Biofuels - Fulfilling Atmanirbhar Bharat Dream
India is world’s third largest energy consuming nation and significant part of India’s energy requirement is met through oil which continues to rely on import largely. India’s share in global energy consumption is set to double by 2050. A rising energy demand and high reliance on import poses significant energy security challenges. It also leads to massive foreign currency outflow. Further, excessive use of fossil fuels leads to higher carbon emissions and associated health concerns. Domestically produced ethanol is a potential opportunity to reduce reliance on oil imports by blending it with conventional fossil fuels for consumption.
India started blending ethanol in petrol on a pilot basis in 2001, designed to reduce the country’s fossil fuel dependence and trim its large crude oil import bill, appears to be getting close towards reaching its set target by 2023. EBP picked up the pace from December 2014 onwards when the new government led by Hon’ble PM Narendra Modi re-introduced administered price mechanism for procurement of ethanol and directed Public Sector Enterprises to set-up bio-refineries.
In last seven years, ethanol supply has increased to 322 crore litres (contracted) in 2020-21 from 38 crore litres in 2013-14. Similarly, ethanol blending percentage too is expected to jump to 8.50% in 2020-21 from a meagre 1.53% in 2013-14. Due to demand growth, the ethanol distillation capacity too has doubled to 427 crore litre annually from 215 crore litres; while number of distilleries has increased by 40% in 5 years to 231 in 2019-20 from 157 in 2014-15.
This growth can be attributed primarily to remunerative prices paid to ethanol suppliers who have seen a major boost to their income. Prior to 2014, only Ethanol from C heavy molasses was procured at the rate of Rs 25.12 per litre. However, the Government has not only introduced B heavy molasses as raw material source for Ethanol but also 100% sugarcane juice as well from Ethanol Supply Year 2018-19. The remunerative price for Ethanol from C heavy molasses has increased to Rs 45.7 per litre; while that of Ethanol from B heavy molasses and 100% sugarcane juice has increased to Rs 57.61 and Rs. 62.65 per litre respectively, thereby heralding a new era of differentiated ethanol pricing.
India is world’s third largest energy consuming nation. To meet India’s rising energy and reduce reliance on import of crude oil from other countries, India started blending ethanol in petrol on a pilot basis in 2001. However, till 2013-14, very low progress was made as far as blending percentage was concerned and hence new government introduced new price mechanism.
With strong growth seen in ethanol supplies and blending percentage, the Government of India has brought forward the target to sell Ethanol Blended Petrol with ethanol upto 20% to 2023 instead of originally planned year of 2025. At 20% blending level, ethanol demand is expected to increase to 1,016 Crore litres by 2025. Therefore the worth of the ethanol industry will set to increase by over 500% from around Rs. 9,000 crore to over Rs. 50,000 crore. The demand growth will further lead to increase in distillation capacity by more than three times to 1,500 Crore litres annually.