Government bans ethanol making from sugar juice & syrup

The central government has issued a directive to all sugar mills, prohibiting the use of sugarcane juice or syrup for ethanol production in the current year. However, the production of ethanol from B-heavy molasses has been permitted. This directive stems from the anticipation of a decline in sugar production during the 2023-24 season, which could lead to scarcity and increased prices.

The 2023-24 sugar season commenced in October, while the ethanol supply year (ESY) started in November. In the preceding ESY (December-October 2022-23), it was reported that approximately 1.26 billion liters, a quarter of the 4.94 billion liters of ethanol produced in the country, were derived from sugarcane juice or syrup. Additionally, around 47 percent, equivalent to 2.33 billion liters, came from B-heavy molasses, and the remaining 1.3 billion liters originated from grain-based sources.

According to reports, the government’s directive could result in over 2 million tonnes of sugar being reintroduced into total supplies in the 2023-24 ESY by preventing sugar companies from producing ethanol using cane juice and syrup. The absence of pricing for sugarcane-based ethanol this year may be attributed to uncertainties about the impact on sugar supplies due to the ethanol program.

Despite concerns about sugar production, the government aims to maintain the ethanol blending program (EBP), envisioning a 20 percent ethanol blend in petrol by the ESY 2025-26. Ethanol in India is predominantly produced from sugarcane-based molasses and grain-based sources. In sugarcane, it can be derived from sugarcane juice or syrup, B-heavy molasses, and C-heavy molasses.

Government sources assert that the directive will not lead to any dilution in the EBP, emphasizing the commitment to achieve the 20 percent ethanol blending target by the ESY 2025-26.