Biofuel Policy

India’s ethanol conundrum

Note4Students

From UPSC perspective, the following things are important :

Prelims level: NAFED and NCCF

Mains level: alternatives to ethanol dependence

Resolving India's Ethanol Conundrum - Sugar Asia Magazine

Central idea 

The article discusses India’s challenges in achieving its 20% ethanol blending target by 2025, focusing on the transition to grains-based ethanol and potential impacts on food prices. It highlights the trade-offs between renewable energy goals and the risk of uncontrollable food inflation, urging a reconsideration of targets and exploration of alternative energy sources.

Key Highlights:

  • Renewable Energy Pledge: Over 100 countries commit to tripling global renewable energy capacity by 2030 at COP28 in Dubai.
  • Ethanol Blending in India: Ethanol blended petrol (EBP) in India rose from 1.6% (2013-14) to 11.8% (2022-23), aiming for a 20% target by 2025.
  • Challenges with Ethanol Target: Low sugar stocks and potential sugarcane production shortfall pose challenges to India’s 20% ethanol blending target by 2025.
  • Shift to Grains-based Ethanol: Government explores a transition to grains-based ethanol, emphasizing maize procurement for ethanol distilleries.
  • National Agricultural Cooperative Involvement: Authorization of NAFED and NCCF to procure maize signals a focus on an organized maize-feed supply chain for ethanol.

Key Challenges:

  • Low Sugar Stocks: Current low sugar stocks impact ethanol production from sugarcane, necessitating a shift to alternative feedstocks like maize.
  • Sugarcane Shortfall: Impending shortfall in sugarcane production poses a challenge to meeting ethanol blending targets.
  • Food-Fuel Trade-off: Transition to grains-based ethanol raises concerns about diverting grains from food production, potentially impacting food prices.
  • Ethanol Price Dynamics: Link between ethanol, crude oil, and corn prices can create market volatility, affecting global food prices.

Key Terms:

  • Ethanol Blended Petrol (EBP): A fuel blend containing a certain percentage of ethanol mixed with petrol, aimed at reducing fossil fuel usage.
  • National Agricultural Cooperative Marketing Federation of India (NAFED): Cooperative organization involved in agricultural marketing and procurement.
  • Food-Fuel Conflict: The trade-off between using agricultural products for food or fuel production, influencing global food prices.
  • Differential Pricing: Varied pricing mechanisms to incentivize specific inputs or outputs in the production process.

Key Phrases:

  • Tightrope Walk: India faces a tightrope walk in achieving its ethanol blending target amidst challenges in feedstock availability.
  • Food Inflation Spectre: The transition to grains-based ethanol raises concerns about potential uncontrollable food inflation.

Key Quotes:

  • “The recent authorization of NAFED and NCCF to procure maize for supplying ethanol distilleries indicates emphasis on this transition…”
  • “By adopting a transition to grains-based ethanol to fast-track the 2025 target achievement, is the government hurtling towards a looming spectre of uncontrollable food inflation?”

Key Statements:

  • The government considers a major transition towards grains-based ethanol to meet the 20% blending target by 2025.
  • The December 7, 2023, order bans the use of cane juice for ethanol production, addressing challenges related to reduced sugar stocks.

Critical Analysis:

  • The article critically evaluates the challenges and trade-offs associated with India’s ethanol blending targets, considering the impact on food prices and market dynamics.
  • It questions the potential risks of transitioning to grains-based ethanol, emphasizing the need for a balanced approach to avoid food inflation.

Way Forward:

  • Reconsidering the ethanol blending target and staggering it to mitigate contradictions is suggested.
  • Advocates for increased investment in public infrastructure, urban design, and renewable energy sources like solar power as alternatives to ethanol dependence.

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