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What does the government's move to increase bioethanol in petrol mean?  

18th August, 2020 Environment

Context: The government has set targets of 10 percent bioethanol blending of petrol by 2022 and to raise it to 20 per cent by 2030 under the ethanol-blending programme to curb carbon emissions and reduce India’s dependence on imported crude oil.


What are 1G and 2G biofuels plants?

  • 1G-bioethanol plants utilize sugarcane juice and molasses, byproducts in the production of sugar, as raw material, while 2G plants utilise surplus biomass and agricultural waste to produce bioethanol.
  • Currently, domestic production of bioethanol is not sufficient to meet the demand for bio-ethanol for blending with petrol at Indian Oil Marketing Companies (OMCs).
  • Sugar mills, which are the key domestic suppliers of bio-ethanol to OMCs, were only able to supply 1.9 billion liters of bio-ethanol to OMCs equating to 57.6 per cent of the total demand of 3.3 billion liters.


Why are Indian plants not able to meet the demand for bio-ethanol?

  • Experts point out that many sugar mills, which are best placed to produce bioethanol, do not have the financial stability to invest in biofuels plants and there are also concerns among investors on the uncertainty of the price of bioethanol in the future.
  • The prices of both sugarcane and bio-ethanol are set by the central government.
  • The price of obtaining agricultural waste required for the production of bio-ethanol at 2G plants was currently too high for it to be viable for private investors in the country.
  • The expert noted that state governments needed to set up depots where farmers could drop their agricultural waste and that the central government should fix a price for agricultural waste to make investments in 2G bioethanol production an attractive proposition.


What can be done to boost investment in bioethanol production?

  • The government could provide greater visibility on the price of bioethanol that sugar mills can expect by announcing a mechanism by which the price of bio-ethanol would be decided.
  • The impetus for bioethanol uptake was driven by the government worldwide, and a target that a certain percentage of ethanol blending be done using ethanol generated from 2G plants would help boost investment in the area.