Ethanol- A Potent Weapon to Reduce Carbon Emissions
The Govt of India has taken the right initiative by introducing various measures to promote ethanol blending in the country. The only thing required now is to keep the momentum going by regularly reviewing the efficacy of the measures taken and doing course correction, if required.
December 30, 2024. By News Bureau
Recently, the Govt of India announced that it intends to blend 20% ethanol in petrol by the year 2025. Simultaneously, there were announcements by a couple of auto majors about launching models of vehicles capable of running on flex fuels (fossil fuels blended with biofuels like ethanol). Ethanol blending with fossil fuels once again became the talk of the town. We all know that energy demand across the world is increasing day by day due to development of the global economy. Fossil fuels are the primary energy sources which account for bulk of the world’s energy consumption.
The World Energy Forum has forecasted that fossil fuels are under high pressure of shortage and can deplete in the coming decades. Also, use of fossil fuels has led to adverse effects on the global climate. Such an alarming situation has led policymakers to think about alternate ways of energy generation. The Government of India is also pushing for greater adoption of renewable power in the country. The Central Govt has set a target of achieving Net Zero carbon emission by the year 2070.
One of the methods which the Govt of India is adopting to achieve its target of Net Zero emission by 2070, is by blending ethanol with petrol. It is noteworthy to mention that as of March 2024, about 98% of the fuel requirement of the road transport sector is being fulfilled by fossil fuels while only 2% is being fulfilled by biofuels like ethanol. The above data from Govt of India highlights the huge potential available to reduce our carbon emissions by replacing/blending fossil fuels like petrol with biofuels like ethanol.
Ethanol is a major biofuel which is being increasingly used to reduce carbon emissions. It is mainly produced from natural sugars (obtained from raw materials like sugarcane, maize, rice etc) by means of fermentation done with yeast or through a process called ethylene hydration. Apart from being used as a biofuel, it also has various industrial uses like being used as a chemical solvent as also in the synthesis of various organic compounds. Ethanol is also used in the medical field as a disinfectant and as an antiseptic
Brazil is a country that has been a huge success story as far as blending ethanol with fossil fuels like petrol is concerned. The country started blending ethanol with petrol as early as 1930. Today, the country has mandated a 27% ethanol percentage in petrol and most of the cars these days in Brazil run on flex fuels.
The Govt of India initiated the ethanol blending program in 2001 but it has been only in the last few years that the initiative has gained substantial momentum.
In the year 2013-14, the ethanol percentage in blended petrol in the country stood at 1.53%. Due to the various initiatives taken by the government, the blending percentage rose to 8.17% in the year 2020-21. There was further increase in blending percentage in the year 2022-23 with the figure touching 12.06%. As per the Ministry of Petroleum, Govt of India, our country has already achieved 15% ethanol blending in petrol as of September 2024.
A National Policy on biofuels was introduced by the Central Govt in 2018 and a target of 20% ethanol blending was proposed to be achieved by 2030. The success of the ethanol blending program in recent years made the govt advance the target year for achieving 20% ethanol blending to 2025 from 2030.
The World Energy Forum has forecasted that fossil fuels are under high pressure of shortage and can deplete in the coming decades. Also, use of fossil fuels has led to adverse effects on the global climate. Such an alarming situation has led policymakers to think about alternate ways of energy generation. The Government of India is also pushing for greater adoption of renewable power in the country. The Central Govt has set a target of achieving Net Zero carbon emission by the year 2070.
One of the methods which the Govt of India is adopting to achieve its target of Net Zero emission by 2070, is by blending ethanol with petrol. It is noteworthy to mention that as of March 2024, about 98% of the fuel requirement of the road transport sector is being fulfilled by fossil fuels while only 2% is being fulfilled by biofuels like ethanol. The above data from Govt of India highlights the huge potential available to reduce our carbon emissions by replacing/blending fossil fuels like petrol with biofuels like ethanol.
Ethanol is a major biofuel which is being increasingly used to reduce carbon emissions. It is mainly produced from natural sugars (obtained from raw materials like sugarcane, maize, rice etc) by means of fermentation done with yeast or through a process called ethylene hydration. Apart from being used as a biofuel, it also has various industrial uses like being used as a chemical solvent as also in the synthesis of various organic compounds. Ethanol is also used in the medical field as a disinfectant and as an antiseptic
Brazil is a country that has been a huge success story as far as blending ethanol with fossil fuels like petrol is concerned. The country started blending ethanol with petrol as early as 1930. Today, the country has mandated a 27% ethanol percentage in petrol and most of the cars these days in Brazil run on flex fuels.
The Govt of India initiated the ethanol blending program in 2001 but it has been only in the last few years that the initiative has gained substantial momentum.
In the year 2013-14, the ethanol percentage in blended petrol in the country stood at 1.53%. Due to the various initiatives taken by the government, the blending percentage rose to 8.17% in the year 2020-21. There was further increase in blending percentage in the year 2022-23 with the figure touching 12.06%. As per the Ministry of Petroleum, Govt of India, our country has already achieved 15% ethanol blending in petrol as of September 2024.
