fuel ethanol production blending program to achieve 10 %
blending during 2021-22 and 20 % by 2030 in the country. Hence, GOI, has brought out policy on
biofuel-2018 and it is being implemented since May 2018 in the country. The 2018 National Policy on
Biofuels broadens the scope for the raw material procurement for ethanol production.
The key points of the policy are following:
Funding: Policy would fund Rs. 5000 cr to 2G ethanol bio refineries over 6 years in addition to
tax incentives, higher purchase price compared to 1G fuels. (Note – These steps are similar to those
taken by Brazilian government to support the growth of ethanol as a bio-fuel market)
Forex Savings: 1 crore litres of E10 would save Rs.28 cr of forex. So, with the supply of about
150 crore litres of ethanol during 2017-18, has saved about Rs. 4000 crores of forex.
OMC Capex: 100 KLPD bio refinery would cost about Rs. 800 crores investment. Currently,
OMCs are in the process of setting up 12 2G bio refineries with a total investment of Rs. 10,000 crores.
This should lead to additional capacity of about 1200 KLPD annually.
As per new biofuel policy, The Cabinet Committee on Economic Affairs (CCEA) raised the
procurement price of ethanol derived from 100 per cent sugarcane juice to Rs 62.65 per litre from the
current rate of Rs 59.40. The price for ethanol produced from B-heavy molasses (intermediary
molasses) was hiked to Rs 57.61 a litre from the current Rs 52.43 but that for ethanol produced from
C-heavy molasses was increased to Rs 45.69 from Rs 43.70.
Conventionally, sugar is extracted in 3 stages, with very little sugar left to be extracted after the
3rd stage. Left over after the 3rd stage is the molasses (C -molasses), which has very low sugar content
(non recoverable sugars) and traditionally this molasses is processed in a distillery for ethanol
production. Going forward, ethanol should be produced from B-heavy molasses, which contains
considerably more sugar to augment ethanol production. However, if the mills cut back on the sugar
output, they will have to be compensated with a competitive price for ethanol. Ethanol also can be
extracted via B Heavy molasses route to get higher yield of ethanol per tonne of sugarcane.
The 2018 National Policy on Biofuels seeks to address these issues.
Under the new biofuel policy, a national Biofuel Coordination Committee has been set up in
2018. It envisages to resolve the lack of raw material availability by expanding the base of raw materials
to include B molasses, sugarcane juice and damaged food grains unfit for human consumption. This
measure aims to help OMCs achieve higher blending targets. Presently, the Ministry of Petroleum and
Natural Gas (MoP&NG) is undertaking the EBP programme to achieve 10% ethanol blending
percentage in petrol by 2021–22.
Attempts to incentivise ethanol production have been made via an interest subvention scheme,
namely: the scheme for augmenting and enhancing ethanol production capacity. The scheme is jointly
monitored by MoP&NG and the Department of Food and Public Distribution (DFPD). So far, the DFPD
has approved (in-principle) 114 proposals for a maximum loan amount of ₹6,139.08 crore, for granting
interest subvention. The Government of India has also allocated additional funds for the scheme. These
12
proposals are estimated to add another 2000 million litres of ethanol production capacity. The
procurement of ethanol from grain surplus projected by the Ministry of Agriculture and Farmers’
Welfare has also been approved.
The amendment of the IDR Act also aims to smoothen inter- and intra-state movement of
ethanol by giving the central Government exclusive control over it. The possibility of higher blending,
beyond 10%, in ethanol-surplus states of Uttar Pradesh and Maharashtra is also being explored to avoid
the movement of ethanol across the country. For this, the Bureau of Indian Standards has already
notified E-20 Standards.
Public sector OMCs follow an order of priority for ethanol procurement: from 100% sugarcane
juice, B heavy molasses/ partial sugarcane juice, C heavy molasses, and damaged food grains. The task
force feels there is significant scope to enhance allocation of ethanol produced through 100% sugarcane
juice route.
The Indian approach to biofuels is based solely on non-food feed stocks to be raised on
degraded or wastelands which are not suited to farming, thus avoiding a possible conflict of fuel vs.
food security. An estimated 55.3 million hectares are considered wasteland in India which could be
brought into productive use by raising bio-fuel crops (Maheswari et al. 2007). Minimum Purchase Price
(MPP) for purchase of bioethanol would be announced with periodic revision. Major thrust will be
given to research, development and demonstration with focus on plantations, processing and production
of biofuels, including second generation biofuels. Financial incentives, including subsidies and grants
will be provided for second generation biofuels.
