Context:

Recently, cereal grains have overtaken sugarcane as the primary feedstock for producing ethanol blending with petrol. 

Key Highlights

• In the current supply year (November 2023-October 2024), sugar mills and distilleries supplied 401 crore litres of ethanol to oil marketing companies by June 30.
• Of this total, 211 crore litres (52.7%) were made from maize and damaged food grains, while 190 crore litres came from sugarcane-based feedstocks.
• For the first time, grains now contribute over 50% to India's ethanol production, increasing from 27.1% in 2022-23, 16.7% in 2021-22, 13.6% in 2020-21, 9.2% in 2019-20, 5% in 2018-19, and zero in 2017-18.

What is Ethanol? 

• Ethanol(C2H5OH), also called alcohol, ethyl alcohol, and grain alcohol, is a clear, colourless liquid ingredient in alcoholic beverages like beer, wine, or brandy. 
• Ethanol is a natural byproduct of plant fermentation and can be produced through the hydration of ethylene.
• Ethanol, which is 99.9% pure alcohol is suitable for blending with petrol.

Reasons Behind the Increase in Maize for Ethanol Blending

• Initial Production: Till 2017-18, ethanol was produced only from C-heavy molasses, a byproduct that sugar mills could not economically convert into sugar.
• Policy Changes: The EBP program received a boost in 2018-19, when the government allowed ethanol production from B-heavy molasses and whole cane juice/syrup, offering higher prices to compensate for reduced sugar production.
• Multi-Feedstock Distilleries: Companies installed distilleries capable of using both molasses and grains, switching based on seasonal availability. Maize as the Top Ethanol Feedstock
• Government Restrictions: The government stopped supplying FCI rice (July 2023) and restricted cane juice and B-heavy molasses use for ethanol (December 2023).
  
• Incentive Pricing: The ex-distillery price for maize-based ethanol is Rs 71.86 per liter, higher than other feedstocks.
  

Ethanol Blending Programme (EBP)

• It aims to reduce dependence on crude oil imports, lower carbon emissions, and enhance farmers' incomes.
  It was launched by the Ministry of Petroleum and Natural Gas in 2003.
• Blending Target: Initially, the programme set a 5% ethanol blending target, which was later increased to 10% by 2022.
  Currently, govt aims for 20% ethanol blending in petrol by 2025.
  Current Blending Ratio: The average blending ratio was 13% till June 2024, up from 12.1% in 2022-23 and 10% in 2021-22.

Impact on Agriculture and Industry

• Positive Impact on Farmers: Increased demand for maize benefits farmers in Karnataka, Madhya Pradesh, Maharashtra, and Bihar. It provides a new market for maize, boosting their income.
• Concerns from Poultry and Feed Industry: The All-India Poultry Breeders Association and Compound Livestock Feed Manufacturers Association raised concerns about maize shortages.
  Government Response: The Centre permitted 0.5 million tonnes of maize imports at 15% concessional duty and is considering further imports to address the demand-supply gap.

Why is the government discouraging the use of sugar for ethanol production?

• The government is discouraging the use of sugar for ethanol production due to its high water consumption. 
• According to a Mongabay-India report, producing 60-80 tonnes of sugarcane per acre requires an average of nine lakh litres of water twice a month.
• The report also notes that to achieve the 20% ethanol blending target by 2025, India would need 1,320 million tonnes of sugarcane, 19 million hectares of additional land, and 348 billion cubic metres of extra water. 
• Similarly, a NITI Aayog report indicates that producing just one litre of ethanol from sugarcane consumes at least 2,860 litres of water.

Way Forward 

• The shift to cereal grains as the primary ethanol feedstock highlights the dynamic nature of India's ethanol production strategy. 
• While it presents opportunities for farmers, it also poses challenges for other industries reliant on maize.
• The government must balance these interests by considering controlled imports, incentivizing alternative feedstocks, and promoting sustainable agricultural practices to support both ethanol production and food security.