India’s Ethanol Blending to Reach Record 5.8% This Year

India’s average blending rate for ethanol in gasoline is expected to reach a record 5.8 percent, up from a previous record of 4.1 percent last year.

A surplus sugar season coupled with a strong incentive to convert the excess into ethanol is expected to help the oil marketing companies procure upward of 2.4 billion litres of ethanol this year. This was the findings of the USDA Foreign Agricultural Service (FAS) report titled, ‘India: Biofuels Annual 2019‘.

An upsurge in demand for the ethanol blending program and consequent tight supply for industrial and potable use will encourage ethanol imports (mostly denatured) to grow 19 percent year-over-year to a record 750 million litres.

The report further added that in theory, all ethanol available in 2019, if used completely for the ethanol blending programme, would meet a 6.6 percent blend rate.

The program stipulates procurement of ethanol produced directly from B-heavy molasses, sugarcane juice, and damaged food grains such as wheat and broken rice.

Ethanol consumption for fuel and non-fuel use will outgrow production for the fifth consecutive year, more so in 2019 due to the upsurge in demand of fuel ethanol for blending with gasoline. In 2019, supply to industrial and potable sectors will be limited by higher prices, which will lead to more demand being met by imports as compared to the previous year. ” A recently introduced import license requirement for importing ethanol (for non-fuel use) is most likely to delay imports, if not stop them altogether,” the report said.

Biodiesel loses sheen

In contrast, biodiesel market penetration will remain stuck at last year’s level (0.14 percent) due to limited supply, insufficient feedstocks, supply chain constraints, and restrictions on imports. “The majority of the biodiesel produced goes mostly to informal sectors, and the support received through OMCs procurement is not enough to pull demand significantly, a further constraint on market development” the USDA report said.

The recently notified requirement to apply for an import license also applies to biodiesel and will limit purchases to an estimated 12 million litres, which is half the amount from last year. Export sales will grow in response to steady demand from traditional buyers, but at a relatively slower pace.

Under the new 2018 biofuels policy, the raw materials identified for production of biodiesel include non-edible oilseeds, used/waste cooking oil (UCO), animal tallow, acid oils, and algal feedstock. There is a renewed focus on developing a suitable collection mechanism to increase UCO supply for biodiesel production while imposing stringent rules to eliminate UCO entry into the food stream.

India’s new biofuel policy seeks to achieve a national average of 20 percent blending of ethanol with gasoline and 5 percent blending of biodiesel with conventional diesel by 2030. Commercial-scale biofuel production covering cellulosic and renewable fuels have not become viable in India yet. This suggests that imported feedstock and conventional biofuels will likely remain critical to meet India’s longer-term blending goals, especially given the projected growth of India’s fuel pools, the report concluded.

To read the report in detail, click here