3. Supply side initiatives for bio ethanol production
Potential of different feedstocks for ethanol production
Developed and developing countries are aspiring to increase the production of biofuels in order
to reduce dependence on crude oil, improve energy security, and adopt biofuel technologies to support
rural development. The focus of this study was to identify the available feedstocks and their quantities
for bioethanol production that can support this policy. The potential energy crops identified were sweet
sorghum, maize, sugar beet and broken grains of cereals was identified to be the most suitable feedstock
for bioethanol production since an average of less than 50% of their domestic supply is consumed as
food. The potential crop and ethanol yield per ha are given in the Table.4.
Table 4. The Potential crops for biofuel production in India
Crop Ethanol yield
(Iitres/tonne)
Crop/stalk yield
(t/ha)
Ethanol production
(litres/ha)
Sugarcane 70 80 5600
Sugar beet 100 50.6 5060
Maize 360 5.9 2133
Sweet Sorghum* 26.3 38.5 1013
Source: FAO production yearbook 1979 and 2018 * Fresh stalk yield
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Today, nearly all ethanol produced in the world is derived from starch and sugar-based
feedstocks. The sugars in these feedstocks are easy to extract and ferment, making large-scale ethanol
production at affordable cost. The sugar based different feedstocks are being used for fuel ethanol
production depend on geography, cost of cultivation and food and alternative uses in the respective
countries in the world. The technically feasible alternative feedstocks in the country are discussed
below.
3.1. Energy canes
Indian sugar and by-product industries are transforming into multiproduct manufacturing sugar
complexes to utilize every part of canes supplied to the mill and to improve the financial viability of
the industry. The sugar mills are looking for other options to improve the profitability. Most of the sugar
mills have now converted into sugar complexes with the combined production of sugar, ethanol,
cogeneration, bio-compost etc. Policy on biofuel, 2018 broaden the scope for production of bioethanol
from all forms ligno cellulose, it has opened up new avenue for energy cane cultivation.
ICAR-SBI has developed clones with mean harvestable biomass yield under limited irrigation
condition was 241.47 t/ha while under normal irrigation condition the yield was 289.08 t/ha. This clone
can be ratooned for at least 7-8 years hence replanting can be avoided every year. This promising clone
is identified as an ideal energy canes due to more biomass yield per unit area and requires low input,
low production cost and low nutrient requirement which are the characteristics of energy canes. This
type of energy canes can be harvested as whole canes with trash and tops and directly fed into the boilers
to produce electricity.
3.2. Maize
Maize is the leading crop and serves as the feedstock for most domestic ethanol production in
the USA. Corn ethanol meets the renewable fuel category of the Renewable Fuel Standard (RFS). This
ensures there are enough feedstocks to meet demand in livestock feed, human food, and export markets.
Maize is the third most important cereal crop after rice and wheat for India. Globally it is highly valued
for its multifarious use as food, feed, fodder and raw material for large number of industrial products.
Currently maize production in India meets the domestic requirement especially for feed industry.
Additional maize production has to be strategically planned for biofuel production. In India, maize is
considered as important alternate feedstock for sugarcane since, the cost of maize production is
equivalent to the price of b heavy molasses. To meet the biofuel industry in the country, further research
efforts are to be taken up to utilize maize stalks and cobs to utilize them as feedstock.
3.3. Sugar Beet
Contrary to cereals, pulses and root crops, the main component of sugar crops is not starch but
simple monosaccharides (glucose and fructose) and particularly disaccharides (sucrose or saccha-rose).
The chemical composition of sugar beet roots makes this raw material, an attractive feedstock for
ethanol fermentation. In the manufacture of sugar from sugar beet, various intermediates, by-products
and wastes are generated, which can be used for the production of energy and other value-added
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products including biofuel. Sugar is the prime component that gives value to the sugar beet crop and
the by-products generated in its extraction (pulp and molasses) give a benefit up to 10% of the value of
the sugar. The sugar content in sugar beet can vary from 12% to 20%. In order to obtain the highest
yield from sugar beet, several factors must be considered, such as varieties, the location and
management practices. The knowledge of the interdependence of those factors is decisive in the
cultivation of sugar beet varieties for ethanol production and can provide a basis for directing the crop
for this sector of the economy.
