Me Knew Its
Ethanol
India needs to produce an additional 1,320 million tonnes (mt) of sugarcane, requiring 348 billion cubic metres of water and 19 million hectares of land. This encouraging more consumption of ‘empty-calorie’ sugar through public distribution system, this would lead to plummeting of global sugar prices, requiring the government to shell out more to subsidise Indian sugar, In 2018-19, India produced 2.4 bl of ethanol and 93 per cent came from B and C molasses. Producing ethanol from sugarcane juice instead of molasses can help India meet its nutrition requirements and make resources like land and water more sustainable. A national biofuel policy that encourages ethanol production from sugarcane juice will help free up land and irrigation water, allowing for the cultivation of food crops that are rich in micro-nutrients.
India’s biofuel policy only recently allowed the use of sugarcane juice in ethanol production, in addition to molasses, the study pointed out. “If the energy industry continues to use molasses as the bioethanol feedstock to meet its target, it would require additional water and land resources and result in the production of extra sugar,”. The new Fair and Remunerative Price (FRP) for sugarcane announced by the government will increase the cost of sugar production. But sugar mills can improve cash liquidity by diverting additional cane for ethanol production as OMCs have committed to buy entire ethanol in the next five years at a prefixed rate. ethanol production capacity in the country has increased to over 375-400 crore litres. The government is targeting an ethanol production and supply target of 300-350 crore litres in 2020-21, and achieving 7.5-8 per cent ethanol blend levels with petrol.
The agreement, which came out of a government-chaired stakeholder meeting on 21 August, is one of a string of measures aimed at enhancing ethanol production capacity and boosting its blending ratio with gasoline under India's Ethanol Blended with Petrol programme (EBP). It also seeks to address the sugar industry's viability by enabling more mills to manufacture the higher value product.
Banks under the new mechanism will hold oil companies' payments in escrow until sugar mills supply contracted fuel ethanol volumes. This will reduce risks of lending the 186bn rupees ($2.5bn) in soft loans already approved in principle to 362 projects for enhancing or setting up ethanol distilleries and boosting production capacity by 6bn l. The government will bear Rs40bn in interest subsidies for five years. Refiners need to blend over 4bn l/yr of ethanol to meet the E10 target, which the Indian government aims to achieve by 2022. This December 2019-November 2020 ethanol supply year should see 1.9bn-2bn l blended against 1.89bn l in the previous supply year. Only 64 projects representing 1.65bn l of potential ethanol capacity growth had been fully sanctioned for loans without the help of the new finance mechanism.
Indian oil companies on 12 August also proposed a five-year expression of interest (EOI) to enroll bidders to supply around 25.6bn l of fuel ethanol from 1 December 2020 until 30 November 2025. Enrollment as a long-term supplier aims to streamline the tender process and cut down the time mills and distillers spend on repeat paper work. Oil companies forecast a year-on-year increase to 5.8bn l of fuel ethanol during December 2024-November 2025 from 4.65bn l in December 2020-November 2021. But tenders will still be issued and bid each year before the start of each ethanol supply year. The five-year EOI, which closes on 2 September, reiterated that only domestic sources may supply ethanol from domestic feedstock for gasoline blending under India's EBP. The government is using penalties as well as incentives to hasten the switch to ethanol from sugar production. India's Cabinet Committee on Economic Affairs said on 19 August it will increase the price mills must remunerate sugarcane growers for the October 2020-September 2021 sugar supply year. Mills will pay Rs285 rupees/quintal ($38/t) for a basic recovery rate of 10pc, up from Rs275/quintal in the current supply year.
India's sugar mills had accumulated sugarcane price arrears totalling $2.74bn as of 20 March 2020, according to government data, largely because of a sugar glut and depressed prices following oversupply during the 2017-2018 and 2018-2019 sugar supply years. The government supports advancing the EBP as a means to stabilise returns for mills and sugarcane growers, as well as enhance energy sovereignty and reduce transport emissions.
energy.economictimes.indiatimes.com
