Concerns Arise as Sugar Shortages and Production Uncertainties Force the Central Government to Ease the Ethanol Blending Programme Pace
India’s Ethanol Blending Programme (EBP) faced a major setback when the Central Government moved towards enhancing domestic availability by limiting the use of sugarcane juice for ethanol production after prohibiting sugar exports. The Ministry of Consumer Affairs, Food and Public Distribution issued a directive on December 7th, instructing all mills and distilleries not to use sugarcane juice for making ethanol.
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Ethanol is a highly pure form of alcohol, which can be mixed with petrol. The Ethanol Blended Petrol (EBP) Programme is considered a remarkable achievement of the Narendra Modi government. This program involves the blending of ethanol with petrol. The statistics show that the all-India average blending of ethanol with petrol has increased from 1.6% in the 2013-14 financial year to 11.8 in the 2022-23 financial year. The data suggest a significant growth in the incorporation of ethanol into the country’s petrol supply over the specified period.
Ethanol production Explained
Ethanol, industrial-grade rectified spirit, and extra-neutral alcohol, typically derived from C-heavy molasses, a byproduct of sugarcane processing. These substances are produced through fermentation and distillation of molasses, that contain 40-45% sugar. The molasses is obtained from sugarcane with 13.5-14% total fermentable sugars, where around 11.5% is recovered as sugar, and the remaining 2-2.5% becomes uncrystallized, non-recoverable total fermentable sugars that contribute to C-heavy molasses. Each ton of C-heavy molasses can produce approximately 220 liters of ethanol.
Alternate raw materials instead of traditional sources for Ethanol Production
Instead of recovering the typical 11.5% sugar from sugarcane, mills, and distilleries can extract 9.5-10%, redirecting the remaining 1.5-2% fermentable sugars to an earlier stage known as B-heavy molasses. This B-heavy molasses, with over 50% sugar content, will produce 290-320 liters of ethanol per ton.
Another option is to skip sugar production entirely and ferment the entire 13.5-14% total fermentable sugars into ethanol. This alternative can produce 80-81 liters of ethanol per ton of cane, compared to 20-21 liters through the B-heavy molasses route and 10-11 liters through the C-heavy molasses route.
India’s Ethanol Production: Diverse Feedstocks and Policy Boosts
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The surge in India’s ethanol production began in late 2017 after mills started producing it from B-heavy molasses and concentrated sugarcane juice. Additionally, new materials, such as surplus rice from the Food Corporation of India’s (FCI) stocks, damaged cereal crops, and maize were also used.
Starch obtained from grains is converted into sucrose and other simpler sugar molecules like glucose and fructose, then fermented using yeast. Despite the longer conversion process required for grains compared to molasses, it can produce a large amount of ethanol, 380-480 liters per ton.
The Ethanol Blending Programme began as the central government started paying mills more for ethanol production using feedstocks than C-heavy molasses. In the 2022-23 financial year, state-owned oil marketing companies are required to pay the ex-distillery price of Rs. 49.41 per liter if the ethanol is made from C-heavy molasses.
On the other hand, if the ethanol is made from B-heavy molasses, sugarcane juice, surplus FCI, and damaged grain, the set prices were Rs. 60.73, Rs. 65.61, Rs. 58.50, Rs. 55.54, and Rs. 56.35, respectively. This step made a huge difference in the industry, as ethanol prices were uniform irrespective of the feedstock used until 2017-18.
Why the slowing down of the Ethanol Blending Programme is alerting?
The directive issued by the Ministry of Consumer Affairs, Food and Public Distribution, on December 7th, the slowing down of Ethanol Blending Programme, is a major setback for companies that heavily depend on sugarcane juice, as they produce ethanol directly from it.
With the ban on sugar exports and concerns over production due to low cane yields, the central government prioritizes domestic supply over exports, impacting the progress of EBP. This decision, can contribute to excess sugar in the market and challenge the ethanol industry’s capacity utilization, affecting profitability for the companies.
