10% ETHANOL BLENDING - COUPLE OF YEARS AWAY

By Ruma Dubey

With fuel prices constantly on the rise, and expected to only go up further as and when crude rises, India needs to work on a war footing to fnd alternatives. Well, no one money is being spent on R&D in India but even the idea which was mooted and had started actually working too is on the backburner.

Almost 10 years ago, it was proposed to make 10% blending of ethanol in petrol (EBP) as vehicle fuel mandatory.  It is made mandatory but sadly, only 4% blending is actually happening on the ground. Why? Simply because enough ethanol is not available; this in a country which is currently staring at a sugar surplus year reads like a misnomer. Over 45% of the ethanol is used up by the alcohol industry and that could be one of the reasons for lack of adequate supply. The main bone of contention is also the pricing, which was too low to entice the sugar mills to supply to OMCs.

To correct this and given the plight of the sugar industry, two days ago, the Govt hiked price of ethanol used for blending in petrol, by almost Rs 3 per litre to Rs 43.70. Not just that, it also, for the first time, fixed the price of ethanol produced from intermediary or B-molasses at Rs 47.49 per litre. This will surely help mills divert cane juice for ethanol manufacturing during surplus years – the current year being the perfect example. Till now, the price was fixed only for ethanol produced from C-molasses or final molasses. Sugar mills will get incentivized with this price hike and increase supply; mills are expecting revenue realisation of over Rs 5,000 crore from sale of ethanol to Oil Marketing Companies (OMCs) during the current 2017-18 sugar season (October-September).

Post the hike in the price, it is expected that sugar mills will increase the supply of ethanol and hopefully, it will get us closer to the 10% ethanol blending rule. ISMA, the sugar industry body has said that for 10% blending, 313 crore litre of ethanol is required; the short fall is quite a lot given the fact that ethanol supply was at 140 crore litre in 2017-18, up from 38 crore litre in 2013-14. To more than double up from current supply will take a couple of year; so we can say that 10% blending is most certainly two-three years away.

Today, we are talking about making 10% mandatory while the Govt has not even managed to make 5% fully compulsory. Why are we the common people bearing the brunt of every rise in crude pricing because of lop-sided policies of the Govt? New cars get launched yet not one single manufacturer is working with the Govt to reduce oil import bill? If car makers push, just as they do when they want duties to be reduced, wont the Govt relent? We now hope that the Govt, will be able to push this through and take the much needed step towards better fuel management.

A few pertinent pointers as to why EBP should be made mandatory:

What exactly is ethanol?

Ethanol is a byproduct of the sugar industry. Currently, ethanol is used for making alcoholic beverages and the same ethanol is as fuel, produced by fermentation. In technical terms, when certain species of yeast, metabolises sugar in the absence of oxygen, ethnol is produced. Simple, molasses, a by-product of sugar mills is the raw material. It is made in three ways – directly from sugar cane juice which seems like too much of a largesse in a country like ours; or from B-grade molasses and C-grade molasses. In the United States, ethanol is usually made from corn. In Brazil, it is most commonly made with sugarcane. Wheat, barley and potatoes are also sources of ethanol.

Why ethanol for blending into fuel?

Ethanol can be used as an automotive fuel by itself and can be mixed with gasoline to form what has been called "gasohol". Because the ethanol molecule contains oxygen, it allows the engine to more completely combust the fuel, resulting in fewer emissions. Since ethanol is produced from plants, it is a renewable fuel.

Are there grades in ethanol?

India’s major ethanol comes from C-grade molasses – this is the last category of molasses remaining after repeatedly boiling sugarcane juice of which the maximum possible crystallisable sugar has been extracted. Grade „B? molasses has comparatively higher percentage of fermentable sugar left and grade „A? has the highest percentage of these categories.

Can companies get into ethanol production?

A company can become an ethanol producer either by setting up a sugar unit or by following the simplest route which many companies have taken – taking over existing sugar mills.

What would be the cost of setting up a new unit?

As per Ethanol India, to set up an ethanol unit using rectified spirit as raw material, with a capacity of 30,000 litres per day, it would cost Rs.10 crore. Same capacity, using raw material as molasses would cost Rs.15-16 crore and using sugar cane juice would cost Rs.20-22 crore.

What is the downer to EBP?

Developed countries are making more and more use of foodgrains as fodder for fuel and that, to a large extent has been the culprit, many say, leading to a run-up in the commodity prices. Creating significant amounts of energy from food crops could deplete the amount of land available for growing actual food for people to eat and that is one big concern and extremely controversial even in developed countries.  But an alternate – cellulosic ethanol can also be worked out wherein, instead of diverting food grains for production of ethanol, nonfood products such as corn stalks, wood chips and switch grass could also be used. 

The initiative needs to be there or else, without ever venturing out into the deep waters, how will one know the perils and joys of the wide sea?