Curb on Sugar Diversion for Ethanol

• 15 Dec 2023

For Prelims: Curb on Sugar Diversion for Ethanol, Ethanol Blended Petrol (EBP), Biofuels, Feedstocks, Crude Oil Import, Food Security.

For Mains: Curb on Sugar Diversion for Ethanol, Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Source: IE

Why in News?

Recently, The Ministry of Consumer Affairs, Food and Public Distribution directed to restricting the use of sugarcane juice/syrup for ethanol production, a key component in Ethanol Blended Petrol (EBP).

• The Indian government has implemented stringent measures to fortify domestic sugar availability. Initially, it imposed a ban on sugar exports.

What is Ethanol Blending?

• Ethanol:
  • It 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.
  • Ethanol is 99.9% pure alcohol that can be blended with petrol.
• Ethanol Blending Programme (EBP):
  • It is aimed at reducing the country’s dependence on Crude Oil Imports, cutting carbon emissions and Boosting Farmers’ Incomes.
  • The Government of India has advanced the target for 20% ethanol blending in petrol (also called E20) to 2025 from 2030.
    • The all-India average blending of ethanol with petrol has risen from 1.6% in 2013-14 to 11.8% in 2022-23.

Why has the Government Restricted the Diversion of Sugar for Ethanol Production?

• Sugar Shortage Concerns:
  • There are concerns over a potential shortfall in sugar production.
  • The move to restrict the diversion of sugarcane juice or syrup for ethanol production is aimed at addressing this anticipated shortage.
• Prioritising Food Over Fuel:
  • The decision reflects a prioritization of food production (sugar) over fuel production (ethanol).
  • By emphasizing the production of sugar, a critical commodity in India, the government aligns with the priority of ensuring Food Security and availability for consumers.
• Managing Supply-Demand Dynamics:
  • The government is attempting to manage the delicate balance between supply and demand in the sugar market. By curbing diversion for ethanol production, it seeks to stabilize sugar availability and potentially mitigate any price volatility in the market.

What are the Implications of this Move?

• Impact on Ethanol Production:
  • This decision affects around 28% of total ethanol production, reducing the volume of ethanol generated from this high-value feedstock.
  • The prohibition on using sugarcane juice or syrup for ethanol production is expected to affect the earnings of sugar mills, particularly as these sources fetch higher prices compared to other feedstocks used in ethanol production.
• Challenges for Ethanol Blending Targets:
  • The government aims to raise the ethanol fuel-blending target from 12% to 15% in 2023-24 and has set a target of achieving 20% ethanol blending in petrol by 2025-26.
  • However, with the restriction on sugarcane juice/syrup for ethanol production, meeting these targets might become more challenging.

What are the Other Sources of Ethanol Production?

• Grains: Corn (maize), barley, wheat, and other cereal grains contain starch, which can be converted into fermentable sugars for ethanol production.
• Cellulosic Biomass: Agricultural residues (corn stover, wheat straw), forestry residues, dedicated energy crops (switchgrass, miscanthus), and municipal solid waste contain cellulose and hemicellulose that can be broken down into sugars for ethanol fermentation.
• Rice: Surplus rice, including broken or damaged grains, can also serve as a source for ethanol production. The starch content in rice can be converted into sugars for fermentation.
• Fruits and Vegetables: Certain fruits and vegetables with high sugar content, like grapes and potatoes, can be utilized for ethanol production.

Way Forward

• There is a need to explore and incentivize the use of alternative feedstocks like grains, rice, damaged/broken grains, and cellulosic biomass for ethanol production.
• Diversification reduces dependency on sugarcane-based sources and ensures a stable supply chain.
• Implement policies that encourage the use of diverse feedstocks for ethanol production. Differential pricing, similar to the previous government strategy, can incentivize the production of ethanol from non-sugarcane sources. Clear and stable policies support long-term investments in diversified feedstock utilization.