In India, India’s aim to blend 20% ethanol in petrol by ESY1 2025 — or ~990 crore liter annually — will require effective utilization of both grain and sugarcane feedstock to increase its supply. Annual ethanol production from grains is expected to see a significant increase to ~600 crore liter by the next season (this season’s production estimate is ~380 crore liter). The balance will have to be produced by processing ethanol from sugarcane, which is viable given the substantial capacity in place.
This, in turn, can help optimize sugar inventory, particularly considering the high carry-over stock expected at the end of the current season owing to the government restriction on diversion for ethanol production and exports.
A CRISIL Ratings analysis of 17 integrated sugar mills, accounting for about one-third of sugar-based ethanol supply, indicates as much. Blending ethanol helps reduce India’s dependence on crude oil imports. The ethanol blending rate has steadily risen 200-300 basis points each season since ESY 2021.
While grain utilization for producing ethanol is not controlled, the government determines the quantum of sugarcane utilization based on its estimation of demand-supply balance of sugar for the year ahead.
Last year’s erratic rainfall is expected to have impacted sugarcane production3 this year. Consequently, ethanol production from the sugarcane route is expected to be restricted to ~250 crore liter (equivalent of 2.5 million tonne of sugar) this season.
Tags: CRISIL Ratings, E20, India
Category: Fuels
