Role Of Ethanol In India’s Clean Energy Transition

JAN 6

Mains   > Economic Development   >   Indian Economy and issues   >   Renewable energy

WHY IN NEWS?

  • India is on course to outshine China as the world’s third largest ethanol consumer by 2026 as it accelerates the transformation towards a clean energy ecosystem with the objective of becoming carbon neutral by 2070.

STATISTICS

  • As per International Energy Agency (IEA):
    • Ethanol demand in India tripled between 2017 and 2021 with consumption reached at 3 crore litres in 2021.
  • Almost two million tonnes (MT) of sugar were diverted for ethanol production during the last sugar season (October 2020 to September 2021)

WHAT IS ETHANOL?

  • Ethanol is a volatile, colourless liquid with a characteristic odour.
  • Ethanol 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.
  • In India, ethanol is primarily produced using sugarcane molasses. Starches from potatoes, corn, wheat and other plants can also be used in the production of ethanol by fermentation.
  • Major ethanol consumers in India are potable liquor sector (45%), alcohol based chemical industry (40%), the rest for blending and other purposes.
  • Ethanol can be combined with petrol in any concentration up to pure ethanol (E100).

What is Ethanol Blending?

An ethanol blend is defined as a blended motor fuel containing ethyl alcohol that is at least 99% pure, derived from agricultural products, and blended exclusively with petrol.

  • Brazil in particular relies heavily upon the use of ethanol as an engine fuel, due in part to its role as one of the globe's leading producers of ethanol.
  • Gasoline sold in Brazil contains at least 25% anhydrous ethanol (i.e. ethanol without water).

BENEFITS OF ETHANOL BLENDING:

  • Energy security:
    • Higher usage of ethanol as an automobile fuel will help save import costs as the country currently meets about 85% of its crude oil requirements through imports.
    • India’s net import cost stands at USD 551 billion in 2020-21. It is estimated that the E20 (80% petrol and 20% Ethanol) program can save USD 4 billion (Rs 30,000 crore) per annum for India.
  • Cleaner Environment:
    • One crore liter of E10 (90% petrol and 10% Ethanol) saves around 20,000 ton of CO2 emissions.

Flex Fuel Vehicles:

An FFV is a modified version of vehicles that could run both on conventional petrol and doped petrol with different levels of ethanol blends.

These vehicles are a logical extension of the Ethanol Blended Petrol (EBP) programme launched by the Union Ministry of Petroleum and Natural Gas in 2003.

These are currently being used successfully in Brazil, giving people the option to switch fuel (Petrol and ethanol) depending on price and convenience.

    • Because the ethanol molecule contains oxygen, it allows the engine to more completely combust the fuel, resulting in fewer emissions.
    • Also, by reducing crop burning a conversion of agricultural residues/wastes to biofuels there will be further reduction in Green House Gas emissions.

  • Additional Income to Farmers:
    • By adopting 2G technologies, agricultural residues/waste can be converted to ethanol and can fetch a price for Indian farmers.
    • Also, conversion of surplus grains and agricultural biomass can help in price stabilization.
  • Waste Management:
    • It is estimated that annually 62 MMT of Municipal Solid Waste gets generated in India.
    • There are technologies available which can convert municipal solid waste to drop in fuels. One ton of such waste has the potential to provide around 20% of drop-in fuels.
  • Cheaper alternative:
    • While petrol is subject to excise duty, GST is levied on ethanol.
    • Hence, the usage of ethanol blended fuel will enable consumers to save Rs 30-35 per litre.
  • Investment in Rural Areas:
    • Oil Marketing Companies are in the process of setting up 2G bio refineries across the Country. This will spur infrastructural investment in the rural areas.
  • Employment Generation:
    • Ethanol production and bio refinery can contribute to jobs in Plant Operations, Village Level Entrepreneurs and Supply Chain Management.
  • Other benefits of ethanol being used as engine fuel:
    • With a 113 octane rating, ethanol is the highest performance fuel on the market and keeps today's high-compression engines running smoothly.
    • Since ethanol is produced from plants that harness the power of the sun, ethanol is also considered a renewable fuel.
    • Ethanol-blended fuel keeps the fuel system clean for optimal performance because it does not leave gummy deposits.
    • Ethanol helps prevent wintertime problems by acting as a gas-line antifreeze.

STEPS TAKEN TO PROMOTE ETHANOL

  • National Biofuel Policy, 2018
    • The Policy categorizes biofuels as basic and advanced to enable extension of appropriate financial and fiscal incentives under each category.
      • Basic Biofuels: First Generation (1G) bioethanol and biodiesel.
      • Advanced Biofuels: Second Generation (2G) ethanol, Municipal Solid Waste (MSW) to drop-in fuels, Third Generation (3G) biofuels, bio-CNG etc.
    • 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.
    • 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.
    • The Policy encourages setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, Used Cooking Oil, short gestation crops.
  • Pradhan Mantri JI-VAN Yojana:
    • The scheme aims to provide financial support to integrated bioethanol projects using lignocellulosic biomass and other renewable feedstock.
    • Under the scheme - 12 commercial scale and 10 demonstration-scale second generation (2G) ethanol projects will be provided a viability gap funding (VGF) support in two phases.
  • Modified scheme to produce 1G ethanol:
    • It aims for extending financial assistance for producing 1st generation (1G) ethanol from feed stocks such as cereals (rice, wheat, barley, corn and sorghum), sugarcane and sugar beet.
    • Under the scheme, the Centre will provide interest subvention to encourage the funding in this sector
  • Ethanol Blended Petrol (EBP) programme:

Revised ethanol blending targets in India

In January 2021, India brought forward its 20 per cent ethanol blending target with gasoline from 2030 to 2025, and is aiming to start selling 20 per cent blends in 2023.

