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 Ethanol,
just recently termed as the green gold is back in fashion. As
oil prices touch a record high of US$140 a barrel, there is
likely to be a paradigm shift towards ethanol. As markets
estimate the cost of producing ethanol to be around US$45 a
barrel, the economics could not be better.
Besides high oil prices, the growing interest in ethanol is that
many countries would like to meet their greenhouse gas abatement
targets under the Kyoto Protocol and it could also facilitate an
export opportunity for the self-sufficient countries.
The Indian bioethanol market is also grappling with availability
issues, as ethanol is primarily manufactured from molasses - a
by-product of sugar. Since sugarcane production is cyclical, the
availability and cost of production of bioethanol will vary
depending on sugarcane crop yields. India's ethanol-blending
program could not be implemented during 2003-2004 due to a low
sugarcane output and the second phase of this programme was
announced in September 2006 only after a recovery in sugarcane
production.
Also, unlike Brazil, sugarcane is not directly used for ethanol
production but is made from a by-product, molasses. For
sustainable supplies, India would either have to divert part of
the cane juice to ethanol production or concentrate on
increasing the yield, which is stagnating at 60-70 tonnes per
hectare.
However, Sugarcane is a water-intensive crop. Unlike Brazil,
which has ample fertile land that receives ample rain, India's
sugar production is heavily dependent on irrigation.
The other option is to use alternative feedstock such as
sorghum, which is drought-resistant and less resource intensive.
A pilot plant using this feedstock (40 kilolitre a day capacity)
has just been commissioned in Andhra Pradesh. But the future
clearly is ligno-cellulosic material such as agricultural
residue and perennial grasses.
As estimated at the present level of petrol and diesel
consumption, the ethanol requirement for 10% blend of each of
these products means around 6 billion litres per year which
would require nearly 90 to 100 million tonnes of additional
sugarcane to be converted to produce it, which is around 30% of
total sugarcane grown in India as against 55% used in Brazil for
ethanol programme, providing additional income for the farmers
as well as for the country. The government is likely to make it
mandatory for 10 per cent from October. The price likely to be
fixed for ethanol is Rs.24/- per litre.
India's demand for fuel is also going up. The transport sector
is also growing rapidly and presently accounts for over half of
the country's oil consumption whilst the country has to import a
large part of its oil needs. India imports nearly 70% of its
annual crude petroleum requirement, which is approximately 110
million tonnes. With oil prices touching a record high, it could
have a significant impact on the country's foreign exchange
reserves, along with the increasing losses in the oil sector as
the government tries to insulate domestic prices of petroleum
products from global price increases.
So India to meet its ethanol requirements will need to bank on
sugarcane. Indian sugarcane is currently used to produce sugar
for our domestic consumption as well as for exporting to other
countries. Still India is producing excess sugar as compared to
its demand and this resultant oversupply is creating a downward
pressure on the market price of sugar, affecting the economics
of the sugar industry and consequently the livelihood of
millions of sugarcane farmers that the industry supports.
So, sugarcane, which is globally under pressure due to the
excess production, can be very advantageous for India providing
no pressure on the supply side of sugar. Surplus cane can be
used to produce ethanol as is done in Brazil. Instead of storing
millions of tonnes of sugar in a falling market and exporting
the balance at very low international prices, the same could
instead be used to produce a few billion litres of ethanol.
Storage quality ethanol is again advantageous as it can be
stored for up to 5 years and sugar does not have that long a
shelf life. So, in seasons of heavy cane crop, sugar industries
can manufacture ethanol and store it. When the crop is limited
it can be used to produce sugar, and the stored ethanol can be
used for meeting commitments.
This in turn is an opportunity for firms like Praj and Alfa
Laval which have been supplying turnkey solutions for the Indian
liquor industry. According to Vinati Moghe, Praj Industries Ltd,
As a technology provider for the beverage alcohol, industrial
alcohol, fuel ethanol plants and for beer production plants we
have been constantly enhancing the technological benefits for
our customers. Some parameters which we have focused upon are:
Yield of alcohol from the substrate/ feedstock; Utility
Consumption and Effluent management.
The estimates setting up of new ethanol capacity to meet the
energy demand is far more economical in terms of capital
investment than setting up an oil refinery of the same capacity.
Global production of ethanol fuel increased by 18 per cent to 46
billion liters in 2007, marking the sixth consecutive year of
double-digit growth. Developed countries like Brazil, Japan, and
the United States are in this industry since the long time.
Today, Brazil gets more than 40% of its automobile fuels from
sugar cane-based ethanol.
It increased its ethanol production by 21% in 2007 to 19 billion
litres. United States produced about 24.5 billion litres and
imported an additional 1.7 billion litres, mostly from Brazil,
in 2007. Brazil and the United States accounted for 95 per cent
of all ethanol production in 2007.
World's ethanol production is expected to pass 20 billion
gallons with CAGR (Compounded Average Growth Rate) of about 5%
from 2008 – 2012. US and Brazil being the leaders in the
production of Ethanol are expected to have the most growth in
this industry along with the emergence of new ethanol producers
in Asia and Latin America.
Various Governments are providing incentives to expand Ethanol
production and use. Brazil and United States use large
quantities of Ethanol as fuel. Some Canadian provinces promote
Ethanol use as a fuel by offering subsidies of up to 45 cents
per gallon of Ethanol. In France, Ethanol is produced from
grapes that are of inferior quality for wine production.
Prompted by the increase in oil prices in the 1970s, Brazil
introduced a programme to produce Ethanol for use in automobiles
in order to reduce oil imports. Brazilian Ethanol is made from
sugar cane. Pure Ethanol (100% Ethanol) is used in approximately
40 per cent of the cars in Brazil. These cars are known as Flex
Fuel cars since they provide an option of using petrol or Fuel
Ethanol or both in any proportion. The remaining vehicles use
blends upto 24 per cent Ethanol with 76 percent gasoline. Brazil
consumes nearly 4 billion gallons of Ethanol annually. In
addition to consumption, Brazil also exports Ethanol to other
countries.
The Indian government has recommended that approximately 10% of
all total energy produced should come from renewable sources and
has made sale of ethanol-blended unleaded petrol recommendatory.
The Ministry of Petroleum has estimated demand for
ethanol-blended fuel to be approximately 12 billion litres by
2007-08, which would mean an ethanol requirement of
approximately 600 million litres (at 5% blending) or 1.2 billion
litres (at 10% blending).
Two reasons that lend urgency to India's biofuels programme are
economics that make the country's surging oil imports make it
absolutely essential that it find alternatives that will replace
costly crude to some extent. Equally compelling is the other
rationale. India ranks fifth in the world in carbon dioxide
emissions and its greenhouse gases are increasing at an alarming
rate as the growth rate accelerates. Clean energy becomes
absolutely essential — and also paying.
To read this section in detail and access interviews of Vinati
Moghe, Nish Patel, Genu Mathew, N. Ashok Babu, Yogesh Satoskar
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