3.4. Sweet sorghum
The National Policy on Biofuels 2018 has identified sweet sorghum as one of the candidate
crops for augmenting biofuel production in the country. Sugar industries are exploring the possibilities
of complementing their existing molasses-based ethanol production with alternative raw material to fill-
in the lean period of sugarcane crushing for year-round operations. In addition, sweet sorghum is ideal
feedstock for second generation bio ethanol production. The major impediment of converting biomass
to biofuels is high pre-treatment costs for removal of lignin besides high cost of enzymes used for
saccharification. In view of the current remunerative price for ethanol, the use of sweet sorghum as
biofuel feedstock in existing sugar mills is going to be a win-win situation for both industry and resource
poor, dry land farmers. Sweet sorghum being a promising alternative feedstock for sustainable ethanol
production can also provide a wide range of environmental, economic and employment benefits under
rainfed conditions.
3.5. Broken and surplus rice and wheat grains
The National Biofuel Coordination Committee (NBCC) took the decision to utilize broken &
surplus rice and wheat grain which will lead to utilisation of part of a huge stockpile of 30.57 million
tonnes (MT) of rice which is almost 128% more than the buffer stock and strategic requirement norms.
At present, the Food Corporation of India (FCI) has huge rice stock from previous years lying with
millers on behalf of FCI. In India, the total capacity of grain-based distilleries is close to 2 billion litres,
of which around 38% (750 million litres) is lying unused. Using surplus rice for ethanol will address
the concern of about 750 million litres of grain-based distillery capacities that are lying idle, due to the
lack of feedstock. Similarly, broken and surplus grains can also be used for grain-based fuel ethanol
production. Effective utilization of these raw materials needs effective coordination of different
ministries and there is clear possibility of using them as biofuel feedstock in the country.
3.6. Second Generation Biofuels
Cellulosic Ethanol Feedstocks
Cellulosic feedstocks are non-food based and include crop residues, wood residues, dedicated
energy crops and industrial and other wastes. These feedstocks are composed of cellulose,
hemicellulose and lignin. Lignin is usually separated out and converted to heat and electricity for the
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conversion process. It's more challenging to release the sugars in these feedstocks for conversion to
ethanol. Second-generation biofuel feedstock is the nonedible byproduct of food crops. For example,
rice, wheat straw and corn husks are second-generation feedstocks. There are advantages to use the
inevitable byproduct of the agricultural industry for biofuel production; no additional fertilizer, water,
or land are required to grow this feedstock. Industry does use some of this nonedible byproduct to
produce animal feed, however there is a substantial amount that could also be used for biofuel
production.
4. Demand side initiatives for fuel ethanol blending program
4.1. Fuel ethanol filling stations
Ethanol blending has become mandatory in the country since 2013 and India is pursuing the
objective of 20 % blending by 2030. Apart from blending, Flexi vehicles are operating in Brazil USA
and EU countries. Its requisite ethanol filling bunks in the existing fuel station in a phased manner. It
encourages commuters to buy flexi vehicles in the coming years. In addition, there are demands to run
eco vehicles, farm implements and vehicles at metro cities with ethanol to reduce pollution. It will
accelerate the ethanol demand and ensure value chain for fuel ethanol production.
4.2. Flexi fuel vehicles
As ethanol FFVs became commercially available during the late 1990s, the common use of the
term "flexible-fuel vehicle" became synonymous with ethanol FFVs. In the United States flex-fuel
vehicles are also known as "E85 vehicles". In Brazil, the FFVs are popularly known as "total flex" or
simply "flex" cars. In Europe, FFVs are also known as "flexifuel" vehicles.
The most common commercially available FFV in the world market is the ethanol flexible-fuel
vehicle, with about 60 million automobiles, motorcycles and light duty trucks manufactured and sold
worldwide by March 2018 and concentrated in four markets, Brazil (30.5 million light-duty vehicles
and over 6 million motorcycles), the United States (21 million by the end of 2017), Canada (1.6 million
by 2014) and Europe, led by Sweden (243,100). In addition to flex-fuel vehicles running with ethanol,
in Europe and the US, mainly in California, there have been successful test programs with methanol
flex-fuel vehicles, known as M85 flex-fuel vehicles.
The rapid success of flex vehicles was made possible by the existence of 33,000 filling stations
with at least one ethanol pump available by 2006, a heritage of the early Pro-alcohol ethanol program
in Brazil. These facts, together with the mandatory use of E25 blend of gasoline throughout the country,
allowed Brazil in 2008 to achieve more than 50% of fuel consumption in the gasoline market from
sugarcane-based ethanol.
