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Why has Centre advanced its 20% ethanol blending target by five years

  • Published
    20th May, 2022
Context

The Union Cabinet recently advanced by five years its target for achieving 20% ethanol blending in petrol.

The amended National Biofuel Policy-2018 has now set the new target for 2025-26 instead of 2030, apart from allowing more feedstock for production of biofuels and export of biofuels in specific cases.

About

Biofuel policy:

  • The National Biofuel Policy is aimed at reducing dependence on imports by encouraging fuel blending.
  • With bioethanol, biodiesel and bio-CNG in focus, its key parts include:
  • Ethanol Blending Programme (EPB),
  • production of second generation ethanol (derived from forest and agricultural residues),
  • increasing capacity for production of fuel additives,
  • R&D in feedstock, which is the starting material for ethanol production, and
  • financial incentives for achieving these goals
  • Initially with 20% blending target for 2030, the central government had announced premium rates for ethanol produced from sugar syrup, cane juice as well as B heavy molasses.

Molasses:

  • Molasses is the sticky liquid formed during sugar production from cane juice, and depending on the percentage of sugar left, it is categorized as B heavy and C.
  • Molasses is the feedstock used by sugar mills to produce ethanol.

Salient Features of National Policy on Biofuels 2018:

  • The Policy categorizes biofuels as "Basic Biofuels" viz. First Generation (1G) bioethanol & biodiesel and "Advanced Biofuels" - Second Generation (2G) ethanol, Municipal Solid Waste (MSW) to drop-in fuels, Third Generation (3G) biofuels, bio-CNG etc. to enable extension of appropriate financial and fiscal incentives under each category.
  • The Policy expands the scope of raw material for ethanol production by allowing use of Sugarcane Juice, Sugar containing materials like Sugar Beet, Sweet Sorghum, Starch containing materials like Corn, Cassava, Damaged food grains like wheat, broken rice, Rotten Potatoes, unfit for human consumption for ethanol production.
  • Farmers are at a risk of not getting appropriate price for their produce during the surplus production phase. Taking this into account, the Policy allows use of surplus food grains for production of ethanol for blending with petrol with the approval of National Biofuel Coordination Committee.
  • With a thrust on Advanced Biofuels, the Policy indicates a viability gap funding scheme for 2G ethanol Bio refineries of Rs.5000 crore in 6 years in addition to additional tax incentives, higher purchase price as compared to 1G biofuels.
  • The Policy encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, Used Cooking Oil, short gestation crops.

Current blending status:

  • As of 2022, the all India average blending as per the Ministry of Petroleum and Natural Gas stands at 9.90%.
  • At present, the installed capacity that sugar mills have for ethanol production is 460 crore litres.
  • It is expected that another 260 crore litres would be added to this once the 46 new distilleries become operational.
  • These have already been approved under a new financial scheme where Centre provides 6% interest subvention for new projects.

Amendments recently made:

  • The most important amendment has been advancing the 20% blending date by five years from Ethanol Supply Year (ESY) 2030 to 2025-26.
  • Introduction of more feedstock for production of biofuels; production of biofuels under the ‘Make in India’ programme in Special Economic Zones, Export Oriented Units; and permission to allow export of biofuels in specific cases are some other changes.
  • Apart from addition of new members to the NBCC, the Committee has now been given the permission to change the policy which it earlier lacked.

Is the new target achievable?

  • In order to achieve 20% blending, India would require a consistent supply of 1,500 crores litres of ethanol annually.
  • Niti Aayog has talked about managing 760 crore liters from sugar and 740 crore litres from grains to meet this ethanol requirement.
  • Once 20 per cent blending is achieved, 60 lakh tonnes of sugar would have to be diverted annually to produce the fuel additive.

Biofuels

  • Biofuels are liquid or gaseous fuels primarily produced from biomass, and can be used to replace or can be used in addition to diesel, petrol or other fossil fuels for transport, stationary, portable and other applications.
  • Crops used to make biofuels are generally high in sugar (such as sugarcane, sugarbeet, and sweet sorghum), starch (such as maize and tapioca) or oils (such as soybean, rapeseed, and coconut, sunflower).

Categories of biofuels

Biofuels are generally classified into three categories. They are

  • First generation biofuels - First-generation biofuels are made from sugar, starch, vegetable oil, or animal fats using conventional technology. Common first-generation biofuels include Bioalcohols, Biodiesel, Vegetable oil, Bioethers, Biogas.
  • Second generation biofuels - These are produced from non-food crops, such as cellulosic biofuels and waste biomass (stalks of wheat and corn, and wood). Examples include advanced biofuels like biohydrogen, biomethanol.
  • Third generation biofuels - These are produced from micro-organisms like algae
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