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Critical Topics and Their Significance for the UPSC CSE Examination on August 22, 2024

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On the ethanol blending programme

For Preliminary Examination:  Current events of national and international importance

For Mains Examination: GS II - Governance on ethanol program, GS III - Science & technology

Context:

India is on its way to achieve its target of blending 20% of petrol with ethanol by 2025-26. However, the food versus fuel equation continues to hang over the ethanol economy along with questions regarding fuel efficiency in existing vehicles

Read about:

What is ethanol?

What is ethanol blending?

Key takeaways:

• India is progressing toward its goal of blending 20% ethanol with petrol by 2025-26, given the advancements in blending percentages and the expansion of ethanol production capacity.
• However, concerns about the balance between food and fuel persist, as recent developments have highlighted. For instance, maize imports from April to June this year have increased compared to the previous year, coinciding with the rise in maize usage for fuel ethanol to offset restrictions on sugarcane products.
• Despite this, the industry remains confident in India's grain and sugar surpluses. 
• The focus has primarily been on first-generation (1G) ethanol, produced directly from food grains and sugarcane. The government is encouraged to diversify into second (2G) and third-generation (3G) ethanol, which are less impactful on food security.
• Achieving the 20% ethanol blending target by 2025-26 requires producing around 1,000 crore liters of ethanol for petrol blending. 
• According to the roadmap for ethanol blending targets by NITI Aayog, the capacity of sugarcane-based distilleries must rise from 426 crore liters in 2021 to 760 crore liters by 2026, while grain-based distilleries' capacity should increase from 258 to 740 crore liters.
• Besides fuel ethanol, an additional 310 crore liters will be needed for liquor production and industrial uses.
• By December 2023, the government's review indicated that India’s ethanol production capacity had reached 1,380 crore liters—875 crore liters from sugarcane and 505 crore from food grains—almost meeting the total target with a heavier reliance on sugarcane.
• The expansion of ethanol production has been supported by two interest subvention programs for new distilleries.
• The industry has requested the extension of these programs to maintain growth and create surplus capacity for blending with diesel. Additionally, they urge Oil Marketing Companies (OMCs) to sign more long-term contracts with distilleries to establish a robust supply chain.
• Sugarcane yields three primary byproducts—sugarcane juice and syrup, B-heavy molasses, and C-heavy molasses, with decreasing sugar content. Traditionally, the first two are used for sugar production, while the third is for ethanol.
• To boost fuel ethanol production, the government allowed the diversion of the first two away from sugar production.
• Ethanol prices depend on the sugar content of the input. In 2022-23, 63% of fuel ethanol came from B-heavy molasses and 33% from molasses.
• However, in December 2023, the government restricted this diversion due to concerns about declining sugar stocks

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