Ethanol
Ethonal Market
Maharashtra is the leading state in ethanol production, with an annual production of 2.68 billion litters, followed by Uttar Pradesh and other major producing states. The ethanol market in India has been growing steadily, with the country aiming to increase the share of ethanol in gasoline to 20% by 2025-26, up from 13% currently. As of May 2024, India has already reached a 15% level of ethanol blending in its fuel mix. The Indian ethanol market is expected to reach $6.2 billion by 2033, growing at a CAGR of 14.5% from 2024 to 2033
The government is considering a proposal to increase ethanol prices for the season starting November 2024, while also pushing for diversification of feed stocks. Additionally, India plans to raise the ethanol blend above 20%.
Ethanol in India is primarily produced from sugarcane and various grains. Ethanol’s potential as a sustainable fuel source is gaining attention, with fermentation being the most common production method. India has made significant progress in its Ethanol Blending Program. This achievement in the course of last 8-10 years has not only augmented India’s energy security but also translated into a forex impact of over Rs.41,500 crores, reduced Green House Gas (GHG) emissions of 27 lakh Metric Tonne (MT) and also led to the expeditious payment of over Rs.40,600 crores to farmers.
The international ethanol market is booming, with its value projected to hit $145.6 billion by 2032, growing at a CAGR of 6.8% from 2023 to 2032. The United States, Brazil, and China are leading producers, with corn and sugarcane being primary feedstocks
Ethonal Production
India’s ethanol production has been steadily increasing, with the country aiming to achieve a 20% ethanol blending target by 2025. As of 2022, India’s ethanol production capacity stands at 684 crore liters, with molasses-based distilleries contributing 426 crore liters and grain-based distilleries contributing 258 crore liters. The government plans to expand production capacity to 1.5 billion liters by 2025 to meet growing demand
The growth drivers for India’s ethanol production include increased demand for fuel additives, government support through initiatives like the National Biofuel Policy, and rising health consciousness. Ethanol’s use in disinfectants and hand sanitizers has increased due to growing health awareness. Additionally, the government’s push for ethanol production has led to a six-fold increase in ethanol storage capacity since 2017.
In 2022-23, India produced 443 crore liters of ethanol, exceeding the target of 433 crore liters. The country has made significant progress in ethanol blending, achieving a 10% blending rate in 2022. To further boost production, the government is exploring alternative feedstocks like corn and other grains to reduce dependence on sugarcane molasses. The adoption of E20-compliant vehicles is also expected to drive ethanol demand, supporting India’s vision for a sustainable energy future.
The international ethanol production landscape is dominated by the Americas, with the United States, Brazil, and Argentina accounting for over 70% of global production. As of 2022, global ethanol production reached 113 billion liters, with the United States producing 63 billion liters, Brazil 32 billion liters, and Argentina 4.5 billion liters.
Ethonal Consumption
India’s ethanol consumption has been steadily increasing, driven by the government’s push for ethanol blending in petrol. The country has made significant progress, achieving a 10% blending rate in 2022, up from just 1.5% from 2005-2014. This growth is expected to continue, with the government aiming for a 20% ethanol blending target by 2025.
The United States, Brazil, and China are the largest consumers, accounting for 55%, 20%, and 10% of global consumption, respectively. Ethanol is primarily used as a transportation fuel (90%), with the remaining 10% used in industrial applications, beverages, and pharmaceuticals
The ethanol consumption growth is largely driven by the transportation sector, with the government promoting the adoption of E20-compliant vehicles. In fact, it’s estimated that by 2025-26, around 25% of vehicles will be E20 compliant, contributing significantly to ethanol demand. Additionally, the government’s National Biofuel Policy has proposed an indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030.
India’s ethanol story is one of enormous grit and perseverance, with the country emerging as a significant player in the global ethanol market. With a growing energy demand and high reliance on imports, the government is keen to promote ethanol as a sustainable alternative fuel source. The progress made so far is a testament to India’s commitment to reducing its carbon footprint and achieving energy security