Tag Archives: ethanol

Ethanol as essential energy

In 2020, the lesson learned was that ethanol is the embodiment of “Essential Energy”. Ethanol produces the renewable fuel and delivers the nutritious feed that livestock and poultry producers rely upon. Ethanol proved essential for weathering the Covid.

Recognising the critical need to combat the spread of the virus, many ethanol producers quickly took the steps necessary to produce the high-purity alcohol that comprises roughly 70% of every bottle of hand sanitizer. Later in the year, news that vaccines were in development was greeted with understandable enthusiasm; it signalled the beginning of the end of the pandemic. But it also created a new challenge.

Much of the vaccine would need to be transported and stored at incredibly low temperatures, necessitating increased supplies of dry ice. Once again, the ethanol industry – which produces supply of CO2, the critical component of dry ice – was called upon to meet the increased demand for an essential product. The 2021 Ethanol Industry Outlook suggest that tomorrow’s challenges of climate change, food and energy security, and rural prosperity will continue to make ethanol an Essential Energy.

The global ethanol market size was valued at USD 89.1 billion in 2019 and is anticipated to register a compound annual growth rate (CAGR) of 4.8% from 2020 to 2027. The demand for the product is driven by growing usage of the product as a biofuel. The rising consumption of alcoholic beverages is another major factor supporting market growth. Ethanol can be manufactured by both natural as well as petrochemical feedstocks. In the natural process, natural sugars are fermented in the presence of yeast.

The Indian ethanol market is projected to grow from $2.50 billion in 2018 to $7.38 billion by 2024, exhibiting a CAGR of 14.50% during 2019-2024, on the back of increasing ethanol use in applications such as fuel additives and beverages. Ethanol is a prominent alcoholic beverage, mainly found in beer, cider, wine, spirits and ale. Indian government is trying to reduce its dependence on imported crude oil and incentivising Indian sugar manufacturers to produce ethanol for Oil Marketing Companies (OMCs). It is expected that ethanol production will increase by three to five folds in the future in order to meet the demand for its 20% Fuel Blending Programme (FBP). Factors such as increasing alcohol consumption and changing lifestyle along with growing influence of the western culture are likely to drive the demand for ethanol in the country.

In terms of source, the Indian ethanol market has been categorised into sugar & molasses based ethanol, second generation (mixed grains) and grain-based ethanol. Based on application, the market has been segmented into industry solvent, fuel & fuel additive, beverages, disinfectant, personal care, and flavouring & fragrance. Based on purity, the market has been segmented into denatured and undenatured. Government’s emphasis on ethanol production from bio mass and solid waste is likely to become a major source of ethanol production in future.

India has target of achieving 10% Ethanol blending by 2022 and 20% Ethanol blending by 2030.

Ethanol remains the highest-octane, lowest-cost motor fuel on the planet. And it is the only tool available at scale in the near term to significantly reduce carbon emissions from gasoline. Meanwhile, the industry’s co-products – including distillers grains and distillers oil – provide indispensable protein and energy to a hungry world.

State-run oil marketers are required to blend 10% ethanol in petrol under the national policy on biofuels 2018 by 2022 and 20% by 2030. But so far this has not been moving at scale as surplus sugarcane was not easily available and the blending is only 5% now.

To improve supplies of ethanol-blended petrol, the government has widened the feedstock options. Accordingly, the National Biofuel Coordination Committee of the oil ministry in June allowed the conversion of surplus rice with the Food Corporation into ethanol.

It has also allowed procurement and conversion of the surplus maze into ethanol. With this, the ethanol production happens from six feedstocks -100% sugarcane juice/sugar syrup/sugar; B-heavy molasses which is sweeter; C-heavy molasses which is mildly sweet; damaged food grain; surplus rice from FCI and surplus maize.

Adding surplus rice procurement process from FCI has already started for the 2020-21 cycle and very soon OMCs shall start procuring maze for making ethanol as well.

Of the total blending by 2022, 300-350 crore litres will come from sugarcane, and the rest from non-sugar feedstock like damaged foodgrains, adding 160 crore litres of 180 crore litres come from sugarcane.

The estimated annual petrol demand is pegged at 4,600 crore litre this year, which means 450-460 crore litre of ethanol mixing in the December 2020-November 2021 crop cycle.

