Ethanol Blending: Some Key Highlights

The Concept of Ethanol Blending will soon take over the Automobile and Sugar Industry by storm and thanks to the report released by Hon’ble Prime Minister of the Export Committee on Roadmap for Ethanol Blending in India by 2025 on the occasion of World Environment Day 05, June, 2021.

The energy demand in our country is rising due to an expanding economy, growing population, increasing urbanization, evolving lifestyles and rising spending power. About 98% of the fuel requirement in the road transportation sector is currently met by fossil fuels and the remaining 2% by biofuels. Today, India imports 85% of its oil requirement. The Indian economy is expected to grow steadily despite temporary setbacks due to the COVID pandemic. This would result in a further increase of vehicular population which in turn will increase the demand for transportation fuels. Domestic biofuels provide a strategic opportunity to the country, as they reduce the nation’s dependence on imported fossil fuels. In addition, when utilized with appropriate care, biofuels can be environmentally friendly, sustainable energy sources. They can also help generate employment, promote Make in India, Swachh Bharat, doubling of farmers’ incomes and promote Waste to Wealth generation. Ethanol is one of the principal biofuels, which is naturally produced by the fermentation of sugars by yeasts or via petrochemical processes such as ethylene hydration. It has medical applications as an antiseptic and disinfectant. It is used as a chemical solvent and in the synthesis of organic compounds, apart from being an alternative fuel source. According to the report, 20% ethanol blending is within reach. The report further lays out an annual plan for the gradual rollout of E20 ethanol in the country. It suggests specific responsibilities of Union Ministries, State Governments and vehicle manufacturers for the production, supply and gradual rollout of 20% ethanol blending in petrol by 2025.   Benefits: Immense benefits can accrue to the country by 20% ethanol blending by 2025, such as saving Rs 30,000 crore of foreign exchange per year, energy security, lower carbon emissions, better air quality, self-reliance, use of damaged foodgrains, increasing farmers' incomes, employment generation, and greater investment opportunities. 

Impact on Sugar Industry: Sugarcane is a water intensive crop. On an average, one tonne of sugarcane can produce 100 kg of sugar, and 70 litres of ethanol. Cultivation of sugarcane for each kg of sugar requires 1600 to 2100 litres of water. Hence, one litre of ethanol from sugar requires 3000 litres of water. It is estimated that sugarcane and paddy combined use 70% of irrigation water of the country. Conclusion: From the above analysis, It is evident that sugar continues to be the most lucrative food crop for ethanol even though it has the highest water consumption per acre. Amongst grains, maize is the least water-intensive crop for ethanol production, although the litre of ethanol generated per acre is lower than rice and broken rice. We must continue to explore the feasibility of other grains which can supplement sugar in ethanol production to meet the 2025 targets. The Sugar Industry will be going a great upward move once the ethanol blending gets settled down in India and once this Brazil model takes up its pace and heading towards the estimated targets in India, the aforesaid industry will be in its boom in the future. Here are the highlights how the sugar industry in the Stock Market has performed recently in response to the Ethanol blending.

Note: This is only a point of view which are meant to act as broad guidelines and are not meant to be followed blindly. This is not an investment advice and only for education and case study purpose. For detailed study. Refer the Roadmap for Ethanol Blending in India 2020-25 Report of the Expert Committee on NITI Aayog website.