People's Democracy

New Policy On Ethanol-blended Petrol

Will Less Sugar Be More Sweet?

Raghu

THE government has been actively pursuing a policy of promoting ethanol- blended petrol (EBP). Petrol blended with five per cent ethanol (E5 petrol) was introduced during the NDA regime on a pilot basis in several states and later extended throughout the country. Ostensibly to also bail out sugar mills facing huge debts to sugarcane farmers and a sizeable surplus of sugar, a Group of Ministers decided last year to make blending of petrol with 10 per cent ethanol (E10 petrol) mandatory by October 2008.

In India, ethanol has always been sourced from molasses which are a by-product of the sugar industry. In December 2007, however, the union government notification under the Sugarcane (Control) Order, 1966, permitted the manufacture of ethanol directly from sugarcane juice. Different states have now started implementing this, the latest being UP, India�s largest sugarcane producing state.

These new policies mandating E10 petrol and permitting ethanol production directly from cane juice instead of from molasses have far-reaching implications cutting across different sectors of the economy and society.

THE FUEL

EBP is the world�s most widely used bio-fuel, and the ethanol used for fuel dosing accounts for about 70 per cent of global ethanol production estimated at around 42,000 million litres. With oil prices skyrocketing, global interest and investment in EBP have risen sharply.

Ethanol as an additive to petrol enables more efficient combustion. Alcohol, unlike petroleum, diesel or vegetable oils, contains oxygen which helps burn the fuel more completely and reduces emissions of unburned hydrocarbons, carbon monoxide and particulate matter. It has been estimated that ethanol blending can reduce emissions of volatile organic compounds by 27 per cent and particulate matter by 41 per cent.

Production of potable alcohol by fermenting sugars has been known for centuries and contemporary technologies are industrial-scale versions of the basic process. Sugars themselves can be obtained from a variety of materials such as sugarcane juice, molasses, fruit juices and starchy crops such as potato, cassava, corn etc. Producing alcohol from starchy material is, of course, less energy efficient since the starch must first be converted to sugar and then to alcohol. A promising option albeit for the future, since commercially viable technologies are not yet available, is production of ethanol from cellulose contained in diverse agricultural and forest residues such as cereal stalks, straws, leaves and so on.

Unfortunately, there is no clarity yet among concerned authorities in India as to standards for E10 gasoline. It is believed the new standards would be termed IS:2796-2008 superseding the earlier IS:2796-2000. The Bureau of Indian Standards had some information on their website for a while but this has since been removed! Interestingly, BIS functions under the ministry of consumer affairs, food and public distribution, but is headed by agriculture minister Sharad Pawar whose concern for the sugar industry is well known.

It should be noted that the energy content in ethanol is about one-third that of petrol, therefore vehicles using EBP would always have less mileage than those using gasoline alone.

It is often claimed, especially in ethanol industry literature, that ethanol up to 25 per cent can be added to petrol safely without requiring any modifications to the vehicle engine. However, practical experience especially in the automobile industry leads to different conclusions.

RELATION

WITH ENGINES

Brazil has undoubtedly the maximum experience with EBP, since that country has had an active ethanol programme over several decades. Currently ethanol substitutes around 40 per cent of total vehicular petrol in Brazil. Fuel is available in Brazil in the form of pure gasoline, E25 or E100, both the latter requiring specially-designed engines. Brazilian manufacturers have developed and introduced Fully Flexible Fuel Vehicles (FFFV) that can run on either pure petrol or ethanol or a blend of the two in any proportion. With over four million FFFVs on Brazil�s roads, these vehicles have engines with electronic control systems that analyse the blend and automatically adjust the combustion accordingly, leaving users with freedom to choose fuels depending on current market prices.

In India, no attention has been paid to the engine side of EBP. Vehicles running on E5 have reported no problems either directly or when switching back and forth between EBP and pure gasoline. However, E10 may require some work on the engines. While new vehicles can easily be made E10 compliant, there could be several problems with existing vehicles, of which only later models in Maruti�s fleet and the new Chevrolet Spark appear to be E10 compatible. If engines tuned for E10 run on pure petrol due to, say, non-availability of the former, the vehicle could experience problems such as knocking. E10 is also expected to have lower mileage, higher nitrous oxide emissions and corrosion of vehicle parts such as fuel pipes, exhaust systems and catalytic converters.

The Society of Indian Automobile Manufacturers (SIAM) has expressed reservations about using E10 fuel in vehicles already on the road, and have even begun tests on vehicles especially two-wheelers in collaboration with some oil companies. Even in highly �green� Germany, representatives of different political parties and industry groups have criticized a February 2008 government plan to raise compulsory bio-ethanol dosing of some grades of petrol to 10 per cent citing worries over fuel consumption and damage to older cars driven by workers and lower income groups.

