Ethanol – A Saviour That Gives Savings

Why in News?

• International oil prices are surging, nearing $100 per barrel once again. India’s import dependence on crude oil and products stood at an all-time high of 87.3 per cent in FY2023.
• To reduce the dependency on imported crude, India needs clear research and development plan to scale up ethanol production.

Ethanol Blending

• Ethanol is an agricultural by-product, mainly obtained from the processing of sugar. It can also be obtained from other sources such as rice husk or maize.
• Blending ethanol to a certain extent with petrol(or diesel) that makes it burn fewer fossil fuels while running vehicles is called ethanol blending.
• Since ethanol contains oxygen, it aids in more complete combustion, lowers emissions, and improves the fuel’s environmental performance.
• By 2023, all vehicles in India will have E20 (20% ethanol in petrol) compatible material, as committed by the auto industry.
• Therefore, in order to carry or store fuel that contains 20% ethanol, the fuel points, plastics, rubber, steel, and other components in cars would need to be compatible.

Reasons why India Needs to Scale up Ethanol Blending Process

• High Energy Demand (Petrol and Diesel)
  • Nearly 60 per cent of India’s petrol demand comes from two-wheelers, which cater to the mobility needs of citizens across the economic spectrum.
  • The remaining 40 per cent demand is from four-wheelers and this share is likely to increase, however slowly.
  • A NITI Aayog report indicated a growth in petrol demand by over 45 per cent by 2030, compared to 2021.
  • In such a scenario, blending alone can deliver a small reduction in the overall demand for petrol.
• India’s Dependency on Imported Crude
  • India’s import dependence on crude oil and products stood at an all-time high of 87.3 per cent in FY2023, and 25.8 per cent of the country’s import bill was spent on it.
  • Indian economy has the third-largest crude and product demand in the world with significant room for consumption growth.
  • At the same time, the International Energy Agency estimates that biomass provided up to 20% of India's total primary energy supply in the last decade, with a substantial amount of it being utilized by families.
  • The newly formed Global Biofuel Alliance under India’s G20 presidency must now convert this fuel into a form that can supply clean bio-energy to multiple ends uses, improve energy security and get value for public spending. 

India’s Ethanol Blending Programme

• To reduce the dependency on imported crude, India launched its ethanol blending programme in 2003 but it saw little progress for more than a decade.
• In 2022, after a coordinated policy push for five years, India’s blending programme achieved the significant milestone of 10 per cent ethanol blending in petrol.
• The government is planning to increase the blending share to 20 per cent (E20) by FY25-26, a target that was brought ahead by five years.

Challenges Faced by India’s Ethanol Blending Programme

• Demand and Supply Problem
  • Ethanol producers supplied nearly 430 crore litres of ethanol in 2022. The demand for 20 per cent blending is set to increase India’s ethanol demand to nearly 1,100 crore litres by 2025.
  • But achieving the 2025 target will require investments, and the ability to provide (and divert) the necessary feedstock for the domestic production of ethanol.
• Lack of Advanced Blending Facilities to Meet the Demand
  • Much of India’s supply of ethanol for the blending programme comes from 1st-generation production; using mostly sugarcane (84 per cent) and grain (16 per cent).
  • First-generation ethanol is produced from food-crops, such as cereals, maize, sugar beet, sugarcane, rapeseed, etc.
  • While the prospects for second-generation (2G) technologies for ethanol production are immense, investments have been slow and even Indian Oil’s state-of-the-art facility will only produce 3 crore litres of 2G ethanol.
  • The second-generation biofuels are produced from residual and waste products (rice-wheat straw, etc).
  • There are 12 such facilities in various stages of planning and construction but are unlikely to contribute to increased ethanol demand.
• The Issue of Climate Change
  • Given the predominance of first-generation production, the often-discussed food-energy-water nexus considerations must be put into practice at the earliest.
  • While ethanol opens up a new income stream for the farming community by way of assured procurement, climate change considerations suggest that rainfall and yields will both see significant variations and can leave us vulnerable to supply shocks.

Way Forward

• Focus on Bio-Fuels and Flex Fuels
  • EVs are not the best solution to the mobility needs as the minerals, materials, and components they need, present more trade, employment, and economic concerns.
  • In such a situation, biofuels and flex-fuel vehicles (that can run almost entirely on biofuels) may bea good alternative.
  • Recently, the Union Minister of Transport unveiled India’s first flex fuel vehicle.
• R&D Plan for 2G Ethanol Blending Technology: India needs a robust assessment and a clear R&D plan for 2G technologies, before it can scale up ethanol production.
• Targeted Promotion of EVs
  • In diversifying India’s fuel base, the primary focus of policy must be to slow down the overall consumption of petrol in the economy and address the private demand for the fuel.
  • Targeted promotion of EVs in public transit and pricing the use of private vehicles in urban settings could ease the transition to higher levels of biofuels.
• The Government should Keep an Eye on Water Usage
  • The new ethanol policy should ensure that it does not drive farmers toward water-intensive cropsand create a water crisis in a country where its shortage is already acute.
  • Rice and sugarcane, along with wheat, consume about 80% of India’s irrigation water.

Conclusion

• The automobile industry is struggling with transitioning to EVs and other challenges related to flex and biofuels engines.
• A well-thought-out and implementable plan to transform the way India moves, will not only help reduce the import bill but also buy us time to help transition a key industry of our economy.

Q) How can Ethanol Blending help save money?

India's net import of petroleum was 185 million tonnes in 2020-21 at a cost of USD 551 billion. Most of the petroleum products are used in transportation and therefore, the E20 programme can save the countryUSD4 billion annually.

Q2) What is the PM JI-VAN scheme?

The government has introduced the “Pradhan Mantri JI-VAN (Jaiv Indhan- Vatavaran Anukool fasal awashesh Nivaran) Yojana” to provide viability gap funding to give the country’s 2G ethanol capacity a jumpstart and draw investment to this industry.

Source: The Indian Express