Govt encourages distilleries to produce ethanol from rice & maize

Secretary, Department of Food and Public Distribution, Sudhanshu Pandey, said that as a result of various measures taken to address demand and supply-side issues, it is likely that ethanol distillation capacities in the country would be more than doubled by 2025 to achieve 20 % blending target.

Prime minister Narendra Modi has released the roadmap for ethanol blending in India 2020-25 on 5 June 2021 on World Environment Day. In addition, notification regarding making E 20 fuel available by April 2023 has been issued.

Pandey said that Ethanol Blending with Petrol (EBP) would positively impact the country’s economy. According to him, it would promote ethanol as a fuel that is indigenous, non-polluting, and virtually inexhaustible and would improve the environment and the eco-system as the use of E20 fuel reduces carbon monoxide emission by 30-50% and hydrocarbon by 20%.

To achieve blending targets, the government is encouraging sugar mills and distilleries to enhance their distillation capacities, for which the government is facilitating them to avail loans from banks. Also, interest subvention up to 6% is being borne by the government.

He said, “The production of fuel-grade ethanol and its supply to OMCs has increased five times from 2013-14 to 2018-19. In ESY 2018-19, we touched a historically high figure of about 189 crore liters, achieving 5% blending. It is expected that in the current ethanol supply year 2020-21, more than 300 crore liters of ethanol is likely to be supplied to OMCs to achieve 8 to 8.5 % blending levels. It is also likely that we would be achieving a 10% blending target by 2022.”

He further informed, “Due to upcoming investment of about Rs 41,000 crore in capacity addition or new distilleries, various new employment opportunities will be created in rural areas and strengthen the agricultural economy. This would save foreign exchange of more than Rs 30,000 crore on account of crude oil import bill and reduce dependence on imported fossil fuel thereby would help in achieving the goal of Atmanirbhar Bharat in the petroleum sector.”

According to Pandey, in the next sugar season, 2021-22, about 35 LMT of sugar is estimated to be diverted. By 2025 about 60 LMT of sugar is targeted to be redirected to ethanol, which would solve excess sugarcane or sugar and would also help sugar mills in clearing cane price dues of farmers. In the past three sugar seasons, about Rs 22,000 crore revenue was generated by sugar mills or distilleries from the sale of ethanol to OMCs.

About five crore sugarcane farmers and their families and 5 lakh workers associated with sugar mills and other ancillary activities would be benefitted from this intervention. Moreover, sugarcane farmers will get timely sugarcane dues as the realization from the sale of ethanol is much faster than the sale of sugar, states press note.

It may be noted that India is facing a situation of plenty with surplus sugar, leading to liquidity problems to sugar mills and delayed payments of cane dues. As a result, the government encourages sugar mills to divert excess sugarcane to ethanol blended with petrol.

Secretary, DFPD further briefed that until 2014, the ethanol distillation capacity of molasses-based distilleries was less than 200 crore liters. As a result, the supply of ethanol to OMCs was only 38 crore liters with blending levels of only 1.53 % in ethanol supply year (ESY) 2013-14. However, in the past six years, due to the policy changes made by the government, the capacity of molasses-based distilleries has been doubled and is currently at 445 crore liters. On the other hand, the capacity of grain-based distilleries are presently about 258 crore liters.

Pandey added, “For ethanol supply year 2020-21, the government has now increased the ex-mill price of ethanol derived from various feedstocks based on raw material cost and conversion costs. In addition, to increase production of fuel-grade ethanol, Govt. is also encouraging distilleries to produce ethanol from rice available with FCI and maize.”

The government has fixed the remunerative price of ethanol from maize & FCI rice. Therefore, to produce ethanol or alcohol from food grains, more than 165 LMT of additional food grains would be utilized; this extra consumption of surplus food grains would ultimately benefit the farmers as they will get a better price for their produce and assured buyers and thus, will also increase the income of crores of farmers across the country.