India’s big push for Ethanol production towards self-reliance
The ethanol industry expects a great leap in producing ethanol from grains and agricultural waste after the government's announcement of 20 per cent blending of ethanol in petrol and 5 per cent blending of biodiesel in diesel by 2030. With an estimated investment of Rs 41,000 crore for ethanol production, sugar mills and distilleries are ramping up their infrastructure for increasing ethanol production with the help of the latest technologies.
The Government of India has proposed a target of 20 per cent blending of ethanol in petrol and 5 per cent blending of biodiesel in diesel by 2030 and introduced multiple initiatives to increase indigenous production of biofuels. This presents an opportunity for sugar companies that have historically struggled with a surplus production of sugar as well as outstanding cane dues from states. Mills typically crush cane with Total Fermentable Sugars (TFS) content of about 14 per cent, and every 100 kg of TFS yields 60 litres of ethanol. Thus, from one tonne of cane, mills can produce 115 kg of sugar and 45 kg of molasses that gives 10.8 litres of ethanol.
India's ethanol market is projected to grow $7.38 billion by 2024, exhibiting a CAGR of
14.50 per cent during 2019-2024, on the back of increasing ethanol use in applications such as fuel additives and beverages. According to the records by the Department of Food and Public Distribution, the production of fuel grade ethanol and its supply to Oil Marketing Companies (OMCS) has increased fivefold from 2013-14 to 2018-19. In FY 2018-19, India touched a historically high figure of about 189 crore litres thereby achieving 5 per cent blending. It is expected that in the current ethanol supply year 2020-21, more than 300 crore litres of ethanol is likely to be supplied to OMCS to achieve 8 to 8.5 per cent blending levels. It is also likely that India would be achieving a 10 per cent blending target by 2022.
To meet the ethanol requirement target of 20 per cent, India will need to augment its sugarcane-based ethanol production capacity by 78 per cent to 7.6 billion litres, and build grainbased ethanol capacity of 7.4 billion litres as per the government’s roadmap.
Government push
The government has fixed remunerative prices of ethanol from maize and Food Corporation of India’s (FCI) rice. To produce ethanol/alcohol from food grains, more than 165 Lakh Metric Tonnes (LMT) of additional food grains would be utilised. Extra consumption of surplus food grains will ultimately benefit farmers as they will get better price for their produce and assured buyers. The government hopes to encourage increased private production of ethanol through loan-based schemes, while it is building around 12 second generation (2G) bio-refineries to help augment grain-based ethanol production
capacity.
Sudhanshu Pandey, Secretary, Department of Food and Public Distribution said, “In the next sugar season 2021-22, about 35 LMT of sugar is estimated to be diverted and by 2025 about 60 LMT of sugar is targeted to be diverted to ethanol, which would solve the problem of excess sugarcane/ sugar and would also help sugar mills in clearing cane price dues of farmers. In the past three sugar seasons, about Rs 22,000 crore revenue was generated by sugar mills/ distilleries from the sale of ethanol to OMCS”.
Oil marketing companies are expected to procure 3.32 billion litres of ethanol from distilleries for blending with petrol during the 2020-21 procurement year, which runs from December 2020 to November 2021.
Uttar Pradesh has emerged as the largest ethanol-producing state in the country. A total of 58 crore litres of ethanol was produced by 54 distilleries established across the state. As per government records, the state has manufactured 58 crore litres of ethanol, a solvent that is essentially mixed with petrol for environmental purposes, in 2020-21. By mixing ethanol in petrol, the Uttar Pradesh government was able to contribute to saving a total of $75.58 million of India’s forex reserve, giving a big boost to the economy in these testing times.
According to equity analysts, the sugar sector is poised to benefit from the government's push for higher ethanol blending in India.
It will increase future investment by sugar manufacturers and bio refineries for ethanol production.
Additional investments
To meet the government's target of 20 per cent blending of gasoline, ethanol storage capacity of sugar companies needs to expand to three times the current level of about 300 crore litres.
According to government estimation, about 10 billion litres of ethanol would be required each year to meet the 20 per cent ethanol-blended fuel standard by 2025. Similarly, the Ministry of Food and Public Distribution has also estimated that an investment of Rs 41,000 crore is expected to meet the requirement.
Sugar manufacturer companies have already started investing to increase their ethanol storage capacity. Recently leading sugar company, Shree
Renuka Sugars announced that it will invest Rs 450 crore to expand its ethanol capacity. In a regulatory filing, the company informed that its board has approved expanding production capacity by 430-kilo litre per day to 1,400-kilo litre per day.
“Considering the huge untapped demand for ethanol due to the policies of Government of India on ethanol blending, the Board of Directors of the company approved further capacity expansion for ethanol production from 970-kilo litre per day to 1,400-kilo litre per day,” the filing said.
“The government of India has mandated 20 per cent ethanol blending in fuel by 2025 against a current blending of 7.79 per cent. Considering this, the company sees a huge untapped demand for ethanol for the ethanol blending programme of the Government of India which can be of benefit to the company in the future,” the company noted.
