India should implement a more “ambitious” biofuel programme that will help its sugar mills to increase production of ethanol and “balance the world sugar market”, according to Eduardo Leão de Sousa, executive director of Brazilian Sugarcane Industry Association or UNICA.
The average ethanol blending in gasoline (petrol) sold in India is now only around 6 per cent and expected to reach 10 per cent by 2022. “That would reduce your sugar production by 4 million tonnes (mt), which is also the surplus in the global market today. Last year, by producing more ethanol, we took away 10 mt of sugar from the world market, but for which it would have collapsed,” Sousa said in an interview to *The Indian Express*.
Brazil’s mills in 2019-20 – the season there is from end-April till November, as against mid-October to May for India – crushed 642.7 mt of sugarcane. Only 35% of the cane juice from crushing was boiled and crystallised to produce 29.6 mt of sugar. The balance 65% was fermented and distilled into ethanol, whose production amounted to 35.6 billion litres.
Indian mills, by contrast, crushed 301.18 mt of cane to make 33.16 mt of sugar and just 1.886 billion litres of ethanol in 2018-19. For the current 2019-20 season, sugar and ethanol supplies are estimated at nearly 27 mt and 1.9 billion litres, respectively.
In Brazil, the average ethanol blending in petrol is about 48%. This has been achieved through a mandatory blending policy (not allowing sale of any gasoline having less than 27% ethanol content) and special “carbon” taxes on gasoline (making it attractive to mix ethanol, which is free from such levy).
“All the 40,000-odd fuel stations in Brazil sell either gasoline with 27% ethanol blend (E27) or pure ethanol (E100). Most of our cars are flex-fuel vehicles running both on E27 and E100 (the tax on the gasoline component makes the latter cheaper at times). Even in diesel, we have 12% ethanol blending,” explained Sousa.
A similar “ambitious” ethanol blending programme in India can do four things.
First, it will reduce the country’s oil import bill. “Your import dependence on oil is 80% at present, which is what we also had till the seventies. But last year, 48% of our gasoline was substituted by ethanol. The use of E27 and E100 has enabled us to avoid additional gasoline consumption of almost 310 billion litres in the last 20 years. Had that volume been imported, it would have cost $ 168 billion in real terms,” Sousa pointed out.
Second, India is the world’s fourth largest greenhouse gases emitter after China, US and European Union. Ethanol can cut carbon dioxide emissions by up to 90 per cent compared to gasoline. Third, it can improve air quality in cities. São Paulo’s air pollution has halved in the last 20 years, despite its car fleet increasing more than 80%. “At 30 micrograms per cubic meter, the city’s average particulate matter is one-tenth of Delhi’s. The main reason for it is use of biofuel,” claimed Sousa.
The fourth benefit from Indian mills diverting more cane juice for ethanol is that it will bring down sugar production and prop up global prices. “Ethanol reduces the risk for everybody, including your 50 million cane growers. We want India to adopt mandatory blending, which would give its mills the flexibility to produce more ethanol like our industry and balance the world sugar market. Large cane producers such as India will also help create a global market for ethanol and make it an internationally traded commodity like oil, soyabean or sugar,” added Sousa.
However, the crash in global oil prices – Brent crude has fallen from $ 66 to $ 36 per barrel this year, while trading below $ 20 a month ago – has meant that even Brazilian mills may divert only 55% of their 650 mt of cane likely to be crushed in 2020-21 for ethanol.
As a result, Brazil’s sugar production, which fell from 38.6 mt in 2017-18 to 29 mt and 29.6 mt in the following two seasons, is expected to rise again to 37.5-38.5 mt. Ethanol output from cane is estimated at only around 30 billion litres in 2020-21, as against 35.6 billion, 33.1 billion and 27.9 billion litres in the preceding three seasons.
“We are comfortable producing more ethanol when crude is at $ 60 per barrel. This year, our sugar mix could go up from 35% to 45%,” admitted Sousa. The anticipated higher output from Brazil has, in turn, led to raw sugar prices in New York tumbling to a 12-1/2 years low of 9.34 cents per pound on April 28, before recovering to just over 11 cents now. And that has hurt Indian export prospects as well.
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