Strengthening India’s Ethanol Future

November 16, 2024

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by Rakesh Verma (Daily Excelsior) India’s energy security landscape is characterized by a significant dependency on fossil fuels, which constitute over 80 percent of the country’s total energy consumption. This reliance on coal, oil, and natural gas presents a multitude of challenges, including vulnerabilities to global market fluctuations and geopolitical tensions. In the fiscal year 2022-2023, India imported approximately 85 percent of its crude oil requirements, amounting to around 220 million metric tons, highlighting the nation’s precarious position in the global energy supply chain.

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As India navigates its energy security challenges, the integration of renewables, particularly ethanol, will play a pivotal role in shaping a sustainable energy future.

Understanding Ethanol and Its Sources

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Ethanol is recognized for its lower carbon emissions when burned compared to conventional fossil fuels, making it a cleaner-burning alternative.

The production of ethanol can occur through various methods, with fermentation being the most common.

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In India, a diverse range of feedstock sources can be utilized for ethanol production. The most prominent include sugarcane, maize, and agricultural waste. Sugarcane is a traditional and highly efficient source of ethanol, as it contains high sugar content, making fermentation straightforward. India is one of the largest producers of sugarcane globally, and its use for ethanol not only helps in energy production but also supports the sugar industry, providing farmers with an additional revenue stream.

Maize, or corn, also presents a significant opportunity for ethanol production due to its high starch content, which can be converted into sugars for fermentation. Furthermore, agricultural waste, including crop residues and by-products, offers a sustainable option for ethanol production. Utilizing these materials reduces waste and enhances the circular economy by returning nutrients to the soil.

Ethanol Policy Framework in India

The Indian Government has recognized the critical importance of ethanol in bolstering energy security and reducing dependence on fossil fuels. Central to this initiative is the National Biofuel Policy, which aims to promote the production and use of biofuels, including ethanol. Initially introduced in 2009 and revised in 2018, the policy outlines a comprehensive framework that seeks to enhance biofuel production, improve energy self-sufficiency, and contribute to environmental sustainability.

One of the key components of the National Biofuel Policy is the blending mandate, which requires a certain percentage of ethanol to be blended with conventional fuels. The government has set ambitious targets for blending, aiming for a 20 percent ethanol blending in petrol by 2025. This target not only encourages domestic ethanol production but also stimulates investment in the biofuel sector. An earlier target of 10 percent blending was achieved in 2022, showcasing the progress made and the potential for scaling up.

In addition to mandates, the Indian government has introduced various incentives to promote ethanol production and usage. These include financial subsidies for ethanol producers, tax exemptions, and direct purchase agreements that ensure a stable market for ethanol. Furthermore, the government has facilitated the establishment of ethanol distilleries, particularly in sugar-producing states, to leverage the existing agricultural infrastructure.

The “Ethanol Blending Program” is another significant initiative under the framework, which aims to create a robust supply chain for ethanol.

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One of the most notable advantages of this shift is job creation, particularly in rural areas where agriculture is a primary source of income. As ethanol production facilities are established, they create direct employment opportunities not only in the distilleries but also in the supply chain, including feedstock cultivation, transportation, and distribution.

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Moreover, the impact on farmers’ incomes cannot be understated.

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Ethanol production also plays a critical role in reducing India’s import dependency. By substituting a portion of imported fossil fuels with domestically produced ethanol, India can decrease its vulnerability to global oil price fluctuations and geopolitical tensions. This not only enhances energy security but also conserves foreign exchange reserves that would otherwise be spent on oil imports.

Environmental Benefits of Ethanol Usage

The increasing utilization of ethanol as an alternative fuel source presents a significant opportunity for mitigating air pollution and reducing greenhouse gas emissions compared to traditional fossil fuels.

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Case Studies of Successful Ethanol Initiatives

Ethanol initiatives across India and similar countries have showcased the potential for renewable energy to transform the agricultural landscape and enhance energy security. One notable case is the state of Karnataka, which has successfully integrated ethanol production into its agricultural framework. By leveraging its substantial sugarcane production, Karnataka has established numerous ethanol distilleries that utilize by-products from sugar manufacturing. This initiative not only increases the local sugar economy’s profitability but also reduces waste, contributing to environmental sustainability. The state’s commitment to achieving a 20 percent blending target by 2025 has resulted in enhanced farmer incomes and job creation in rural areas, showcasing a model that other states can replicate.

In Maharashtra, the Ethanol Production from Sugarcane (EPS) program has been instrumental in scaling up ethanol output. The State’s Government has supported the establishment of cooperative sugar mills that focus on ethanol production, providing financial assistance and fostering community involvement. This initiative has led to significant increases in ethanol production capacity and has created a stable market for sugarcane farmers, reducing their dependence on fluctuating sugar prices. As a result, more than 50 percent of the sugar produced in Maharashtra is now being converted into ethanol, demonstrating a successful integration of agricultural and energy sectors.

