Our View – World’s second-largest sugar producer’s ethanol programme has miles to go

India, the world’s second-largest sugar producer, has started inching ahead in a blending program for mixing ethanol with gasoline, after years of little progress. However, a tough battle lies ahead.

Currently, the blending percentage in India is hovering around 5.1% and at this pace the final blending rate is expected to be around 5.25% during the supply year that will close on November 30, the Indian Sugar Mills Association (ISMA) told indosiancommodities.com in a written statement..

“Government of India has taken all necessary steps to encourage and enhance the production of ethanol throughout the country. It has announced remunerative prices of ethanol. Has allowed other feedstocks like cane juice, B-Heavy molasses which are richer in sugar content and therefore gives better yield,” it said. 

“This not only makes more ethanol available for blending but also reduces stock of sugar due to which almost all the sugar mills are facing acute financial stress. Due to this the country is able to achieve 5%+ blending this year,” the industry body added.

Besides, the Government has also announced an interest subvention scheme for augmentation of ethanol production capacity, as capacity is the main constraint as of now.

Production of sugarcane during the summer season is estimated at 399.83 million tons, 11% higher than the average sugarcane production, which will simultaneously make more ethanol available for blending next year, ISMA added. 

Yet, the industry says that the domestic market is not geared to absorb the green fuel in sufficient quantity.

In a distress letter to Prime Minister Narendra Modi, ISMA says that it will take at least 2-3 years for ethanol offtake in the country to reach 6-7 million tons — a level at which the volumes of green fuel are large enough to absorb the surplus sugar stocks.

Till such time, the Indian industry says it will need to export the sugar surplus.

Since India is in urgent need of reducing carbon intensity and has been taking meaningful strides in several fronts such as renewable energy as well as use of natural gas, it appears surprising that the country is not able to absorb a readily available source in a more meaningful way.

It’s high time that the government machinery, including that of state-run oil marketing companies, cranks up the rollout of blended fuels across the country.

Else, a precious resource will need to be exported even as the country’s oil import bill keeps rising steadily

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