In a bid to encourage production of ethanol from C-heavy molasses for blending with petrol, public sector oil marketing companies (OMCs) - Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) - have hiked the procurement price of such ethanol by Rs 6.87 per litre to Rs 56.28 per litre. With this decision, the government and the OMCs hope to make production of ethanol from C-heavy molasses - a sugar processing byproduct with very low sugar content - an attractive proposition for sugar mills, and discourage the use of the high-sugar feedstocks. Earlier, the sugar industry had reportedly expressed dissatisfaction with the procurement price of C-heavy molasses-based ethanol. In view of concerns over the likelihood of inadequate sugar production this season, the government does not want high-sugar feedstocks - sugarcane juice, sugar syrup, and B-heavy molasses - to be diverted for ethanol production. While the government wants to ensure adequate sugar supply and keep prices of the sweetener in check, it also does not want the ethanol-petrol blending to suffer due to lower availability of the biofuel. "In order to maximize #ethanol production from C molasses route and improve the overall availability of ethanol for #EthanolBlendedPetrolProgramme, Public Sector Oil Marketing Companies announce an incentive of Rs 6.87 per litre for ethanol from C heavy molasses. C molasses is a by product of sugar factory and its utilisation for ethanol production is an effective way to promote #GreenEconomy," the Petroleum Ministry said in a post on X. In ethanol supply year (ESY) 2022-23, which ended on October 31, India achieved 12 per cent ethanol blending in petrol. The government has set a target of 20 per cent ethanol blending in petrol to be achieved by ESY 2025-26. The prescribed blending aim for ESY 2023-24 is 15 per cent, for which the OMCs would need to acquire around 700 crore litres of ethanol. According to industry players, around 25-30 per cent of ethanol is produced from sugarcane juice and sugar syrup, while around 45 per cent comes from B-heavy molasses - a sugar processing byproduct with substantial sugar content. Currently, ethanol from C-heavy molasses accounts for a miniscule share of the total production of the biofuel. For India, which is the world’s third-largest consumer of crude oil and depends on imports to meet over 85 per cent of its requirement of the commodity, increasing the use of biofuels is a key tool towards two ends - reducing dependency on energy imports and limiting the carbon footprint of the country’s rapidly growing energy use. Earlier this month, the government had banned the use of sugarcane juice and sugar syrup to manufacture ethanol, while allowing the use of B-heavy molasses only for for the existing offers received by the OMC from sugar mills. However, after strong resistance from the sugar industry, the decision was overturned a few days later. Instead of altogether banning the use of these feedstocks, a cap on sugar diversion for ethanol production was introduced. Even during the one-week period when the use of these feedstocks for producing ethanol was banned, the government maintained that it was not looking at dialling down the blending targets. “The government is fully committed to the ethanol blending programme. There is absolutely no question of any dilution of our commitment to that programme,” Petroleum Secretary Pankaj Jain had said at the time.
