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In order to meet the anticipated increase in demand in 2025 when the country aims to adopt 20% ethanol-blended petrol, India is actively supporting the building of both conventional and second-generation (2G) ethanol plants.

Two months earlier than expected, the Indian government began selling 20% ethanol-blended petrol in 11 states in February. The government sees its next move in widening the accessibility by 2025-2026.

According to Sangeet Singla, the head of the Ministry of Consumer Affairs, Food, and Public Distribution, the government expects a 25% increase in the country's total ethanol production capacity by the end of the calendar year 2023.

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The current capacity in India is close to 10 billion litres.

About 70% of the current capacity is accounted for by sugarcane, with the remaining 30% being accounted for by crops like rice and maize.

India now has a capacity to produce about 9.5 billion litres of ethanol, of which 6.2 billion litres are produced using sugarcane feedstock and 3.3 billion litres are produced using grain feedstock.

To quickly enhance output, the government is also actively promoting the construction of 2G ethanol plants.

A deal was recently made between the state-owned power generation business NTPC Ltd. and the Finnish biotechnology supplier Chempolis to look into the possibility of developing a bio-refinery based on bamboo in eastern Assam.

As per NTPC, Bamboo is supposed be employed in the project to create 2G ethanol creation, bio-coal for thermal power plants.

This is Assam's second endeavour to produce ethanol from bamboo. The state-owned Numaligarh Refinery Ltd (NRL) announced plans to build a 2G ethanol facility in Numaligarh in 2018 in collaboration with Finland's Chempolis and Fortum. The NRL project, which is slated to begin operating in 2023, is expected to produce 49,000 tonnes of bio-ethanol and other biofuels yearly.

The Indian government is certain that it will be able to distribute 20% ethanol-mixed petrol throughout the nation by 2025, but industry participants worry that there may be difficulties in achieving this objective.

The two biggest sugarcane-growing states, Maharashtra, and Karnataka have seen a decrease in production as a result of irregular rainfall during the 2022 monsoon season.

Rainfall for sugarcane crops was insufficient throughout the growth stage and excessive when it wasn't needed.

According to a statement released on April 26, ISMA has decreased its anticipated diversion of sugar for ethanol production this year from 4.5 million tonnes to 4 million tonnes due to the lower sugarcane yield.

The sugar sector was expected to divert 5 million tonnes of sugar during the ethanol supply year (ESY) 2022–23, which runs from December 2022 to November 2023.

Due to inconsistent rainfall distribution, the Maharashtra crushing season ended with fewer cane yields than anticipated, according to a statement from ISMA.

The third-largest sugarcane-producing state in India, Karnataka, is expected to see a decline in sugarcane yield, according to the report.

According to the roadmap created by the government's think tank NITI Aayog, 5.42 billion litres of ethanol will be needed for blending with petrol in ESY 2022–2023 and 6.98 billion litres in ESY 2023–2024.

Ethanol Price Trend

North America

A mixed price dynamic has been observed in the North American market in recent months as a result of manufacturing capacity and demand strength. Ethanol prices eventually rose as production capacity increased, and stock remained low.

The rate of employment fell, while the rate of inflation remained consistently higher in the region, influencing final prices. During the food crisis, as well as an increase in energy costs, feedstock (corn) prices remained high.

According to the United States Department of Agriculture (USDA), the stock increased at the end. The Christmas and New Year's holiday seasons, along with the disruption caused by Storm Elliot, lowered general market ethanol prices.

APAC

The general industry dynamics of ethanol in the Asia-Pacific area remained consistent till the conclusion. The Chinese market observed an increase in COVID infection, which restricted domestic production capacity.

During the country's economic disruption, the country's major financial hubs halted production. As the cost of manufacturing increased, ethanol prices began to rebound near the conclusion. The commodity price increased, and the product demand for manufacturing biofuel became more moderate.

Throughout the quarter, the price of energy in the domestic market surged in tandem with the price of coal in the Asian market, affecting the final pricing of ethanol. In addition, limited movement and the national New Year's holiday affected the ultimate cost of manufacturing ethanol.

Europe

In the European market, the price of ethanol has been trending upward. Financial uncertainty persisted in the Europe region, resulting in high inflation and energy costs, which impacted the cost of manufacturing ethanol.

The EU increased its focus on sugar production while also addressing the nation's food scarcity. Ethanol import prices in the country increased from Germany, and customers demonstrated a consistent market trend.

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With rising energy prices, demand for ethanol-blended fuel remained favourable; hence, final prices followed the upward direction.

As per Procurement Resources, to meet the expected rise in demand in 2025, when the country plans to switch to 20% ethanol-blended petrol, India is actively encouraging the construction of both conventional and second-generation (2G) ethanol plants. In February, the Indian government began selling 20% ethanol-blended petrol in 11 states, two months earlier than projected. The government intends to make it widely available by fiscal year 2025-2026.