In January 2003, the Ethanol Blended Petrol (EBP) initiative was introduced. The initiative aimed to encourage the use of alternative, environmentally benign fuels and to lessen reliance on imports for energy needs. By 2030, the government's "National Policy on Biofuels," which was announced in 2018, set an indicative goal of 20% ethanol blend in gasoline. However, considering the good performance, thanks to several interventions made by the Government since 2014, the aim of 20% ethanol blending was shifted from 2030 to 2025-26. More on PIB.
Ethanol, an anhydrous ethyl alcohol with the chemical formula C2H5OH, may be made from starchy plants including sugarcane, maize, wheat, and other grains. In India, sugarcane molasses is mostly fermented to make ethanol. Different mixes of gasoline and ethanol are possible. Because the ethanol molecule contains oxygen, it enables the engine to burn the fuel more thoroughly, resulting in fewer emissions and less environmental pollution overall. Ethanol is regarded as a renewable fuel since it is generated by plants that use solar energy.
Need for the Scheme
A product of the agricultural sector, ethanol is primarily made from molasses, a by-product of the sugar industry. The sugar business struggles to pay farmers their cane price on time during years of the excess output of sugarcane and low prices. To reduce pollution, preserve foreign currency, and boost value addition in the sugar business so that they can pay farmers' cane price arrears, the Ethanol Blending Program (EBP) aims to achieve the blending of ethanol with motor spirits.
Ethanol Blended Petrol (EBP) Programme | UPSC IAS IPS IFS
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The Ethanol Blended Petrol (EBP) Program has been promoted by the Indian government to improve India's energy security, reduce reliance on gasoline imports, save foreign money, address environmental challenges, and boost the local agricultural industry. By notification dated September 20, 2006, the Ministry of Petroleum & Natural Gas (MoP&NG) ordered the Oil Marketing Companies (OMCs) to start selling 5% ethanol-blend gasoline in the notified 20 States and 4 UTs beginning on November 1, 2006, subject to economic viability and in accordance with Bureau of Indian Standards criteria.
The extra 10 States are also involved, although the initiative does not extend to the North-Eastern States, J&K, the Andaman & Nicobar Islands, or the Lakshadweep Islands with effect from 01st April 2019 wherein OMCs sell petrol blended with ethanol up to 10%.
Actions Taken to Enhance Production
Since 2014, the government has taken several actions to enhance domestic ethanol production, including:-
- The opening of a different path for ethanol production; the reinstatement of the administered pricing system;
- Amendment to the Industries (Development & Regulation) Act of 1951, which gives the Central Government sole authority to regulate denatured ethanol for efficient transportation throughout the nation;
- Reduction of GST from 18% to 5% on ethanol intended for the Ethanol Blended Petrol(EBP) Program;
- Ethanol prices differ depending on the raw materials used to produce it;
- Extension of the Ethanol Blended Petrol (EBP) Program to the entirety of India, except the islands of Andaman and Nicobar as of April 1, 2019;
- Interest Subvention Scheme for the Department of Food and Public Distribution (DFPD) to increase and expand the capacity of ethanol production;
- Release of the long-term ethanol purchase policy.
Simplifying Supply Chain
To simplify the whole ethanol supply chain, the procurement process for ethanol under the Ethanol Blended Petrol (EBP) program has been streamlined, and competitive ex-depot pricing has been established. A "grid" that connects distilleries to OMC depots and specifies the quantities to be provided has been developed to help achieve new blending objectives. A demand profile for each state has also been predicted, taking into account distances, resources, and other sectoral demands. The price of ethanol has been revised for the Ethanol Blended Petrol (EBP) Program for the next sugar season 2021–2022, which runs from December 1, 2021, to November 30, 2022.
The price of ethanol from the C heavy molasses route will go up from Rs. 45.69 to Rs. 46.66, while the price from the B heavy molasses route will go up from Rs. 57.61 to Rs. 59.08 per litre. Rs. 62.65 per litre of ethanol produced from sugarcane juice, sugar, or sugar syrup should be raised to Rs. 63.45 per litre. Additionally, GST and freight expenses will also be charged. OMCs have been urged to set reasonable transportation fees so that ethanol delivery over large distances is not discouraged.
The government concluded that oil PSEs should be allowed to establish their prices for 2G ethanol since doing so would facilitate the development of sophisticated biofuel refineries in the nation. It is essential to remember that Oil Marketing Companies (OMCs) alone now set the price for grain-based ethanol. The GST rate on ethanol intended for the EBP Program has been lowered by the government from 18% to 5%.
To increase the production of fuel-grade ethanol and to achieve blending targets, the Govt of India has allowed the use of maize and rice with FCI for the production of ethanol. The government has declared that rice available with FCI would continue to be made available to distilleries in the coming years. The extra consumption of surplus food grains would ultimately benefit the farmers as they will get a better price for their produce and assured buyers, and thus will also increase the income of crores of farmers across the country.
- It may lower the cost of importing motor gasoline by $4 billion annually, or Rs 30,000 crore.
- Additionally, it offers farmers the chance to make extra money if they plant crops that are used in the manufacturing of ethanol.
- According to the NITI Aayog study, ethanol is less polluting than other fuels and offers equal efficiency at a lower cost than petrol.
- At the moment, domestic bioethanol production is not enough to satisfy Indian OMCs' need for bioethanol for blending with gasoline.
- India has risen to become one of the world's top producers of ethanol, but its water consumption is still inefficient compared to that of the top producers, the United States and Brazil.
- Although producing ethanol from agricultural residue might be a suitable alternative, the biorefinery's yearly capacity is still insufficient to achieve the 5% petrol-ethanol blending requirement.
Demand and Supply of Ethanol
About 189 crore liters of ethanol were supplied to OMCs by sugar mills and grain-based distilleries during the ethanol supply year 2018–19, helping to meet the 5% blending target. In the upcoming ethanol supply year 2019–20, efforts are being made to supply 190–200 crore liters of ethanol for blending with gasoline to achieve 5.6% blending. To meet the 8.5% blending objective in the current ethanol supply year (ESY) 2020–21 (December to November), around 325 Cr liters of ethanol must be provided to OMCs.
As of 26.04.2021, OMCs have given sugar mills and distilleries access to around 349 cr liters of ethanol. Additionally, to reach 10% blending in the next ESY 2021–2022, it is estimated that OMCs will receive more than 400 billion liters of ethanol. The Government has a 10% blending target for mixing ethanol with petrol by 2022 & 20% blending target by 2030.
The committee suggests that manufacturing of E20-tuned engine cars begin in April 2025, with the rollout of E20 material-compliant and E10 engine-tuned vehicles beginning in April 2023. The Center needs to investigate strategies to lessen the program's reliance on sugarcane. Alternative feedstock like agricultural waste, and recycled cooking oil, offers more ecologically friendly bio-fuels.
The non-cane component of the ethanol blend has to be increased with a focus. This can be achieved by offering incentives to both public and private parties to build facilities for second-generation ethanol. Careful monitoring and assessment of emissions changes will be required as we go towards greater ethanol blends to ensure that the potential for emission reduction for both regulated and uncontrolled pollutants may be increased.