India unlikely to meet target for biofuel mix
The government is unlikely to meet its deadline of October 2008 for increasing the level of ethanol from 5% to 10% in the ethanol-petrol blend being tried out under the ethanol blending programme.
By TNN |
NEW DELHI: The government is unlikely to meet its deadline of October 2008 for increasing the level of ethanol from 5% to 10% in the ethanol-petrol blend being tried out under the ethanol blending programme. Indications of the missed deadline are becoming clear with sugar industry watchers and experts estimating a dip in sugarcane output in the next sugar year (October 2008 to September 2009) by 20%-25%.
What is likely to be a bigger worry for the government is that experts have projected that India could become a sugar importer by 2010-11. Sources from the ministry of new and renewable energy (MNRE) indicated to ETthe strong possibility of a slowdown in the ethanol blending programme timeline and the extension of deadline for 10% blending. ���The decision does not seem to be very feasible.
There is every possibility of inadequate molasses capacity in the next season and the government may have to rework the deadline. Besides, cane, if it is extracted directly from sugarcane, can affect domestic sugar supply,��� said an official.
Although the issue is of concern to the ministry of agriculture and ministry of petroleum, the MNRE plays an important in co-ordinating the blending programme. The likelihood of missing the deadline comes in the midst of an unprecedented rise in global crude oil prices and India���s aggressive stand in the world forum against the US heavily subsidising corn for biofuel and thus forcing diversion of food crop land to biofuels.
Corn is widely accepted by experts as far less economical and more environmentally detrimental, compared to sugarcane, as raw material for biofuel. Indications that the deadline could be missed also came from the sugar industry. A tighter cane output should spell higher ethanol prices from oilcos, they argue, since ethanol would be competing with alcohol. Sugar companies could find the prices from the latter more tempting to their bottom lines unless the price issue is addressed urgently.
���Unless oil companies offer higher price for ethanol, it may not be viable and profitable for the sugar industry to produce and supply ethanol at the prevailing price which is not lucrative enough,��� said an industry source.
���As of now, the sugar industry has enough capacity to meet the increased demand. However, if sugarcane output comes down, the constraining factor will be the price of ethanol.
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The current price of ethanol (Rs 21.50 per litre) was fixed when crude was trading at $55-60 per barrel. Today, the price of crude has more than doubled. Oil companies need to take this into account,��� added the source. Significantly, if the government plans to stick to its blueprint on the ethanol blending programme, it may, in view of the projections of a sugarcane shortfall in the near future, even have to import ethanol, said the industry source.
Last year, in a bid to aggressively kickstart the programme in the midst of a sugarcane output glut in the country that cost the government thousands of rupees in bailout sops to the industry, food and agriculture minister Sharad Pawar announced the deadline for the mandatory 10% blending of ethanol with petrol.
With a sugar output of about 27 million tonne in 2007-08, India had the potential to produce 2.7 billion litre of ethanol from molasses, which is a by-product. Although there is a situation of under-capacity utilisation in the country now, 10% blending would demand an estimated 1000 million litre per annum, which could be difficult to access in the event of marked sugarcane output shortfall.
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