Cabinet approves modified scheme to enhance ethanol distillation capacity
Part of: GS Prelims and GS-III – Infrastructure; Environment; Agriculture
- There has been surplus production of sugar in the country since sugar season 2010-11.
- Sugar production is likely to remain surplus in India in coming years due to introduction of improved varieties of sugarcane.
- To deal with surplus stocks of sugar, sugar mills have been exporting sugar, for which Government has been extending financial assistance.
- India being a developing country can export sugar by extending financial assistance only up to year 2023 as per WTO arrangements.
- So, diversion of excess sugarcane & sugar to ethanol is a correct way forward to deal with surplus stocks.
- Thus, recently Cabinet has approved modified scheme to enhance ethanol distillation capacity.
- Diversion of excess sugar would help in stabilizing the domestic ex-mill sugar prices.
- It will also help sugar mills to get relieved from storage problems.
- It will improve their cash flows and facilitate them in clearance of cane price dues of farmers.
- Government has fixed target of 10% blending of fuel grade ethanol with petrol by 2022, 15% blending by 2026 & 20% blending by 2030.
- With a view to support sugar sector and in the interest of sugarcane farmers, the Government has also allowed production of ethanol from B-Heavy Molasses, sugarcane juice, sugar syrup and sugar.
- To increase production of fuel grade ethanol, Govt. is also encouraging distilleries to produce ethanol from maize; & rice available with FCI.
- Government has fixed remunerative price of ethanol from maize & rice.
- Government is also planning to prepone achievement of 20% blending target by year 2025 and onwards.
- With increase in blending levels, dependence on imported fossil fuel will decrease and will also reduce the air pollution.
Also, the Government has taken following decisions:
- To bring a modified scheme for extending interest subvention to augment ethanol production capacity.
- Government would bear interest subvention for five years including one year moratorium against the loan availed by project proponents from banks at 6% per annum or 50% of the rate of interest charged by banks whichever is lower.
- Interest subvention would be available to only those distilleries which will supply at least 75% of ethanol produced to Operations Management & Control System (OMCs) for blending with petrol.
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- Proposed intervention would enhance production of 1G ethanol from various feed stocks thereby, facilitate in achieving blending targets of ethanol with petrol.
- It would promote ethanol as a fuel which is indigenous, non-polluting and virtually inexhaustible.
- It would improve the environment and the ecosystem and result in savings on Oil Import Bill.
- It will also ensure timely payment of dues to farmers.