India’s average ethanol blend rate may reach record 5.8%: USDA FAS

India’s average blending rate for ethanol in gasoline is expected to reach a record 5.8 per cent, up from a previous record 4.1 per cent last year and considerably higher than historical levels, the USDA Foreign Agricultural Service (FAS) said in its India: Biofuels Annual 2019 report.

A surplus sugar season coupled with a stronger incentive to convert excess sugar to ethanol is helping the oil-marketing companies (OMCs) procure upwards of 2.4 billion litres this year.

An upsurge in demand for the ethanol blending program (EBP) and consequent tight supply for industrial and potable use will encourage ethanol imports (mostly denatured) to grow 19 per cent year-over-year to a record 750 million litres, according to the report.

India’s current aspirational blend goal for fuel ethanol is E10 by 2022, and there is no near-term blend target for biodiesel. Introduced last year, India’s National Biofuel Policy 2018 seeks to achieve a national average of E20 for gasoline and B5 for diesel by 2030.

According to the USDA FAS report, India’s Ethanol Blending Program stipulates procurement of ethanol produced directly from B-heavy molasses, sugarcane juice, and damaged food grains. A surplus sugar season coupled with financial incentives to convert excess sugar into ethanol is expected to help the country’s oil marketing companies (OMCs) procure more than 2.4 billion litres (634.01 million gallons) of ethanol this year.

The report indicates it is unlikely the country’s E20 goals will be reached by 2030 due to the general inability of the cane industry to supply India’s fuel demand, the fact that imports are managed in a way that minimizes the role they can play, and the expected timeframe for commercial-scale production of advanced biofuels.

India is expected to consume a record 3.8 billion litres of ethanol this year, up from a record 3.1 billion litres in 2018. The report states a 6.6 per cent blend rate could be achievable if all the ethanol produced form molasses this year is blended with gasoline. “Potential blending would be higher yet if imports were permitted and duties lowered,” the report states. “However, given demand from the potable and industrial sectors and limitations on imports, a national blend average of 5.8 per cent in 2019 is expected.”

Ethanol production in India is expected to reach a record 3 billion litres this year, up 11 per cent from 2018. Last year, approximately 2.7 billion litres of ethanol was produced from molasses. Regarding imports, the U.S. has remained the largest ethanol supplier to India for the past six years. Indian ethanol importers were down 14 per cent last year, falling to 633 million litres. The U.S. accounted for 94 per cent of 2018 imports.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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