State-owned Indian Oil Corporation (IOC) plans to build two second generation (2G) biorefineries in the southern states of Telangana and Andhra Pradesh as part of the government’s aim to increase ethanol production in the country.
Each of the 2G bio-refineries will be set up at a cost of Rs 6 billion ($83 million) and will be able to produce 500,000 litres/day of ethanol from spoilt and surplus food grain from the Food Corporation of India (FCI) as well as agricultural waste such as wheat and paddy straw, said the company in statement.
Bapi Construction Electrical Engineering Private Limited (BCPL) announced that its subsidiary BCL Bio Energy Private Ltd has been granted provisional stage-1 clearance for the production of ethanol from grains such as maize and rice, to blend with petrol. The project includes ethanol production from grains at Purnia in Bihar and is expected to resume commercial production by FY2023.
State-run Steel Authority of India Ltd (SAIL), the country's largest steel maker, plans to construct India's first gas-to-ethanol facility at its Ferro alloy plant in Chandrapur, Maharashtra. Investment of Rs 4 billion ($54.8 million) to produce 50,000 litres/day of ethanol from the facility, which will convert gases such as carbon dioxide, carbon monoxide and hydrogen into ethanol using fermentation technology.
Most of the ethanol manufacturing units
are concentrated in 4-5 states where sugar production is high but now food grain based distilleries are being established to expand this to the whole country. Leading sugar manufacturer companies are expanding their ethanol production capacity by using modern technologies.
Use of technology
Praj Industries, India’s industrial biotech company has developed innovative technology to produce Bio-bitumen based on lignin (one of the co-products resulting from the second generation (2G) ethanol plants). The Netherlands-based Circular Biobased Delta, one of Europe’s premier consortia to promote bioeconomy, has approved Praj’s Bio-bitumen samples processed from Purified Lignin, as a part of their flagship CHAPLIN program.
Lignin is one of the co-products resulting from the 2G ethanol plants, paper making and also from Compressed Biogas plants. Bitumen is a black viscous mixture of hydrocarbons produced by fractionation of crude oil and has wide applications in road construction and roofing as binder.
Praj had provided Bio-bitumen samples processed from Rice and Wheat Straw as feedstock in their 2G Biorefinery Demo plant in India to CBBD for testing and evaluation.
After thorough evaluation and studies in their advanced laboratories, CBBD has approved Praj’s Bio-bitumen sample for scale up in Asphalt on a Dutch test strip on the road.
In April 2021, Praj Industries has bagged an order to set up India’s largest capacity syrup based ethanol plant from a Godavari Biorefineries Ltd (GBL) in Karnataka. As a part of this project, Praj will expand the existing ethanol manufacturing capacity to 600 kilo litre per day (KLPD), using sugarcane syrup. When commissioned, this will become India’s largest capacity syrup based ethanol plant. This capacity expansion planned by GBL is in line with the Government’s biofuel policy to increase the ethanol manufacturing quantity in India using various sugary feedstocks.
The expansion capacity at GBL plant will continue to be a zero liquid discharge facility. The expansion will maintain zero liquid discharge norms by deploying innovative technology i.e. SHIFT, developed in Praj’s state-of-the-art R&D
facility - Praj Matrix. The ‘SHIFT’ technology minimises energy and water footprint while maximising value for customers.
Samir Somaiya, Chairman & Managing Director of Godavari Biorefineries Limited (GBL) said, “Responding to the government's vision of Atmanirbhar Bharat, we decided to divert sugar cane syrup to the distillery to manufacture ethanol. We are happy for our association with Praj as our technology partner for increasing our manufacturing capacity. Praj will design, engineer, supply, install and increase our capacity from 400 KLPD to 600 KLPD ethanol production using sugar syrup as raw material.” The Government of India has made several strategic interventions by way of progressive policies, conducive financial mechanisms, to encourage the sugar sector to limit surplus sugar production and instead, produce more ethanol. Sugar manufacturing companies, bio refineries and distilleries are ramping up their infrastructure to expand the ethanol capacity with the support of government finance schemes and investment by private players in the industry.
“In the next sugar season 202122, about 35 LMT of sugar is estimated to be diverted and by 2025 about 60 LMT of sugar is targeted to be diverted to ethanol, which would solve the problem of excess sugarcane/ sugar and would also help sugar mills in clearing cane price dues of farmers. In the past three sugar seasons, about Rs 22,000 crore revenue was generated by sugar mills/ distilleries from the sale of ethanol to OMCS”.
Sudhanshu Pandey, Secretary, Department of Food and Public Distribution
“Responding to the government's vision of Atmanirbhar Bharat, we decided to divert sugar cane syrup to the distillery to manufacture ethanol. Praj will design, engineer, supply, install and increase our capacity from
400 KLPD to 600 KLPD ethanol production using sugar syrup as raw material.”
Samir Somaiya, Chairman & Managing Director of Godavari Biorefineries Limited (GBL)