A National Policy on biofuels was introduced by the Central Govt in 2018 and a target of 20% ethanol blending was proposed to be achieved by 2030. The success of the ethanol blending program in recent years made the govt advance the target year for achieving 20% ethanol blending to 2025 from 2030.
.JPG)
Ethanol Blending in Petrol in India
Source: Press Information Bureau, GoI
Source: Press Information Bureau, GoI
.JPG)
Benefits of Ethanol Blending in Recent Years
Source: Press Information Bureau, GoI
Some Major GoI Initiatives to Promote Ethanol Blending
Source: Press Information Bureau, GoI
Some Major GoI Initiatives to Promote Ethanol Blending
1. GST on ethanol being used for ethanol blending has been reduced from 18% to 5%, making ethanol production financially attractive.
2. The Govt. has amended the Industries(Development & Regulation) Act, 1951 so that free movement of ethanol can take place between different states
3.Interest subvention scheme has been introduced for ethanol producers, to give a push to ethanol production in the country
4.Procurement price for ethanol is fixed by the Govt on the lines of MSP for food crops
5. Differential pricing mechanism for ethanol has been introduced, depending upon the raw material used for its production
The raw materials that are used for producing ethanol used for blending with petrol are sugarcane, maize, broken rice etc. In our country, in the FY 2023-24, about 25.1 billion litres of ethanol was produced from sugarcane, 23.2 billion litres from maize and 10.2 billion litres from rice/damaged foodgrains. So, from the above data, it can be said that sugarcane and maize have been the main raw materials for producing ethanol used for blending with fossil fuels.
It is pertinent to mention that it is advantageous to use maize over rice and sugarcane for ethanol production for a variety of reasons. Some of the benefits of preferring maize over rice/sugarcane for ethanol production are as follows:
Comparative Advantages Associated with Usage of Maize for Producing Ethanol Vis-à-vis Sugarcane/Rice
a. India is the 5th largest producer of maize in the world
It is pertinent to mention that it is advantageous to use maize over rice and sugarcane for ethanol production for a variety of reasons. Some of the benefits of preferring maize over rice/sugarcane for ethanol production are as follows:
Comparative Advantages Associated with Usage of Maize for Producing Ethanol Vis-à-vis Sugarcane/Rice
a. India is the 5th largest producer of maize in the world
b. Only about 20% of the production is consumed by humans
c. Crop requires less water as compared to rice/sugarcane
d. Crop can be grown throughout the year
Comparative Disadvantages Associated with Usage of Sugarcane/Rice for Producing Ethanol Vis-à-vis Maize
a. Both are crops predominantly consumed by humans. In a developing country like India where a large portion of the population is unable to get optimum nutrition, it may not be feasible to spare these crops for ethanol production
b. Both are water guzzling crops
c. Sugarcane has a relatively long crop cycle of 18 months
d. Both require huge subsidies in the form of fertilizer subsidy and electricity subsidy (to run diesel gensets for drawing out water)
e. Production of both consumes fossil fuels in the form of diesel for running gensets for pumping groundwater
As per the projections by Govt of India, to achieve a blending percentage of 20%, the country will need to produce 13.50 billion litres of ethanol in every ethanol supply year which spans from November of year to October of next year. This production of ethanol includes ethanol to be used for other purposes also, apart from ethanol used for blending with petrol. Out of the total production, 10.16 billion litres of ethanol is projected to be used for blending. As per data released by Department of Food and Public Distribution, Govt of India; the ethanol production capacity in the country stands at about 16.5 billion litres. So, it can be said that the capacity for ethanol production is sufficient for the country to achieve a target of 20% ethanol blending in petrol.
The main issue is the availability of raw materials (sugarcane, maize and rice/damaged grains) at economically viable prices. As per the Grain Ethanol Manufacturers Association, the grain-based ethanol producers are currently selling ethanol to oil marketing companies at a loss of Rs 8-9 per litre. This is due to the high prices of rice and maize. The Association contends that the industry has about Rs 20000 crores of term loans from banks and if the ethanol producers continue to sell ethanol at a loss, the bank advances run the risk of turning bad.
On the other hand, the Poultry Federation of India argues that the increased demand of maize from ethanol producers has led to increase in the prices of maize which is a major component of feedstock for poultry birds. This has led to increase in costs for the poultry industry and adversely affected their margins since poultry prices have not increased correspondingly. In fact, in our country, about 60% of maize production is used for making feedstock for cattle and poultry industry. Only about 20% of maize production is used for human consumption.
