Informist, Monday, Sept. 30, 2024
By Afra Abubacker
NEW DELHI – Even as India aims to go big on ethanol, there is a debate over which feedstock is better--sugarcane or grains. Citing a recent farm ministry study, government officials reiterated at the India Sugar & Bio-energy conference last week that sugarcane uses less water than grains like maize, rice, and wheat.
Sugarcane uses 2,001 litres of water to produce 1 litre of ethanol, while wheat, rice, and maize use 2,289 litres, 3,414 litres, and 3,518 litres respectively, according to a study by the Indian Institute of Sugarcane Research under the Indian Council of Agricultural Research, Ministry of Agriculture & Farmers' Welfare. Ethanol is made from starch-containing feedstocks such as molasses and grains.
However, Petroleum Secretary Pankaj Jain voiced concerns over long-term demand for ethanol. "Much as we may want to be looking at more and more ethanol in the world... vehicle owners are shifting away from petrol," he said on Friday at the conference hosted by the Indian Sugar & Bio-energy Manufacturers Association.
He said demand for petrol is set to gradually decline, which is evident from the growing demand for compressed natural gas-run vehicles. "Today, the largest car manufacturer in India is reporting that one-third of its sales are CNG," Jain said. CNG cars sell the most, more than diesel and electric vehicles, he added.
However, ISMA Director General Deepak Ballani said the concerns voiced by the petroleum secretary over demand for ethanol are "far-fetched". "There is a competition, but I think both (electric and flex-fuel vehicles) will coexist... (green mobility) ecosystem is so huge that you need multiple parallel applications," Ballani said on sidelines to Informist.
Besides competing against other green energy sources, there is debate over food versus fuel in production of ethanol using sugarcane. Last December, the government restricted production of ethanol using sugarcane-based feedstocks due to concerns over lower sugar production in an election year.
After almost a year-long cap on diversion of sugar for production of ethanol, the government, in August, allowed sugar mills to freely use all sugarcane-based feedstock for ethanol production in the upcoming ethanol supply year starting November. Food Secretary Sanjeev Chopra clarified that restrictions imposed on ethanol production from sugarcane feedstock last year were only a "temporary blip", and the government has now "ensured that the ethanol blending programme remains on track."
To reduce dependence on crude oil and promote green mobility, India launched the ethanol blending programme in 2003 and set a target of achieving 15% ethanol blending with petrol in 2023-24 (Nov-Oct) and 20% in 2025-26. As of Sept. 1, India has achieved 13.6% ethanol blending in 2023-24.
"We have always maintained that the ethanol blending programme is critical to the financial strength and muscle of the sugar sector," the food secretary said.
Though the petroleum secretary also acknowledged ethanol's role as an "effective de-risking strategy" against the cyclical nature of the sugar industry, he said it is time to diversify beyond ethanol to sustainable aviation fuel, compressed biogas, and potash.
ISMA recently signed a memorandum of understanding with The Energy and Resources Institute and Praj Industries Ltd to collaborate on sustainable aviation fuel production, aligning with the government's sustainability goals.
India has set an initial indicative target of blending 1% sustainable aviation fuel with aviation turbine fuel for international flights by 2027 and 5% by 2030. The aviation industry annually accounts for 1 billion tonne, or 3% of global carbon emissions, pressing the necessity for an alternative to traditional jet fuel, according to the industry association.
SUGAR LOBBY
In 2023-24, the government restricted ethanol production from sugarcane-based feedstocks. However, to not go back on the blending targets, the government promoted maize as the go-to feedstock for ethanol production. It also increased the price of ethanol from maize by INR 5.70 to INR 71.86 a litre, making it a premium biofuel. In the sugarcane feedstock basket, price of only ethanol from C-heavy molasses was hiked.
