New Delhi: Centre's move to allow the direct sale of ethanol as a fuel for compatible automobiles is expected to boost demand, said India Ratings and Research (Ind-Ra).
According to the agency, the move assumes significance especially for the sugar industry as India might not be able extend export subsidies beyond 2023, according to the decisions taken at the World Trade Organisation's Nairobi Ministerial meeting in December 2015.
"Of the total contracted quantity of 3 billion litres for ethanol supply season 2020-21, 0.8 billion litres of ethanol had been supplied till the first week of March, indicating a blending rate of around 7 per cent, though states such as UP, Maharashtra, Karnataka, Uttarakhand and Bihar achieved a higher blending rate of up to 10 per cent," the report said.
"About 78 per cent of the total ethanol supplied comprised ethanol made from cane juice or B-heavy molasses."
Recently, Centre had proposed to advance the deadline for blending 20 per cent ethanol in petrol from the earlier announced 2030 to 2024.
The use of 20 per cent doped petrol or E20 decreases the carbon monoxide and hydrocarbons emissions significantly, compared to normal gasoline in two-wheelers and four-wheelers.
The increased blending will also reduce use of polluting fossil fuel in the country.
The Ministry of Road Transport and Highways has already notified the use of E20 and issued mass emission standards for the same.
Now it is up to the oil companies and automobile companies to build capacities for both production and use of E20.
Accordingly, the next two years would also give sugar mills time to convert excess sugarcane or sugar for producing higher quantity of ethanol required for blending with petrol.
The government had earlier fixed a target of 10 per cent ethanol blending by 2022 and 20 per cent by 2030. But the plan now is to directly migrate to 20 per cent as the level of blending is successively being used in a few countries such as Brazil.