June 22, 2024
India Ethanol

India Ethanol Market: India’s Ethanol Blending Program A Steady Gain in Momentum Globally

India Ethanol Market Ethanol Production Capacity Expansion

The government of India has aggressively promoted ethanol blending with gasoline as a strategy to reduce costly crude oil imports and provide an alternative market for sugarcane farmers. Major steps have been taken in recent years to ramp up domestic ethanol production capacity across the country. The target for ethanol blending has been raised from 5% to 20% by 2025. To achieve this ambitious target, significant investments have been made to set up new distilleries and expand existing ones. As a result, India’s total distillation capacity for fuel ethanol has grown from about 1500 crore litres per annum in 2014 to over 3600 crore litres currently. Several global players as well as domestic companies have pledged billions of dollars for capacity expansion projects over the next few years. This will help India achieve self-sufficiency in ethanol supply and meet its blending targets.

Incentivizing Agricultural Waste Feedstock

Along with expanding conventional sugarcane molasses-based distilleries, the government is promoting the use of agricultural waste like rice and wheat straw, corn stover and biomass from coffee plantations as alternate feedstock. Ethanol production units using such cellulosic wastes are given higher subsidy rates. This is encouraging investors to set up second-generation biofuel plants. Several pilot and demonstration plants using agricultural residue have come up across states like Punjab, Haryana and Karnataka. If these projects are successful in achieving commercial scale, it can potentially unlock huge ethanol volumes from agro-waste available across the country. This will lessen India’s dependence on sugarcane and provide a viable use for farm waste otherwise treated as a nuisance.

Regional Disparities in Ethanol Blended Petrol Supply

While substantial progress has been made nationally with average blending touching around 8.5% currently, there exists considerable inter-state variations. States like Bihar, Uttar Pradesh and Tamil Nadu which have limited sugarcane cultivation are lagging behind national targets. They are largely dependent on  India Ethanol supplies from other states through rail transport. This has resulted in unreliable and intermittent availability of ethanol blended petrol in certain districts over the past year. The transport and storage logistics require strengthening, especially during the lean sugarcane season from December to April. Oil marketing companies and state governments are working to enhance tank truck fleet capacity and develop inland depot infrastructure to ensure year-round blending across India. Policy support and incentives are also required to encourage localized ethanol production in non-traditional states.

International Trade and Compatibility Standards

With the objective of becoming a netexporter of biofuels in the long run, India is focusing on developing capabilities for bulk export of ethanol. Ease of trade requires compatibility with international fuel standards and quality specifications adopted in different countries and regions. Considerable progress has been made in this direction with successful supplies of Indian ethanol meeting European (EN 15376) and American (ASTM D4806) standards for blending in gasoline. This will facilitate larger volumes of exports to EU countries and the US in the coming years as India’s output exceeds domestic consumption. However, greater compliance with evolving emission regulations regarding maximal achievable particulate matter will be critical for India’s ethanol to compete globally. Upgrading production processes and working with foreign partners can help address such technological challenges.

Consumer Acceptability and Pollution Impact

From the consumers’ standpoint, a major concern in the initial days of ethanol blending program was regarding possible engine and fuel system issues with the use of petrol containing 10% ethanol. However, with extensive field trials and retrofitting vehicles where required, such problems have been minimized. Modern vehicles especially those manufactured after 2010 have demonstrated adequate compatibility with E10 fuel. Widespread availability of such compliant fuel across India has boosted public acceptance for higher blend levels.

Studies tracking air quality data over the past five years show notable reductions in carbon monoxide and particulate matter concentrations particularly in cities with 15% or more ethanol blended petrol supply all through the year. Ethanol’s oxygenating properties help improve combustion efficiency of vehicle engines and cut tailpipe emissions. Ongoing research is also exploring the emission benefits of ethanol compared to other biofuels in reducing greenhouse gases like carbon dioxide over the entire lifecycle. If realized in practice, this could help augment ethanol’s role in reducing automotive pollution and mitigating climate change impact from the transport sector.

In Summary, India ethanol market blending program exemplifies the coordinated efforts between central and state governments, oil companies as well as private enterprises in championing a sustainable biofuel initiative. While challenges remain in expanding production capacity and balancing regional supply chains, considerable progress towards energy security, farm welfare and greener fuels has been made. With continued policy push and investments in technology, India aims to emerge as a leading producer and consumer of bioethanol globally in the coming decade.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it