With countries across the world fast adopting electric vehicles to cut back emissions and meet the environmental needs, India is pushing for more cars to run on sugar-based ethanol. The Indian government is set to fast track an ethanol program that will divert as much as six million tons of sugar toward fuel production annually by 2025.
Ethanol is fermented from plant sugars and added to gasoline to boost the oxygen content of car fuels and reduce pollution. Its use is on the rise in Brazil and the United States. Prime Minister Narendra Modi set a target in June for blending 20% ethanol in gasoline to 2025. The advantages are that it will reduce air pollution, cut India’s oil import bills, help soak up a domestic sugar glut and boost investment in rural areas.
Rahil Shaikh, managing director of Meir Commodities India Pvt, said this is good news for the world if India diverts sugar to produce more ethanol as it will reduce the global surplus. “But eventually if there is a higher demand, some countries including India will have to expand cane acreage.”
Tarun Kapoor, India’s Oil Secretary, believes that India will have to almost triple ethanol production to about 10 billion litres a year, if it is to meet its 2025 target. “This will require $7 billion of investment and the challenge would be to create the kind of capacity needed in a short span of three to four years.” Moreover, the government is offering financial support to sugar mills to set up or expand distrilleries.
According to a Bloomberg report, companies like Balrampur Chini Mills Ltd will stop producing sugar at some mills and begin processing cane juice to make ethanol instead. Moreover, India is pursuing a Brazil-like model, which has successfully promoted sugarcane-based ethanol for more than 40 years to ease its sugar glut, cut dependency on oil imports and increase energy security.
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Ethanol production also creates job opportunities. As the sugarcane processing in Brazil has shown, it involves various steps, including cultivation of feedstock, extraction and crystallization of sugars in mills, and fermentation and distillation in ethanol plants. According to the Renewable Fuels Association, the production of 15.8 billion gallons of ethanol and a 39.6 million metric tons of co-products and distillers oil in 2019 necessitated more than 68,000 direct jobs and 280,000 indirect and induced jobs.
