Sugar sector for mandatory ethanol blending

The sugar industry has asked the government to revive and accelerate the ethanol blending programme by making it mandatory for production units. The industry believes that this would strengthen the cash flow of sugar producers and save huge foreign currency.

Ethanol demand would increase substantially to 434 million litres if 5 per cent blending is mandated across nine states and four union territories. The same would double if 10 per cent is blended.

The industry estimates that the total ethanol production this financial year could be around 400 million litres against 300 million litres in June 2004.

Ethanol has emerged a sustainable, renewable and viable alternative to the fast-depleting, non-renewable fossil fuels. It is also a comparitevly environment-friendly energy source.

India's oil imports bill doubled to $26 billion in 2004-05, from $12.5 billion in 1999-2000. The country's crude oil imports in 2005-06 are expected to cost $37 billion. Crude oil prices rose five-fold to $55 a barrel from $11 a barrel in 1999.

Demand for crude oil in India more than doubled to 110 million tonne (mt) in 2004-05, from 54.1 mt in 1989-90. The demand is expected to spiral to 138 mt by 2006-07 and 155 mt by 2011-12.

Massive use of ethanol, as one of the options, can help India meet its commitment to curb its greenhouse gas emissions. "The use of ethanol as an alternative to conventional fuels reduces carbon dioxide (CO2) emissions by 25 per cent. Each tonne of sugarcane used to produce ethanol absorbs 0.17 tonne of CO2 from the atmosphere," an industry expert said.

Ethanol production can be sustainable if the government provides subsidies, as in the case of all major ethanol producers such as Brazil, the US and Australia, the expert said.

Brazil has offered subsidies by reducing excise duty on ethanol-powered vehicles and the US a tax break of about $0.12 a litre.

The Australian government has been providing nearly A$17 million in subsidies to ethanol producers, while the Canadian government has introduced 5-8 per cent ethanol-blended gasoline and set a target of producing 1.3 billion litres a year by 2010.

The ethanol-producing countries around the world are already implementing policies to promote the blending of petrol with ethanol as vehicular fuel.

Brazil had started doping petrol with ethanol, up to a level of 5 per cent, way back in 1931. Today, 3 million cars or 40 per cent of all the cars in the country use only ethanol as fuel. The remaining 17 million cars in the country dope 76 per cent gasoline with 24 per cent ethanol.

Brazil has mandated that ethanol should meet at least 24 per cent of all its automobile fuel requirements. Similarly, Canada has laid down that ethanol should constitute at least 5-8 per cent of all its vehicular gasoline. The European Union has targeted use of 5 million tonne of biofuels annually.

In quest of an alternative

Nine states and 4 union territories account for 66% of India's annual gasoline consumption of 70 mt

As per government notification, the sugar industry invested Rs 900 crore in capacity expansion

Government on Oct 27, '04 superseded its earlier notification and made ethanol blending compulsory