The other day the director general of Indian Sugar Mills Association Abinash Verma made an impassioned plea for the central government to announce the final price of ethanol to be procured by oil marketing companies (OMCs) for blending with petrol. Till such time the final price is announced, OMCs are to procure ethanol from indigenous sources at a uniform ex-factory ad-hoc price of Rs 27 a litre for its doping with petrol. According to Verma, sugar mills have finalised “contracts with oil marketing companies for supply of about 600 million litres and delivery has begun.”
In this particular case, the government is not to be blamed for the unconscionably long time being taken to post ethanol’s final price. Over three months ago, the government flagged off the ethanol blended petrol programme (EBPP) across the country as it left it with an expert committee led by planning commission member Saumitra Chaudhury to recommend the final price. The government wanted the final price recommendation “expeditiously.” It will be interesting to watch how much weight the committee will give to “parity with gasoline retail price, import parity price of ethanol and underlying cane prices,” as suggested by the sugar industry.
India being the world’s second largest producer of sugar from cane after Brazil, is expected to use a growing portion of cane by-product molasses for making ethanol. For the world, Brazil stands as the shining example of very largely eliminating greenhouse gas emission by using ethanol either in a blend with petrol or on stand alone basis in its automobile fleet.
New Delhi’s commitment to EBPP – it has an open mind on raising ethanol blend percentage to up to 10 per cent depending on the availability of molasses and resolution of competing claims of chemicals and India made foreign liquor (IMFL) makers – is as much because of the prospect of controlling carbon footprint from ethanol use as for “enhancing benefits to cane farmers.” In a joint presentation to the expert committee, Isma and National Federation of Cooperative Sugar Factories said ethanol use would also “boost income pool of cane farmers.” A committee under C Rangarajan will be recommending a formula for sharing of revenue from sugar and primary byproducts by mills and farmers.
So divergent are the views of the sugar industry and other users of alcohol derived from molasses about the supply and respective requirements of the by-product that it is proving to be a Herculean task for the committee to find a common ground.
What must also be coming in the way of fixing the final price is chemicals and IMFL manufacturers’ opposition to mandatory five per cent ethanol blending at any fixed price. According to them, in case EBPP is to be relaunched, the basis of working out ethanol price will be its calorific value and cane price. Interestingly, in this campaign they are finding support from the department of chemicals and petrochemicals.
What must also be queering the pitch for the committee, are the pitching of alcohol requirements at extraordinary high levels by chemicals and IMFL makers. The latter group has also suggested that ethanol should not cost more than Rs 21.50 a litre so that its “operational viability” is not compromised in any way. Isma itself admits of very large differences in production and consumption figures for alcohol made available by sugar mills and other interests. The only way to break the logjam will be to get the relevant data from state excise authorities. What is, however, beyond contest is the country’s capacity to take care of ethanol blending of up to 10 per cent.
Hairsplitting is unavoidable when sectional considerations take precedence over national interests. Bioenergy recommends itself for its renewability and environment friendliness. International Energy Agency says “bioenergy is the largest renewable energy contributor to global primary energy today and it has the highest technical potential of all renewable energy sources.” One major source of ethanol, a member of bioenergy family, is cane or sugar byproduct molasses. Both Brazil and India will claim to have passed the muster of soil productivity, water use efficiency, biodiversity maintenance and reward for farmers as they grow cane.
Ethanol has a special appeal for India, for its feedstock here unlike in Brazil is only the byproduct molasses. As a result, we are not using farm land or a food crop for making bioenergy. China has a dislike for using corn for making ethanol. It is, therefore, pushing non-staple crops like sorghum, balata and cassava. Both India and China are keenly promoting jatropha, a hardy oil rich seed which can be grown on marginal land. All these crops are good sources of biofuel. Oil accounts for a little over 30 per cent of India’s import bill and to the extent there is ethanol doping, money spent on oil imports will be saved.
Brazil and the US between them are responsible for over 85 per cent of the world ethanol production. In Brazil, 25 per cent ethanol doping in gasoline is mandatory, while over 11 million Flex cars on Brazilian roads run entirely on ethanol. India needs catching up.
