Central Idea

The Centre has taken significant steps to increase domestic sugar availability, including banning sugar exports and restricting the diversion of sugar for ethanol production.
On December 7, the Ministry of Consumer Affairs, Food and Public Distribution directed mills and distilleries not to use sugarcane juice/syrup for ethanol production.

Ethanol Blended Petrol (EBP) Programme

Programme’s Success: The EBP programme, a key achievement of the government, has seen ethanol blending with petrol increase from 1.6% in 2013-14 to 11.8% in 2022-23.
Feedstock Diversification: The success is attributed to diversifying feedstocks, including C-heavy molasses, B-heavy molasses, sugarcane juice/syrup, and grains.

C-heavy Molasses: Traditionally used for ethanol production, yielding 220-225 litres of ethanol per tonne.
B-heavy Molasses: Provides higher ethanol yield (290-320 litres per tonne) compared to C-heavy molasses.
Direct Fermentation of Sugarcane: Fermenting the entire sugarcane without sugar extraction yields 80-81 litres of ethanol per tonne.

Increased Ethanol Production Post-2017: The use of B-heavy molasses and sugarcane juice/syrup, along with new substrates like surplus rice, broken grains, and maize, boosted ethanol production.
Differential Pricing Policy: The government incentivized ethanol production from non-C-heavy molasses feedstocks with higher prices.
Impact on Industry: Companies like Triveni Engineering & Industries Ltd (TEIL) adapted to multiple feedstocks, including grain during the off-season.

Directive’s Impact: The December 7 directive is a setback, especially for companies with capacities to produce ethanol from cane juice/syrup.
Tender for Ethanol Supply: The OMCs’ tender for 825 crore litres of ethanol for 2023-24 might be affected, particularly the 135 crore litres from sugarcane juice/syrup.
Uncertainty in Pricing: The Centre has not announced prices for various ethanol feedstocks for 2023-24, despite the ethanol supply year aligning closer to the sugar year.

Low Sugar Stocks: The 2022-23 sugar year ended with low stocks, prompting the government to prioritize domestic sugar supply.
Uncertain Production Forecasts: The National Federation of Cooperative Sugar Factories predicts a decrease in sugar production for 2023-24.
Government’s Prioritization: The latest decisions reflect the government’s focus on domestic supply and consumer needs over exports and fuel production.

Shift in Government Policy: The Centre’s recent actions indicate a shift towards prioritizing domestic sugar availability over ethanol production.
Broader Implications: These decisions impact both the sugar and ethanol industries, reflecting the complex balance between food security and renewable energy initiatives.