The Department of Food & Public Distribution recently notified a modified scheme notably designed for extending financial assistance to the production of 1st Generation (1G) ethanol. This move forms a significant part of the broader objective to attain the blending targets of ethanol with petrol through the Ethanol Blending Programme (EBP).
Ethanol Blending Programme: Endeavour to Advance Biofuels
The EBP primarily strives for blending ethanol with petrol, subsequently categorizing it as biofuels. This ingenious initiative holds the potential to save millions of dollars by reducing fuel imports and cutting down carbon emissions significantly.
The ultimate target set by this programme is to reach 20% blending of ethanol by the year 2025.
Ethanol Extraction from Surplus Foodgrains
In 2018, the ambit of the EBP programme was widened by the Central Government to include fuel extraction from surplus amounts of food grains like maize, jawar, bajra fruit and vegetable waste. Until then, only excess sugarcane production was permitted to undergo conversion into ethanol for procurement under the programme.
Financial Support for Expansion of Ethanol Distillation Capacity
To encourage investment in this sector, the government opts to offer interest subvention on loans. The purpose of this subsidy is twofold – it aims to establish distilleries specifically designed for producing 1G ethanol from feed stocks, including rice, wheat, barley, corn, sorghum, sugarcane, and sugar beet. Furthermore, it seeks to convert molasses-based distilleries to dual feedstock.
Expected Benefits
Farmers stand to gain from this initiative as it allows them to diversify their crops, especially encouraging the cultivation of maize/corn which requires less water compared to sugarcane and rice. It also presents an opportunity for employment, as investment in adding capacity or setting up new distilleries will provide job opportunities in rural areas. Additionally, it promotes distributed ethanol production, which could save significant transportation cost and prevent delays in meeting the blending target.
Related Initiatives
Amongst other related plans, the Indian government previously invited public comments for introducing adoption of E20 fuel – a blend of 20% ethanol with gasoline. Another important initiative, the Pradhan Mantri JI-VAN Yojana, 2019, is intended to create an ecosystem for setting up commercial projects and boost research and development in the 2G Ethanol sector. Moreover, GST on ethanol for blending in fuel has been reduced from 18% to 5% by the Government.
National Biofuel Policy 2018
According to this policy, biofuels have been categorized as “Basic Biofuels” like First Generation (1G) bioethanol & biodiesel and “Advanced Biofuels” such as Second Generation (2G) ethanol, Municipal Solid Waste (MSW) to drop-in fuels, Third Generation (3G) biofuels, and bio-CNG. This categorization is designed to extend appropriate financial and fiscal incentives under each category.
Way Forward
Moving forward, proper implementation of the biofuel policy and ethanol blending programme should ensure that fuel requirements do not compete with food requirements. It’s pertinent to use only surplus food crops for fuel production. At the same time, alternatives like 3rd generation biofuels (derived from algae) and 4th generation biofuels (derived from genetically engineered plants or biomass) should be encouraged for a sustainable future.