Another compelling example comes from Brazil, which has long been a leader in ethanol production. The country’s Proálcool program, initiated in the 1970s, aimed to reduce oil dependence through the promotion of ethanol derived from sugarcane. Brazil’s successful implementation of flexible-fuel vehicles, capable of running on both gasoline and ethanol, has significantly contributed to its energy security. This initiative has not only bolstered domestic production but has also led to the establishment of a robust supply chain for ethanol, thereby creating jobs and supporting rural economies. The lessons learned from Brazil’s experience highlight the importance of Government policy, public acceptance, and infrastructure investment in fostering a thriving ethanol industry. READ MORE

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Govt’S Biofuel Drive Has Saved Rs 91,000 Crore In Oil Import Bills: Hardeep Puri (MENAFN)
India’s Ethanol Drive: Achieving 15% Blending in 2024, Targeting 20% by 2025 for Energy Security (Krishi Jagran)
India’s ethanol blending target may be unsustainable, challenges ahead: Study (Hindustan Times)
How India's ethanol boom is transforming the country's corn trade flow (S&P Global Podcast; includes transcript)

Excerpt from MENAFN: Petroleum Minister Hardeep Singh Puri said on Tuesday (November 12, 2024) that India's current biofuel blending rate has reached 16.9 per cent, putting the country on track to reach the 20 per cent target set for 2025-26.

“As a result of the Govt. of India's biofuel initiatives, we have saved Rs 91,000 crore in import bills parallelly giving a much-needed boost to the Agriculture sector,” he added. He also said that India ranks second globally in biofuel blending, underscoring its leading position in sustainable fuel practices.

The minister was speaking at the inauguration of the energy Technology Meet (ETM) 2024, organised by the Centre for High Technology (CHT) and co-hosted by Indian Oil Corporation Ltd. READ MORE

Excerpt from Hindustan Times: The study explored biofuel use and electrification to develop a sustainable decarbonisation strategy for transport -- India’s target of a phased increase in ethanol blending from 10% (E10) to 20% (E20) in a bid to decarbonise the transport sector may prove unsustainable, warned a new study released on Friday (December 6, 2024).

To meet the growing demand for ethanol, the study indicated that an additional 3.5 Mha of land would need to be brought under sugarcane cultivation by 2050 (Representtional image/Reuters)

To meet or maintain the 20% ethanol blending target, India is likely to need imports, which contradicts the primary goals of improving energy security and promoting self-reliance, according to the study by Bengaluru-based Centre for Study of Science, Technology and Policy (CSTEP).

India is already importing ethanol for industrial purposes, with domestically produced ethanol being used for fuel blending, the report said.

Instead, continuing with 10% ethanol blending (E10) would be beneficial, as it avoids trade-offs between food and fuel, and existing vehicles and infrastructure are already E10-compliant. Any surplus ethanol could be used for jet fuel production, the report suggested.

The study, titled ‘Decarbonising India’s Transport Sector: Navigating Trade-offs of Biofuel Use and Electrification,’ used Sustainable Alternative Futures for India (SAFARI) and Social Accounting Matrix (SAM)-based multipliers models to explore the natural resource and macroeconomic implications of biofuel use and electrification, aiming to develop a sustainable decarbonisation strategy for the transport sector.

On the issue of the additional ethanol required for an E20 scenario, the study recommended a 50-50 combination of both maize and sugarcane. However, it cautioned against dropping sugarcane, as maize has a lower water footprint but requires the same amount of water per litre of ethanol produced as sugarcane.

To meet the growing demand for ethanol, the study indicated that an additional 3.5 million hectares (Mha) of land would need to be brought under sugarcane cultivation by 2050, leading to an annual additional water demand of 60 billion cubic metres (BCM).

The study also highlighted potential breakthroughs in second-generation (2G) ethanol or other advanced technologies that sustainably use crop residues and other waste biomass, which could contribute to a sustainable ethanol supply. However, biomass supply chain challenges may limit this progress.

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Regarding fleet electrification, the study referred to the International Energy Agency’s estimate of global mineral demand. It said that India would require up to 21% of the global demand for copper and more than 5% of the demand for lithium. READ MORE

Excerpt from S&P Global Podcast: India is at the crossroads of transitioning from Asia's primary corn exporter to a net importer amidst growing ethanol production within the country. Is this trend of corn imports going to continue, and why is the Indian ethanol market a crucial factor? What challenges stand in the way of this transition?

In this podcast, grains and oilseeds price reporter Edward Low is joined by Namarita Kathait, associate editor for Asia agriculture, senior editor for biofuels, Rishab Joshi, and global biofuel news editor Samyak Pandey to discuss the latest developments in India's corn and ethanol markets. READ MORE