However, the sugar industry seems to have lobbied with the Department of Food and Public Distribution
for favourable policies due to last year's curbs on ethanol production from sugarcane-based feedstocks. "A few months back, ISMA president explained that though the government is promoting maize (for ethanol production), he told me to read some (research) papers, and you will realize that sugarcane is a wonder crop and...sugarcane water consumption (in ethanol production) is less than maize and rice," Aswani Srivastava, joint secretary (sugar), said.
Vivek Saraogi, the managing director of Balrampur Chini Mills Ltd. also gave research papers on sugarcane's water efficiency in ethanol making, according to Srivastava. Though he "was not convinced" by the industry's arguments, Srivastava said the study by the Ministry of Agriculture also arrived at the same conclusions.
Since late July, officials of the Department of Food and Public Distribution, including Food Secretary Sanjeev Chopra, have been reiterating that sugarcane does not consume more water per litre of ethanol produced than rice or maize. However, he clarified that the feedstock basket needs to be diversified, with the due role for sugarcane. "This is not to say we need to only focus on sugarcane... we need to ensure that we have a diversified feedstock," Chopra had said at the All India Sugar Trade Association's Sugar and Bioenergy Conclave on Jul 27.
At the Maize Summit in Delhi on Sept. 25, Agriculture Secretary Devesh Chaturvedi also said that rice should not be prioritised for ethanol production as it uses more water for ethanol manufacturing. His comments came after the government, on Aug 29, lifted a 13-month ban on the sale of rice to grain-based ethanol distilleries.
PRICE HIKE CRIES
Citing the hike in fair and remunerative prices of sugarcane, the sugar industry has been demanding a hike in ethanol price and an increase in the minimum selling price of sugar. Fair and remunerative prices are paid by sugar mills to farmers on sugarcane purchases.
In February, the Cabinet Committee on Economic Affairs approved a hike of INR 25 in the fair and remunerative price of sugarcane to INR 340 per 100 kg for the 2024-25 (Oct-Sep) sugar season. According to the industry, a hike in ethanol rates and minimum selling price of sugar is long overdue.
"It is unfortunate that the domestic sugar prices are currently not adequate to cover the cost of production," Mandava Prabhakar Rao, president of the Indian Sugar and Bio-energy Manufacturers Association, said. "The MSP (minimum selling price) of sugar has remained at INR 31 per kg for over five years and needs to be revised. We respectfully urge the government to consider increasing the MSP to reflect the recent rise in the fair and remunerative price of sugarcane," the association chief added.
Speaking to Informist on the sidelines of the event, Jain said the pricing of ethanol from sugarcane feedstocks for the upcoming ethanol year starting November is with the Cabinet, without giving details.
For the ethanol year 2023-24, the government only increased prices of ethanol from C-heavy molasses by INR 6.87 to INR 56.28 a litre. Currently, ethanol made from sugarcane juice is priced at INR 65.61 a litre, and that from B-heavy molasses at INR 60.73 a litre, unchanged from 2022-23.
On sugar exports, Food Minister Pralhad Joshi said that the government is considering lifting the ban on sugar exports. He said the government will decide on exports once the estimates on sugarcane output and the opening balance of sugar for the next sugar season starting October are available. In October 2023, the government extended restrictions on exports of raw sugar, white sugar, refined sugar, and organic sugar, amid concerns over low sugar production in 2023-24.
On the increase in minimum selling price, Sangeet Singla, director (sugar) at the Department of Food and Public Distribution, said the matter is under consideration. The current minimum selling price of the sweetener is INR 31 per kg, unchanged since 2019.
While the industry is pushing for favorable policies, the government is pressing for transparency and accurate data. Chopra has asked sugar mills to integrate their production and sales data into the national single window system. Sugar mills have to digitise their data into Enterprise and Resources Planning software as required by the government. The software tracks all information regarding making sugar--from harvesting, cane procurement, pricing, transporting, sales, inventory, among others.
Stressing on digitising, Singla asked sugar mills not to "waste their time in Krishi Bhavan," and instead "focus on digitising their operations." End
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