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The Impact of the Centre’s Ethanol Policy Shift on the Sugar and Ethanol Industries

The Centre has taken major initiatives to boost domestic sugar supply, such as prohibiting sugar exports and limiting sugar diversion for ethanol production.

  • The Centre has taken major initiatives to boost domestic sugar supply, such as prohibiting sugar exports and limiting sugar diversion for ethanol production.
  • On December 7, the Ministry of Consumer Affairs, Food, and Public Distribution issued a directive to mills and distilleries prohibiting the use of sugarcane juice/syrup in the manufacturing of ethanol.

Ethanol Blended Petrol (EBP) initiative

  • Success: The EBP initiative, a significant success of the administration, has seen ethanol blending with gasoline climb from 1.6% in 2013-14 to 11.8% in 2022-23.
  • Diversifying feedstocks, such as C-heavy molasses, B-heavy molasses, sugarcane juice/syrup, and cereals, is credited with the company’s success.

Ethanol Production from Various Feedstocks

  • C-heavy molasses: Traditionally used in the manufacturing of ethanol, generating 220-225 litres of ethanol per tonne.
  • When compared to C-heavy molasses, B-heavy molasses yields more ethanol (290-320 litres per tonne).
  • Sugarcane Direct Fermentation: Fermenting the entire sugarcane without sugar extraction produces 80-81 litres of ethanol per tonne.

Ethanol Blending Scheme at the Centre: Food vs. Fuel Debate

  • Increased Ethanol Production Following 2017: The addition of novel substrates such as extra rice, broken grains, and maize, as well as B-heavy molasses and sugarcane juice/syrup, increased ethanol output.
  • Pricing Policy Variation: With increased pricing, the government encouraged ethanol production from non-C-heavy molasses feedstocks.
  • Industry Impact: During the off-season, companies like Triveni Engineering & Industries Ltd (TEIL) adapted to a variety of feedstocks, including grain.

Challenges and Setbacks for the Impact of the Industry 

  • Directive: The December 7 directive is a setback, particularly for enterprises with the capacity to make ethanol from cane juice/syrup.
  • Tender for Ethanol Supply: The OMCs’ tender for 825 crore litres of ethanol for 2023-24, notably the 135 crore litres from sugarcane juice/syrup, might be impacted.
  • Pricing Uncertainty: Despite the fact that the ethanol supply year is closer to the sugar year, the Centre has not established prices for various ethanol feedstocks for 2023-24.

Concerns about sugar supply and policy implications

  • Low Sugar supplies: Because the sugar year 2022-23 finished with low supplies, the government decided to prioritise local sugar supply.
  • Uncertain output Forecasts: According to the National Federation of Cooperative Sugar Factories, sugar output will fall in 2023-24.
  • Priorities of the Government: The most recent choices demonstrate the government’s preference for domestic supply and consumer demands above exports and fuel production.
Source: https://indianexpress.com/article/explained/food-versus-fuel-whats-happening-with-centres-ethanol-blending-scheme-9062757/
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