The Criticality of Biofuels and their Impact on India's Economy and Ecology

by Vijay Nirani (ETEnergyWorld/TruAlt Bioenergy) India can reduce its dependence on imported fossil fuels by adopting production of biofuels thereby enhancing energy security and mitigating economic risks.

Industry leaders must dedicate themselves to transitioning towards a low-carbon energy landscape, driven to emphasize the profound impact biofuels can have on India's economic prosperity and ecological sustainability. This potential is not merely theoretical; it is demonstrated by robust Government policies and forward-thinking insights. READ MORE

Excerpt from Krishi Jagran: ISMA expresses confidence in achieving the 20% Ethanol Blending target but emphasises the need for stable policies and investments in sugarcane production.

The drop in Indian cane production due to the global climate phenomenon, EL-Nino, had led to a sudden stoppage of ethanol production from syrup and BHM from mid-December 2023. This meant that only 20 Lac tons of sugar was diverted towards the production of around 200 Cr ltrs of ethanol. However, based on the sugar production figures, India could have afforded to produce around 250 Cr ltrs of ethanol more by diverting a further quantity of around 25 Lac tons sugar even after meeting the full requirements of 285 Lac tons of sugar for domestic demand after leaving more than adequate 66 Lac tons of closing stock at the end of the season.

Subsequently, the sugar industry could have supplied 450 Cr ltrs of ethanol which could have been almost adequate for the current ethanol year requirement from the sugar industry. Looking at the statistical figures above, we delve into the challenges faced by the sugar sector in meeting the 20% ethanol blending target in future and explore the policy interventions necessary to facilitate compliance. By examining the economic and environmental benefits of ethanol blending, the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) aims to provide a comprehensive overview of the road ahead in achieving this critical milestone for the Nation.

Prabhakar Rao, President of the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), said, "The Indian sugar industry is well-positioned to meet the government's ambitious 20% ethanol blending target by 2030. Our industry can contribute a significant 55% of the ethanol requirement, and even increase that to up to 60% if we can get stable policy support and investment on sugarcane production stabilisation."

For the Indian sugar industry, the Ethanol Blending Requirement presents both challenges and opportunities. On one hand, it offers a new market for ethanol production, creating a potential revenue stream. On the other hand, meeting the demand for ethanol production necessitates significant investments in infrastructure and technology, posing challenges for sugar producers.

Current Challenges

Policy Interventions Needed for Ethanol Blending

To enable the sugar industry to meet the Ethanol Blending Requirement after meeting the sugar demand fully, the following policy intervention is crucial:

Harmonious fixation of MSP for sugar and ethanol prices for the three feedstocks syrup, B Heavy and C Heavy molasses while announcing FRP for sugarcane– The sugarcane farmers and the sugar industry needs to harmoniously co-exist. While the FRP is announced by the Government every year, the MSP for sugar remains unchanged for more than 5 years. It is of paramount importance to fix the MSP and ethanol prices along with the FRP every year establishing harmony and financial viability. The ethanol production and the sugar production will reach an equilibrium based on the market-driven economics. The revenue share ratio (of sugar) for Indian cane farmers is 75% which is far higher, as opposed to 70% in other important cane-growing countries like Thailand and Brazil.

Therefore, the 75% ratio proposed is very reasonable. As such, despite the sugar prices being the lowest in India, the farmers are paid the highest Fair and Remunerative Price (FRP) as compared to other cane-growing countries.

The stoppage of ethanol production from December 2023 has resulted in excess closing stock of about 9.1 million tons over and above the 5.5 million requirements. This led to a drop in sugar prices and losses to the industry besides delays in payments to the cane farmers. Thus, the execution of policy interventions to empower the sugar industry to meet the 20% ethanol blending prerequisite is not merely a calculated effort in the direction of sustainable energy practices but also a vital move in contributing to the financial strength of the sector and the welfare of farmers. READ MORE