Background:
- Sugar-based ethanol was pivotal during the launch of India’s Ethanol Blended Petrol (EBP) programme in 2003.
- Over time, raw material constraints, competing sugar demands, and strategic policy shifts have limited its growth.
- India’s 20% blending target (achieved in 2024-25) now relies on a 70% grain-based and 30% sugar-based ethanol mix.
Current Limitations:
- Water-intensive nature: Producing 1 litre of ethanol from sugarcane requires 2,860 litres of water.
- Capacity constraints: Only 875 crore litres of India’s 1,380 crore litre ethanol capacity (late 2023) came from sugarcane.
- Sugar prioritisation: Last year’s monsoon failures caused sugar shortages, pushing ethanol production down the priority list.
- Stagnant prices: No increase in procurement prices for sugar-based ethanol (from cane juice or B-heavy molasses) capped production incentives.
Impact on Sugar Millers:
- Heavy investments were made in ethanol distilleries anticipating rising demand.
- Underutilised capacity and financial strain now affect many sugar mills.
- Grain-based ethanol expansion and lack of price stability disrupted initial economic projections for sugar-based ethanol.
Grain-Based and Beyond:
- Government now favours grain-based ethanol, using surplus maize and FCI rice.
- Grain-based capacity already at 505 crore litres and growing.
- Future ethanol demand for diesel blending and industrial use highlights the unsustainability of sugar-based reliance.
- Second-generation (2G) biofuels from crop residues are emerging as the next solution, although technology is still maturing.
Multi-Feedstock Production:
- Strategic recommendation: Sugar mills should shift to multi-feedstock ethanol production (grains + residues + sugarcane).
- Government has launched an interest subvention scheme for cooperative mills; extension to private mills (60% of sector) is critical.
- Retrofitting support and assured pricing for multi-feedstock ethanol are vital to maximise national capacity.
Future Outlook for Sugar-Based Ethanol:
- Likely to stabilise at 30–40% share of the EBP blend, dependent on stable sugarcane production.
- Influencing factors:
- Government sugar security policies
- Competing ethanol demands
- Environmental sustainability concerns
- Millers’ financial viability without guaranteed price hikes