4.3. Long term Price and procurement policy for ethanol
The Brazilian Government switches to alternatives between gasoline and ethanol in order to
control fuel prices. At times when gasoline prices go up, people opt for ethanol and vice versa, thereby
creating a self-correcting mechanism. Brazil has the ability to lower its ethanol prices to affordable rates
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because its sugarcane industry is run through the market mechanism. This means that there is no
minimum price at which sugarcane has to be purchased. In India’s case, the Government cannot reduce
ethanol prices, because sugarcane has an FRP, which is reasonably priced high. In this case, the price
of ethanol has to cover the cost by ex-mills in purchasing the sugarcane from farmers.
Industry has been demanding a long-term pricing formula for ethanol to encourage setting up or
capacity enhancement of fuel ethanol production. It is recommended that the Ministry of Petroleum and
Natural Gas examine the suggestion in a holistic manner keeping in view the need for providing some
indication for the pricing formula for ethanol so as to reduce uncertainties of return on the investments
being made for bioethanol production. Similarly, the production and purchase support measures for the
period of minimum ten years is expected to sustain the fuel ethanol demand for averting the risks and
uncertainty in the upcoming ethanol market.
5. Constraints in the EBP Program
The future viability of the Indian sugar industry will depend on value-addition and
diversification through ethanol and cogeneration. Diversification will allow the mills to exploit scale
economies and improve economic efficiency and profitability in the industry. In order to tap full
potential, molasses need to be fully available for fuel ethanol program apart from other uses.
6. Impact of Biofuel Feedstock on Food/Price/Livelihood
India does not produce any ethanol from cereal grains (maize, etc.) thus, there has been no
impact of the ethanol programme on the domestic market for food, feed and trade of cereal grains and
byproducts. Fortunately, India’s sugar demand increasing and necessitated sugar production would be
30 million tonnes in 2025. So, sugarcane cultivation is inevitable and has to be increased substantially
to satisfy domestic demand. Increase in cane cultivation is helpful for more ethanol production through
by product (molasses). The only hitch is sugarcane pricing. Price should be increased substantially to
sustain the sugarcane farmers in sugarcane cultivation. Then, the sugar industry will not be lacking in
meeting the requirement of fuel ethanol in the country. Potentially India became a sugar surplus country
for the past 5 seasons, that led to huge cane price arrears to the farmers and liquidity crisis in the
industry. In the current season nearly 14 MT of accumulated sugar stocks leading to further losses.
Hence diversion of juice to ethanol will substantially reduce the glut in sugar, increased sugar price and
probably a viable sugar complex. Further with the improved sugarcane varieties and production
technologies, India can easily achieve the growing demand for sugar and alcohol in the coming years.
7. Way forward
The government, since 2016, has been putting in place policies (including the 2018 National
Policy on Biofuels) to achieve the EBP targets by stipulated time frame. It has offered better price for
ethanol, ensured oil companies blend, addressed supply issues and removed restrictions imposed by tha
State governments. In 2018-19 (December-November period), The blending rate was more than 5 per
cent for the first time in the country.
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For India’s ethanol blending programme to deliver, three critical factors of policy consistency,
stability in price and flexibility are essential. It must be made clear that ethanol blending with petrol
will continue irrespective of oil prices and such unequivocal statement will prepare the stakeholders to
make necessary investment.
Sugar mills need to make substantial investment in bioethanol distilleries. Appreciations to the
government’s subsidised loan scheme, as many as 114 mills are expanding their capacities, which
should in the next 24 months add 900 million litres of ethanol capacity. Capacity for another 1000
million litres needs to be created. If the government sticks to its plan of increasing the blending rate to
20 per cent by 2030, automotive players will have to study if engines need to be modified. These
investments will not materialise without policy consistency.
Ethanol has competing users and for OMCs to get their share for blending should pay a
remunerative price. The government has ensured this for 2017-18 and 2018-19. It is anybody’s guess
that what would be the price next year as crude prices soften. For ensuring price stability, ethanol pricing
should be delinked from crude prices. Even if crude falls, ethanol price for blending should remain
remunerative considering the overall benefits. Also, the government should handhold the programme
till it stabilises. Brazil did just that. It’s ethanol programme started in the 1970s and for over 25 years
the government fixed the price and shielded it from market fluctuations. Brazil’s average blending rate
of 40-45 per cent would not have been possible without such grand support from the government.