One of the ways in which the availability of maize in the country can be increased is by reduction of import duty on the cereal. Currently, the import duty on maize is as high as 50%. Recently, in June 24, the government allowed import of 5 lac tonnes of maize under the Tariff Rate Quota (TRQ) system which enables import under reduced import duties. But, it is to be noted that such ad-hoc measures can have only short term positive impact on the availability of maize in the country. If the ethanol manufacturing industry has to become successful in the long term, then there should be supply of adequate quantities of maize on a sustainable basis.
Another option that can be considered is the introduction of Genetically Modified (GM) maize varieties in the country. The ethanol manufacturing as well as the poultry industry have also been batting for the same. These varieties of the crop have higher yield than the varieties being currently grown in the country.
Currently, the Govt has focused on producing ethanol from sugars found in food crops viz sugarcane, maize and rice/damaged grains. In view of the constraints associated with the usage of food crops, the Govt may explore producing ethanol from alternative sources like agricultural waste, including paddy stubble. If ethanol can be produced from agricultural waste, it will also lead to drastic fall in pollution in the country which is often associated with stubble burning, specially in some north Indian states
To conclude, it can be said that is we are to achieve our target of Net Zero Emission by 2070, we will have to take an integrated approach to tackle carbon emissions. Blending ethanol with fossil fuels can be a very potent weapon to reduce our carbon emissions, considering the fact that road transport sector is one of the biggest contributor to environmental pollution in the country. The Govt of India has taken the right initiative by introducing various measures to promote ethanol blending in the country. The only thing required now is to keep the momentum going by regularly reviewing the efficacy of the measures taken and doing course correction, if required.
(The views expressed in the article are of the author and not of the Bank)
The main issue is the availability of raw materials (sugarcane, maize and rice/damaged grains) at economically viable prices. As per the Grain Ethanol Manufacturers Association, the grain-based ethanol producers are currently selling ethanol to oil marketing companies at a loss of Rs 8-9 per litre. This is due to the high prices of rice and maize. The Association contends that the industry has about Rs 20000 crores of term loans from banks and if the ethanol producers continue to sell ethanol at a loss, the bank advances run the risk of turning bad.
On the other hand, the Poultry Federation of India argues that the increased demand of maize from ethanol producers has led to increase in the prices of maize which is a major component of feedstock for poultry birds. This has led to increase in costs for the poultry industry and adversely affected their margins since poultry prices have not increased correspondingly. In fact, in our country, about 60% of maize production is used for making feedstock for cattle and poultry industry. Only about 20% of maize production is used for human consumption.
One of the ways in which the availability of maize in the country can be increased is by reduction of import duty on the cereal. Currently, the import duty on maize is as high as 50%. Recently, in June 24, the government allowed import of 5 lac tonnes of maize under the Tariff Rate Quota (TRQ) system which enables import under reduced import duties. But, it is to be noted that such ad-hoc measures can have only short term positive impact on the availability of maize in the country. If the ethanol manufacturing industry has to become successful in the long term, then there should be supply of adequate quantities of maize on a sustainable basis.
Another option that can be considered is the introduction of Genetically Modified (GM) maize varieties in the country. The ethanol manufacturing as well as the poultry industry have also been batting for the same. These varieties of the crop have higher yield than the varieties being currently grown in the country.
Currently, the Govt has focused on producing ethanol from sugars found in food crops viz sugarcane, maize and rice/damaged grains. In view of the constraints associated with the usage of food crops, the Govt may explore producing ethanol from alternative sources like agricultural waste, including paddy stubble. If ethanol can be produced from agricultural waste, it will also lead to drastic fall in pollution in the country which is often associated with stubble burning, specially in some north Indian states
To conclude, it can be said that is we are to achieve our target of Net Zero Emission by 2070, we will have to take an integrated approach to tackle carbon emissions. Blending ethanol with fossil fuels can be a very potent weapon to reduce our carbon emissions, considering the fact that road transport sector is one of the biggest contributor to environmental pollution in the country. The Govt of India has taken the right initiative by introducing various measures to promote ethanol blending in the country. The only thing required now is to keep the momentum going by regularly reviewing the efficacy of the measures taken and doing course correction, if required.
(The views expressed in the article are of the author and not of the Bank)
- Arun Kumar Bhardwaj, Chief Manager (Research), State Bank Academy
Please share!
If you want to cooperate with us and would like to reuse some of our content,
please contact: contact@energetica-india.net.
please contact: contact@energetica-india.net.
Next events
Last interviews
Gaurav Dolwani
CEO
From Scrap to Sustainability: LICO Materials’ Circular Economy Approach
Gaurav Kumar
Head of Supply Chain and Manufacturing
Euler Motors Bridges Cost Gap Between EVs and ICE Vehicles with Localization
Shveta Arya
India Region Leader
Powering India’s Mobility Future: Cummins Showcases Advanced Power Solutions at Bharat Mobility
Samkit Shah
Co-Founder
Jitendra EV Leading Hybrid EV Revolution with Hydrix
Muthu Subramanian
MD & General Manager
From Charging to Swapping: How Yuma Energy is Changing EV Refueling
Follow us