In India too, plans are to sell the standard petrol dosed with 10 per cent ethanol, whereas more expensive branded petrol such as �Extra Premium�, �Speed� etc would still be available without ethanol but at a premium price. Still, transitional pains, lower mileage and possible engine problems would be faced by those driving two-wheelers, older four-wheel vehicles and those finding it difficult to afford premium brands.

ETHANOL

AVAILABILITY

Perhaps the most important questions about the new E10 policy, indeed about the entire bio-fuels issue, relate to sustainability. Let us look at availability first.

Total sugarcane production in India is about 280 million tonnes. On all-India average, about 60 per cent of sugarcane is used for producing sugar and 30 per cent for jaggery with the balance going towards seeding the next year�s crop. Normally, ethanol is produced almost entirely from molasses left over after the extraction of sugar syrup which is processed to yield either sugar or jaggery, and thus has no impact on production volume and hence prices of the latter.

In 2007, production of sugar was 29mt (million tonnes), up from 28mt the previous year, with domestic consumption of 19mt. The sugar industry by and large welcomed the EBP policy and going from E5 to E10. On the face of it, sugar availability and prices too should not be a concern with such surpluses in production. A closer look, however, tells a different story.

India presently produces about 1900 million litres of alcohol annually from molasses, of which about 700 million litres go for liquor, 600 million litres for industrial uses, leaving about 600 million litres for the 5 per cent blending of petrol. (It should be noted that these figures from 2005-6 are approximate, particularly since off-take for the liquor industry, which dominates the use of alcohol from molasses, are notoriously unreliable). If India is to move to 10 per cent blending, about 1200 million litres of ethanol would be required.

Clearly this cannot come from molasses alone. It also needs emphasis that ethanol for blending with petrol has to be completely free of water, making its distillation process more rigorous than for potable alcohol and demanding separate production lines. So where will the additional ethanol come from, and with what consequences?

SUSTAINABILITY

In 2007, the industry was struggling to cope with ethanol demand for E5 petrol. This was partly due to pricing of ethanol at Rs 18.75/litre which neither sugar mills nor oil companies found profitable enough and some states chose simply not to produce ethanol from molasses. Sugar mill owners also wanted greater protection from downturns in sugar prices, partly addressed by raising ethanol procurement price to Rs 21.50/litre.

But pricing was not the only issue. Different states implemented the E5 policy differently and there is no reason to believe that E10 will fare any better. Other complexities, such as greater excise revenues from liquor and impediments to inter-state movement of alcohol, further muddied the waters. Net result of all this was the seldom mentioned fact that India has been a net importer of ethanol since 2002, notably from Brazil especially since 2005.

The December 2008 notification, bowing to the wishes of the sugar mill owners, also sought to address problems of production costs and availability by permitting the manufacture of ethanol �either directly from sugarcane juice or from molasses, including B-Heavy molasses, or both.�

Ethanol is usually made from the final �C�-stage molasses. Processing efficiencies increase, and costs therefore come down, if alcohol is manufactured from either intermediate �B�-stage molasses or directly from sugarcane juice itself. However, there are trade-offs in terms of sugar and alcohol yield as shown in the Table below.

Clearly, the new policy will result in lower sugar production. Sugar industry estimates are that E5 petrol blending resulted in diversion of about two million tonnes of sugar whereas E10 through the now-permitted new routes may reduce stocks by as much as 10 million tonnes.

BRAZIL

& INDIA

It is often argued that Brazil makes ethanol from cane juice, so why cannot India? Comparisons with Brazil are entirely misleading.

Brazil produces much larger quantities of sugarcane, 50 per cent of which goes for sugar and 50 per cent for ethanol. Brazilian sugar exports have been around 30 per cent of total production for a long time whereas, in India as we have seen, sugar surpluses are marginal and transient, with constant anxiety that a drop in sugar production could lead to spiraling domestic prices and hoarding. Thus in 2007, despite supposedly large surpluses of around 11 million tonnes, government permitted exports of only 1.5 million tonnes, and exports were banned altogether between July and January when international prices fell from 450 dollar to 330 dollar per ton. Private agencies were even allowed limited imports of sugar so as to prevent domestic prices from rising. Conclusion must surely be that current surpluses are marginal and transitory, and that India�s sugar production is just about on par with domestic consumption, leaving little room for large-scale diversion of cane juice for ethanol.

And India does not have surplus agricultural land that it can divert to sugarcane cultivation not any sizeable reserve of uncultivated land it can draw upon, both of which are possible in Brazil.

Yet another and striking difference is that Brazil has adopted a policy of meeting at least 10 per cent of its fuel needs for transport with ethanol, and is promoting this goal internationally with India having declared it will try and follow suit. However, 70-80 per cent of vehicles in Brazil run on petrol whereas in India close to 70 per cent of vehicles run on diesel!

Using molasses for ethanol production is one thing but using cane juice directly is quite another. India would do well to heed the cautionary dictum on bio-fuels: agricultural land use should follow the hierarchy of �food first�, then �feed for livestock� and lastly �fuel�.