Flexibility is another important virtue. In India, ethanol is produced after distilling molasses, a
by-product of sugar. As against the domestic consumption of 26 million tonnes, sugar output in 2017-
18 was 32.2 million tonnes and 2018-19 season (33.13 million tonnes) was also another bumper year
for cane production. This glut could have been avoided if mills were allowed to produce ethanol directly
from cane juice or by converting B heavy molasses earlier in the process instead of producing sugar.
This would put an end to the sugar cycle (non-climate triggered) and the debilitating cane arrears.
Fortunately, the new bio-fuel policy allows this. It also permits damaged/broken food grains apart from
agri-waste to be converted into ethanol. It should be nurtured to become market player to EBP program.
A consistent and flexible policy is the only way to derive many advantages of the gasohol
programme which offers the benefits of blending ethanol with petrol for fuelling vehicles. It is
environment-friendly. It also helps to reduce India’s dependence on oil imports. Our country is the third
largest consumer of crude oil after China and US and importing as much as 82 per cent of its needs.
Lower imports reduce the current account deficit which in turn eases the pressure on the rupee, leading
to lower inflation and interest rates and thereby, fuelling economic growth.
A mission mode programme involving relevant ministries and departments is needed to develop
indigenous second-generation biofuels technologies including cocktail enzymes is inevitable. The
patented and protected imported technologies are costly and may not suitable for our country.
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Though India is progressing in EBP program in last couple of years, there is a risk and
uncertainty on availability of feedstock from sugarcane alone. It is due to two reasons. The first and
foremost is production and price fluctuation in the sugarcane and sugar production system and 20 %
blending target needs minimum of 10000 million litres which may not be possible due to non
availability of the raw materials round the year and other necessitated demand for potable and chemical
industries. Hence, suggested potential raw materials for ethanol production need to be produced in a
most efficient way for sustainability.
By 2040, it is estimated that India will become the largest consumer of crude oil. Importing
bulk of that requirement will leave us vulnerable economically and strategically. Ethanol blending is a
possible way to avoid the grim situation. It should become a national policy that is supported by all
stakeholders irrespective of the Government.
8. Conclusion
A huge opportunity lies in promoting the adoption of ethanol for meeting domestic fuel
requirements and country the has already achieved 5% blending during 2019 due to new policy
directives coupled with fair pricing of fuel ethanol for blending EBP program. The potential of the sugar
sector, seen from this perspective is immense and there are many facets of this industry, not fully
explored. The momentum is picking up globally, whereby the sugar plants are being seen as multi
product industrial complexes which manufacture not only sugar but also industrial / potable alcohol,
fuel ethanol as equally valuable activity. While, production of industrial / potable alcohol and electricity
is now a well established activity in the sugar mills in India, the end use related to fuel ethanol is
gradually picking up due to recent Government incentives. In the last few years, a number of integrated
sugar plants have come up with process flexibilities of shift between sugar and ethanol.
However, a long-term viable pricing formula for sugarcane-sugar-ethanol had to be worked out
so as to reduce uncertainties of return on the investments being made for bio ethanol production. The
future viability of the Indian sugar industry will depend on value-addition and diversification through
ethanol and cogeneration. India with the huge captive consumption base for not only sugar but also for
alcohol-based by-products of sugar industry paradoxically faces issues of sugar surplus and idling
industrial capacities. Diversification of bio-based products will allow the mills to exploit scale
economies and improve economic efficiency and profitability in the sugar industry. Inclusion of tropical
sugar beet in the program will have additional advantage.
The policy paper highlights sustainability issues related to biofuel program in India
encompassing the success story of ethanol blending program in Brazil, production and feed-stock
availability in India, potential of different feed-stocks for ethanol production, role of sugarcane varieties
in sustaining sugar & ethanol production, 2G ethanol, price and procurement policy for ethanol and
constraints in the EBP Program. All aspects of EBP have been discussed in detail, especially the recent
initiatives taken by the GOI.
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Finally, food security, energy security and climate change mitigation are critical to social,
economic and environmental sustainability, not only at the national level but also globally. A successful
resolution of these challenging issues requires the goodwill and commitment of all nations to work
together. This policy paper will be immensely useful in assessing the long-term sustainability of ethanol
production and EBP in India.
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Bio-energy and agriculture: promises and challenges (2006). International Food Policy Research
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