Mills in U.P. are expected to produce about 105lac tons in 2020-21 SS, as against 126.37 lac tons produced in 2019-20 SS. Estimated lower production this year is because of reportedly lower cane yields and lower sugar recoveries in the State, much higher diversion to gur/khandsari units and much higher diversion of sugar for production of ethanol by way of diversion of B-heavy molasses and sugarcane juice. Based on the allocations made by the OMCs for supply of ethanol in 2020-21, it is estimated that about 6.74 lac tons of sugar will be diverted for production of ethanol by the sugar mills in the State in the current year as compared to about 3.70 lac tons diverted in 2019-20 SS.

In the sector of cane development and sugar industry, distillation of 120 kilolitres per day capacity will be established in Pipraich sugar mill which will start in December 2021. There will be facility to manufacture ethanol.

Pipraich sugar mill will be the first sugar mill in North India to manufacture ethanol directly from sugarcane juice.

The crushing capacity of Mohiuddinpur-Meerut sugar mill of the corporation area was increased to 3,500 TCD from 2,500 TCD.

A target to increase the crushing capacity of Mohiuddinpur-Meerut sugar mill from 3,500 TCD to 5,000 TCD is proposed to benefit 1,00,000 cane farmers in the state.

Cabinet has approved guidelines for production of ethanol from cane juice and syrup in the distilleries of the state.

Cabinet order is as follows: The decision will aid in reducing excess sugar stocks, increasing liquidity with the sugar mills for settling cane farmer’s dues and making higher ethanol available for Ethanol Blended Petrol (EBP) Programme; Surplus sugar production has depressed sugar prices, thereby impacting sugar industry’s capacity to pay sugar cane farmers. The ex-distillery price of ethanol derived from cane juice is `85 per liter while that from C- heavy molasses is `45.69 per liter, for the ethanol supply year beginning December 2020. Higher remunerative price for ethanol produced from cane juice will help in reduction of cane farmer’ arrears; Sugarcane juice shall mean, primary juice, secondary juice, mixed juice and clear juice as obtained by sulphitation or defecation process. Sugarcane syrup shall mean concentrated juice having total dissolved solid content not less than 50 brix; Sugar mills with captive distilleries within the premises shall be allowed to produce ethanol from cane juice and syrup. Standalone distilleries will not be allowed to produce ethanol from cane juice and syrup; Ethanol produced from cane juice shall be used only for Ethanol Blended (EBP) Programme; as no sugar or molasses is produced in the process, the income from ethanol derived from cane juice and syrup shall be tagged for payment of sugarcane dues to farmers. All the instructions regarding cane allotment and cane payment issued from time to time shall be binding on these units and The State Government has earlier permitted ethanol production from B-heavy molasses. Since then, more than 40 distilleries in the state are producing ethanol form B-heavy molasses, resulting in a significant increase in ethanol production in the state. The state is the highest producer of ethanol in the country.

Cabinet decision will empower the sugar mills to choose between production of sugar or production of ethanol from cane juice, based on viability of market price of sugar, further improving the income of sugar mills and there by better cane payment to farmers.

Maharashtra is expected to produce about 105.41 lac tons in 2020-21 SS, as against 61.69 lac tons produced in 2019-20 SS. Higher estimated sugar production this year is mainly due to increased cane area by about 48% and better cane yields as compared to the last season owing to favourable weather conditions as well as increase in percentage of plant cane. Based on the allocations made by the OMCs for supply of ethanol in 2020-21, it is estimated that sugar mills in the State will divert about 6.55 lac tons of sugar for production of ethanol in the current year, which is substantially higher as compared to only about 1.42 lac tons diverted in 2019-20 SS.

The third major sugar producing State viz. Karnataka is expected to produce about 42.5 lac tons of sugar in 2020-21 SS, as against 34.94 lac tons produced in 2019-20 SS. Similar to Maharashtra, there is an increase in cane area and reportedly better cane yields and better sugar recoveries, which is resulting in higher estimated sugar production in the current season. Mills in the State are expected to divert about 5.41 lac tons of sugar for ethanol production in the current year as compared to about 2.42 lac tons diverted in 2019-20 SS.

These three major sugar-producing States are estimated to contribute almost 93% of the total estimated diversion of sugar into ethanol of about 20.10 lac tons in the current season.

The Government had announced two important policy decisions to improve liquidity of sugar mills during 2020-21 SS, by way of announcement of sugar export programme of 60 lakh tons and upward revision of ethanol prices for 2020-21 SS, which have been welcomed by the industry.

