Oil and Gas Sector – HELP, Open Acreage Policy, etc.

Cabinet approves Mechanism for procurement of ethanol by Public Sector Oil Marketing Companies (OMCs) under EBP Programme

ExplainedSchemes | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.
Note4Students

From UPSC perspective, the following things are important :

Mains level: Ethanol Production ;

Why in the News?

The Cabinet Committee on Economic Affairs (CCEA) has approved a revision in the ethanol procurement price for Public Sector Oil Marketing Companies (OMCs) for the Ethanol Supply Year (ESY) 2024-25.

What is the significance of the Price Revision?

The recent revision of the ethanol procurement price for Public Sector Oil Marketing Companies (OMCs) is significant for several reasons:

  • Price Stability and Remuneration: The increase from ₹56.58 to ₹57.97 per litre ensures price stability and provides a more remunerative rate for ethanol suppliers, which is crucial for maintaining a steady supply of ethanol.
  • Support for Sugarcane Farmers: The separate payment of Goods and Services Tax (GST) and transportation charges will benefit sugarcane farmers, enhancing their income and encouraging production.
  • Meeting Blending Targets: The 3% increase in the price is aimed at ensuring adequate availability of ethanol to meet the ambitious blending target of 20% by 2025-26, advancing from the original target of 2030.
  • Reducing Crude Oil Dependency: This initiative is part of a broader strategy to reduce India’s dependency on crude oil imports, leading to substantial foreign exchange savings and environmental benefits.

What is Ethanol Blended Petrol (EBP)?

The Ethanol Blended Petrol (EBP) Programme is a government initiative aimed at promoting the blending of ethanol with petrol to create a more sustainable and environmentally friendly fuel option.

  • OMCs are currently blending up to 20% ethanol with petrol, which helps reduce reliance on imported crude oil and lowers carbon emissions.
  • Ethanol blending has dramatically increased from 38 crore litres in the Ethanol Supply Year (ESY) 2013-14 to 707 crore litres in ESY 2023-24, achieving an average blending rate of 14.60%.
  • The programme has resulted in estimated savings of over ₹1,13,007 crore in foreign exchange and has substituted approximately 193 lakh metric tonnes of crude oil over the past decade.

What are other initiatives taken to promote biofuels?

  • National Policy on Biofuels (2018): This policy aims to reduce dependency on fossil fuels and promote sustainable development by encouraging the production and use of biofuels from various feedstocks such as sugarcane, broken rice, and maise.
  • Pradhan Mantri JI-VAN Yojana: This initiative focuses on accelerating the development of second-generation (2G) ethanol capacity in India, providing viability gap funding to support the establishment of 2G ethanol projects.
  • Global Biofuels Alliance (GBA): Launched in September 2023, this alliance aims to accelerate the global adoption of cleaner fuels and support decarbonization goals. It involves collaboration with multiple countries to enhance biofuel deployment.
  • Repurpose Used Cooking Oil (RUCO) Initiative: Launched by the Food Safety and Standards Authority of India (FSSAI) in 2018, this initiative aims to convert used cooking oil into biofuel, thereby preventing its reuse in food preparation and promoting sustainability.
  • Biodiesel Production Targets: India has set a biodiesel blending target of 5% by 2030. The government is mobilizing production through policies that support feedstock availability, including used cooking oil and non-edible industrial oils.
  • Sustainable Aviation Fuel (SAF) Initiatives: The National Biofuel Coordination Committee has established targets for blending SAF in domestic flights, aiming for 1% by 2025 and 5% by 2030.
  • Ethanol Blending Advancements: The target for ethanol blending has been advanced from 2030 to 2025, with plans to achieve 20% blending. This includes signing long-term off-take agreements with dedicated ethanol plants to ensure a steady supply.

Way forward: 

  • Strengthen Feedstock Supply Chain: Enhance agricultural productivity and diversify feedstock sources including maize and non-food biomass, to ensure a stable and sustainable ethanol supply.
  • Expand Infrastructure and Investments: Develop ethanol storage, blending, and distribution networks while encouraging private sector participation through financial incentives and policy support.

Prelims PYQ:

[2013] With reference to the usefulness of the by-products of the sugar industry, which of the following statements is/are correct?

  1. Bagasse can be used as biomass fuel for the generation of energy.
  2. Molasses can be used as one of the feedstocks for the production of synthetic chemical fertilizers.
  3. Molasses can be used for the production of ethanol.

Select the correct answer using the codes given below.

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

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