In 2017, blending stood at 2 per cent, but by the summer of 2021 it touched 8 per cent, putting the country on track to achieve 10 per cent blending this calendar year.

    • It was launched in January, 2003.
    • The Ethanol Blending Programme (EBP) seeks to achieve blending of Ethanol with motor sprit with a view to reducing pollution, conserve foreign exchange and increase value addition in the sugar industry enabling them to clear cane price arrears of farmers.
    • Under this programme, oil marketing companies (OMCs) will procure ethanol from domestic sources at prices fixed by the government.
    • Till 2018, only sugarcane was used to derive ethanol. Now, the government has extended the ambit of the scheme to include foodgrains like maize, bajra, fruit and vegetable waste, etc. to produce ethanol.
  • Roadmap for Ethanol Blending in India by 2025:
    • The central government has recently released an expert committee report on the Roadmap for Ethanol Blending in India by 2025.
    • Its key recommendations include:
      • Augmentation of ethanol production capacity
      • Pan-India availability of E10 fuel by April, 2022
      • Expediting Environmental Clearances for ethanol plants/distilleries
      • Production of higher ethanol compatible vehicles
      • Incentives for ethanol blended petrol vehicles
  • Other initiatives:
    • GOBAR DHAN Scheme:
      • Launched in 2018, GOBAR (Galvanizing Organic Bio-Agro Resources) Dhan scheme aims to positively impact village cleanliness and generate wealth and energy from cattle and organic waste.
      • It also aims at creating new rural livelihood opportunities and enhancing income for farmers and other rural people.
    • Repurpose Used Cooking Oil (RUCO):
      • The Food Safety and Standards Authority of India (FSSAI) has launched this initiative that will enable collection and conversion of used cooking oil to biodiesel.

CHALLENGES:

  • Availability of raw material:
    • Ethanol production in India is heavily dependent on the production of sugar and sugarcane, which fluctuates due to the cyclic nature of the crop. Hence sufficient quantity of ethanol is not available for blending.
    • Example: Only around 50% of petrol sold in India is E10 blended, while remaining is unblended petrol (E0).
  • Delays in getting clearance:
    • Ethanol production plants/distilleries fall under the “Red category” and require environmental clearance under the Air and Water Acts for new and expansion projects. This often takes a long time leading to delays.
  • Lower efficiency:
    • The calorific value of ethanol is low and this leads to reduction in performance.
    • Ethanol also acts as a solvent and could affect the lubrication system in engines, thereby increasing wear and tear.
  • Higher cost of vehicles:
    • According to the Society of Indian Automobile Manufacturers (SIAM), the cost of FFVs (four-wheelers) would be higher by Rs 17,000 to Rs 25,000 and Rs 5,000 to Rs 12,000 for two-wheelers compared to conventional petrol vehicles.
  • Customer acceptance:
    • Flex fuel vehicles would be more expensive than regular vehicles due to the upgradation of materials, engine parts and fuel system. Hence, customer acceptance will be a major challenge.
  • Concerns of Industry:
    • FFVs would require additional investment in production lines and technology transfer.
    • For auto industry, this will pose another challenge that they are already facing with the introduction of BS VI fuel, disruptions due to pandemic and competition from electric vehicles.
  • Changes in existing fleet of vehicles:
    • Currently produced vehicles in India are designed optimally for E5, with rubber and plastic components compatible with E10 fuel. As E20 rolls out, vehicles need to be produced with components and elastomers compatible with E20 and engines optimally designed for use of E20 fuel.
  • Food versus fuel debate:
    • Despite being an agrarian powerhouse, India has a high incidence of poverty and malnutrition.
    • In this situation, diverting food grains for ethanol production rather than addressing issues in food distribution raises an ethical concern.

WAY FORWARD

  • Ensure sustained production and availability:
    • Sugarcane and grain-based ethanol production capacities needs to be augmented if India is to attain the desired outcomes of ethanol blending. For this, augmentation of production and storage systems, transport of ethanol from surplus to deficit states and special efforts to attract investors needs to be taken.
  • Diversification of feedstock:
    • Sugarcane has among the highest water consumption per acre among major Indian crops. As an alternative, production of ethanol from maize and other low water consulting feedstock may be encouraged.
    • In the long term, production of ethanol from non-food feedstock (Advanced Biofuels) including second generation (2G) should be promoted so that production will sustain without causing any tradeoff with the food production system.
  • Expedite Clearances:
    • A system for single window clearances may be formulated to accord speedy clearances for new and expansion projects for ethanol production. This should include all clearances by Central and State agencies.
  • Support for industry:
    • Government may provide support to industry for introduction of FFVs, development of technologies and retrofitting of existing fleet through tax breaks, product linked subsidies etc.
  • Incentives for customers:
    • For better acceptability of higher ethanol blends in the country, retail price of such fuels should be lower than normal petrol to compensate for the reduction in efficiency and incentivize switching to blended fuel.

 

PRACTICE QUESTION:

Q. ‘Ethanol as a fuel is key in India's transition to a low carbon economy.’ In this light, discuss the advantages of ethanol blending. What measures have the government taken to promote ethanol as a fuel in the country?