However, the government is yet to announce implementation of a very crucial policy decision i.e. increasing MSP of sugar. This will improve the liquidity of the mills enabling them to make timely cane payment to farmers also. The ex-mill sugar prices are already under pressure in almost all the States and to ensure that sugar mills are able to pay to farmers on time, there is need to quickly decide on increasing the MSP of sugar.

Marrying ethanol with petrol the need of the hour

In an interview with Ambrosia, V.N. Raina, Director General, AIDA, stresses on the need to blend 10% of ethanol with Petrol to save valuable foreign exchange for the country.

What is the current situation of ethanol production in India?

The production of ethanol for mixing with petrol was introduced in the country during the year 2006-07. Ethanol is an important bio-fuel and is blended with petrol under EBP programme. It is an important component of national bio fuels programme. Ethanol is a source of energy which is indigenous, non polluting and virtually inexhaustible.Therefore to promote this bio fuel, the govt. has scaled up the blending targets which are given below:-

Production of Surplus grains declared (2018-19)

S.No.               Products Qty                 ( Lac Tonnes)

1                        Maize                            30-40

2                        Bajra                             9.00

3                       Jawar                             4.70

The initial aim was to mix 5% ethanol with petrol by the season 2016-17. However, to promote bio fuel the govt. scaled up the blending targets from 5% to 10% to be achieved by the season 2021-22 under Ethanol Blended with Petrol Programme (EBP). However, due to various reasons implementation of this programme was not seriously taken up till the year 2017 when the govt. notified the programme. But with all the efforts of the govt. and the distillery industry producing ethanol from molasses 5% blending could not be achieved even till the year 2016-17, However, during the current year 2018-19 (closing 30th Nov. 2018) total blending of approx. 6.2% has already been achieved. This also included the ethanol produced from grains “not fit for human consumption” to supplement the ethanol supplies.

The entire ethanol game plan envisaged by the govt. Can be explained in nutshell as below:

Centre has set a target of 10% ethanol blending by petrol by 2022, leading to forex savings of `12,000 crores a year.

There was 3.5% blending in 2016-17 sugar season and 4.0% in 2015-16.

Nationwide average for ethanol blending stood at 4.02% as on Oct.1

The latest proposal will allow ethanol production from surplus quantities of maize, jawar and bajra, as well as other feedstock such as fruit and vegetable wastes.

Ethanol blending in petrol has risen from 38 crore litres in supply year 2013-14 to an estimated 146 crore litres in 2017-18.

What are the incentives being given by the government to ramp up the production given the increasing ethanol requirements in India?

The Govt. first introduced financial assistance scheme by extending financial assistance through spot loans to sugar mill attached distilleries to set up plant and machinery for production and enhancement of ethanol production capacities in the country. Many distilleries attached to sugar mills applied for and received the financial assistance form the Ministry of Consumer Affairs, Food & Distribution, GOI enabling them to put up distilleries and ethanol production equipment. The financial scheme included facility of interest subvention @ 6% per annum or 50% of rate of interest charged by banks, whichever is lower with certain conditions.

In order to augment ethanol production capacity and thereby also allow diversion of sugar for production of ethanol, in principal approval has been granted for extension of soft loan of `6139 crores though banks to the mills for setting up new distilleries /expansion of existing distilleries and installation of incineration boilers or installation of any method as approved by Central Pollution Control Board for Zero Liquid Discharge for which Government will bear interest subvention of `1332 crore. About 114 sugar mills are likely to be benefitted as a result of this measure and ethanol production capacity of sugar mills in the country is likely to be enhanced by about 200 crore litres per annum in the coming three years.

The Govt. has notified a new scheme on 08.03.2019 for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity. Under the scheme Govt. would bear `2,790 core towards interest subvention for extending indicative loan amount of `12,900 crore by banks to the sugar mills for augmentation of ethanol producing capacity.

The Govt. has notified a scheme on 08.03.2019 for extending financial assistance to molasses based stand-alone distilleries. Under the scheme, Govt. would bear `565 cores towards interest subvention for extending indicative loan amount of `2600 crore by banks to the molasses based stand-alone distilleries to augment their ethanol production capacity.

