Ethanol’s economic and environmental benefits

India is among the highest emitters of greenhouse gas (GHG) and its cities are amongst the most polluted in the world. India has undertaken several initiatives over the years towards its goal of net zero emissions as part of Paris COP21 commitments. It has been successful in driving the growth of Renewable Energy and is now looking at other ways to curb emissions, one of which is to produce ethanol on a large scale.

India has the potential to become one of the major ethanol producers in the world due to the large quantities of sugarcane that are grown in the country.Ethanol is a low-hanging fruit solution that can enable a greener, more sustainable economy.

Diverting surplus sugarcane crop for ethanol production holds multiple benefits for India – reduction in GHG emissions and air pollutants in major Indian cities; reduced oil import dependency; infrastructural investment in rural areas; employment generation; and market-oriented alternative income for the country’s 50 million sugarcane farmers.

India is making good progress, guided by its National Biofuel Policy

India’s National Biofuel Policy (NBP), introduced in 2018, aims to promote, develop and utilize domestic feedstock for biofuel production – a move that is expected to increasingly replace fossil fuels with biofuels, thereby contributing to national energy security, climate change mitigation, pollution reduction, improved health conditions and the sustained creation of employment opportunities.

As a part of the Ethanol Blended Petrol (EBP) programme, mills were allowed to produce ethanol from B Molasses and sugarcane juice. An indicative target was set for 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by the year 2030. In 2020, this target was sharpened to 10% ethanol-blending by 2022 (10% of ethanol mixed with 90% of petrol) and 20% by 2030.

In January 2021, India advanced the target of achieving 20% ethanol-blending with petrol by five years to 2025. Achieving this will require around 12 billion liters of alcohol/ethanol. For this harvest season, the sugar industry plans to divert 6 million tonnes of surplus sugar to produce around 7 billion liters of ethanol, while the remaining 5 billion liters will be produced from excess grain.

Tripartite Agreement for ethanol production

In 2020, sugar mills, oil marketing companies (OMCs) and banks entered into a tripartite agreement, which allows sugar mills to get loans on the basis of committed purchases of ethanol by OMCs. The agreement helps mills’ liquidity and promotes ethanol supplies, by enabling them to set up new distilleries or expand the existing facilities to manufacture ethanol.