On further request from distillery industry and All India Distillers’ Association (AIDA), govt. has also agreed to consider financial assistance on the same condition to grain based distilleries for producing ethanol. Many distilleries have already applied. In the meantime loans have been sanctioned as far as molasses based distilleries are concerned. The scheme for loans to grain based distilleries is also under consideration of the govt. This step will provide further possible resources towards increasing the production of ethanol under EBP Programme.

What are the current requirements of ethanol and are there any deficit and how are they bridging it?

The current requirement as per the programme of introducing 10% blending by the year 2022 requires approximately 300 crore ltrs. of ethanol. The govt. has announced various incentives and financial assistance to the industry. It is hoped by the closing of the year 2019-20 when new distilleries would have gone up including increase in existing production capacities in the existing units due to the positive steps taken by the govt., the 10% blending will be achieved by the year 2020- 21/22.

The prices announced for Ethanol for supply year 2019-20 (1st Dec. 2019 – 30 Nov. 2020) are:

S.No.                            Products                                              Price (Rs.) / BL

1                                   “C” Heavy Molasses                            43.75

2                                   “B” Heavy Molasses                            54.27

3                                   Sugarcane Juice                                   59.48 + GST & Transportation charges

The revision of prices of ethanol supplied from grains is also under consideration by the govt. in consultation with the distillery industry

In addition the govt. has also taken steps in consultation with the industry to set up and revise the prices of ethanol from time to time so that the industry feels protected about the production and supply of ethanol. A very recent price increase has been introduced by the govt. 01.01.2019, which now will bring the price of ethanol from various sources to the level given below w.e.f. 01/12/2019.

The revision of prices of ethanol supplied from grains is also under consideration by the govt. in consultation with the distillery industry.

The govt. of India very rightly announced use of surplus grains in addition to the spoilt and damaged grains for production of ethanol. The govt. has declared following surplus grains under this policy which could be used for production of ethanol for the year 2018-19. It will be further increased and announced from time to time by the govt. in consultation with the concerned departments. The present quantities of availability of surplus grains in the country which could be used by distilleries for production of ethanol are as below:

Will the petroleum companies be able to absorb the new price increase?

The setting up of prices are being announced by the govt. of India in consultation with the petroleum companies and it has been agreed that the prices have to be revised from time to time if the need be, to ensure continuous supply of ethanol and to increase its production as much as possible. The petroleum companies are part of the final prices of ethanol, calculated and announced by the govt.

What is the current requirements of ENA in the liquor industry ? Is there sufficient production to meet the needs of the industry?

Current requirement of ethanol as well as ENA depends upon the production and availability of raw materials for the basic production of Rectified Spirit (R.S)from which ENA and / or ethanol is produced. As per the present scenario the supply of ENA for liquors is being carried out by the industry alongwith supplies of ethanol. However, the market now competitive and has to be kept in mind for prices of liquor which are controlled by the state govts. Considering the market price of the ENA vis-a-vis that of Ethanol, it should be fair to the liquor industry as well.

A good quantity of grain spirit being produced is also in the market now and there sufficient quantity is available both for ENA and Ethanol as per the programme set up by the govt. However, it vastly depends upon competitive pricing and balanced affordability.

What incentives is the government giving for ENA production, both for domestic consumption as well as for exports?

The procurement and supply of ENA for potable purposes comes under the ambit of state govts. and the state govts. have to ensure good prices for IMFL for continuous availability of ENA in the competitive market of alcohol production in the field. The Central Govt. has no role for fixation or revising liquor rates and prices in the market, which is under the govts. of respective states.

What are the alternative feedstocks government is looking at for ethanol production besides traditional molasses and grain? And what are the challenges we have for the same?

The govt. of India has been on the look out for many alternatives, sources and resources for finding out alternative feed stocks for production of Ethanol. The govt. has already considered all feed stocks which are possibly available like agricultural wastes, forest wastes, bagasse, bamboo miscellaneous millets etc. and the research in this regard is continuously being undertaken for selecting and finalising the new feed stocks for production of ethanol.

There is an option under the research programme which will continue for searching out various resources of feed stocks and resources from all fields will be studied provided they are reasonably affordable and competitive with other feedstocks.

Will electric vehicles disrupt the demand for petrol and as a result the demand for ethanol?

No, in the near foreseeable future there is no possible disruption of demand for petrol or ethanol as a result of introducing electric vehicle in the country. The demand for petrol is rather expected to increase rapidly as the number of motor vehicles on the road is increasing by the day.