Overview of the Bio-Ethanol Industry

Ethanol can be produced from grains, rotten potatoes, sugarcane molasses and agricultural/industrial waste. Bioethanol is an eco-friendly and renewable variant of ethanol that has gained popularity as an alternative to petrol. In energy-deficient countries such as India, bioethanol will be crucial to curb the import dependence on conventional energy resources such as coal and petroleum. Bio-ethanol is now being used by Oil manufacturing companies (OMC) to blend with regular petrol under the central government's directions. The government is also focusing on augmenting the production of the Bio-ethanol industry using molasses. It has even developed an Ethanol Blending roadmap for India for 2020-2025. Demand for bio-ethanol as a fuel is being driven by the widespread availability of this eco-friendly fuel, blending mandates by the government and the rise in demand for fuel for vehicles.

 Central and state governments are aiding the stakeholders, viz. producers, OMCs and vehicle manufacturers, by assisting them with the challenges faced with respect to marketing, pricing, technology and, most important regulatory hurdles related to biofuels. The government has reduced GST on the product and initiated the interest subvention scheme on loans for starting the bio-ethanol industry, with the condition that a minimum of 75% of the ethanol should go to OMCs. In the following write-up, we will analyse the scope of the bio-ethanol Industry in India, the benefits of starting this business, and all legalities that will be needed to start its manufacturing in India.

Advantages of setting up of bioethanol Industry in India

The business opportunity created by the introduction of the National Policy on Biofuels (NBP), in 2018, can be attributed to many factors, such as

Push by the government: Ethanol Blending Programme (EBP) was launched by the government in 2003. In 2018, EBP received a boost under the National Policy on Biofuels. Among other things, NPB acted as a guide to producing bio-ethanol that can be blended with petrol.EBP picked up the pace after the re-introduction of administered price mechanism for procurement of ethanol and the direction given by the government to Public Sector Enterprises to set up bio-refineries.

Demand for the product: Ethanol finds competitive usage in portable sectors as well as chemical and pharmaceutical industries. As India aimed to achieve a 10 % blending rate (E10) by ESY 2021-22 and a 20 % (E20) by ESY 2025-26. While the government had earlier aimed to sell E20 blended petrol from 2025, due to the strong growth in ethanol supplies and the benefits of increasing the blending percentage, the government brought forward the target to sell E20 to the year 2023 instead of 2025. Data released by the government showed that India had achieved E10, with an annual average blending rate of 9.5 per cent.

Increase in remunerative prices: This growth of the Bio-ethanol Industry can be attributed primarily to remunerative prices paid to ethanol suppliers. The government has introduced B heavy molasses for ethanol and 100% sugarcane juice from ESY 2018-19. The remunerative price increased from C Heavy molasses to Rs 45.7 per litre; for Ethanol from B Heavy molasses and 100% sugarcane juice increased to Rs 57.61 and Rs. 62.65 per litre respectively, thereby starting a new era of differentiated ethanol pricing.

Schemes to support 2G Bio-ethanol Industry: Government of India has launched the project "PM JI-VAN Yojana" to provide financial assistance to Integrated Bioethanol Projects using lignocellulose biomass and other renewable feedstock. The scheme's objective is to support commercial scale and demonstration scale 2G ethanol Projects with Viability Gap Funding.

In July 2018 & March 2019, the government notified two interest subvention schemes for molasses-based distilleries. Under the scheme mentioned above, interest subvention at the rate of 6% per annum or 50% of the rate of interest charged was borne by the central government for 5 years.

Supportive FDI Policy: Foreign investors proposing to set up a 2G Ethanol Project in India are also eligible for the“PM JI-VAN Yojana” scheme. However, all statutory provisions related to the FDI limit would be applicable.

How to produce 2G ethanol from Molasses

Bioethanol is mostly produced from sugar and starch-containing raw materials, i.e. sugar feedstock, starch feedstock and lignocellulose feedstock. ABE fermentation is used to make bioethanol from different feedstocks such as corn, soybeans, wheat straw, woodchips etc. Unlike first-generation ethanol, the conversion of cellulosic feedstocks to ethanol is complex. Cellulosic biomass is first pre-treated either chemically or enzymatically to break down the polymeric units and increase the accessibility of C5-C6 sugars for fermentation to produce ethanol. The most popular process of bioethanol production comprises the following stages:

• Pre-treatment
• Enzyme Hydrolysis
• Yeast fermentation
• Distillation/Dehydration

Licences and Approvals required to Start Bioethanol Industry

BIS Certification: National Biofuels Policy indicates that all biofuels/alternate fuels/drop-in fuels must conform to the relevant Indian Standards. Ethanol produced in the country must meet BIS standards IS 15464 (2004).

PESO licence: As per an order passed by NGT, it is now mandatory for distilleries and sugar mills producing ethanol to obtain a license from the Petroleum and Explosive Safety Organisation of India. PESO has issued safety measures for distilleries for the storage and supply of ethanol to oil firms.

Factory License: A bioethanol manufacturing unit will come under the definition of ‘factory’ under the Factories Act, of 1948 and will, thereby, require this licence

Consent NOC: A Bio-ethanol industry must obtain Consent certificates before establishing the unit. Consent to Establish (CTE) and Consent to operate (CTO) will have to be obtained from the concerned State Pollution Control Board.

Additional Licences required to set up a Bio-ethanol industry

• Business Registration
• MSME registration
• Fire NOC
• CGWA NOC
• Tie-up with a TSDF operator for waste disposal

Documents needed for Bioethanol Plant setup

• Site Plan or layout plan.
• Proof of ownership of site or rent/lease agreement;
• Electricity bill
• Details of the machinery installed.
• Details of Pollution control devices
• Aadhar and PAN Card
• GST Certificate
• Process flow chart
• Signed Undertaking
• Industry Registration Proof
• Detailed Project Report with total investment.
• Details of processes and the sources of discharge such as air emission/solid waste/hazardous waste etc.
• Balanced Sheet Certified by a CA
• Copy of CTE/CTO
• Proof of Consent fee
• Laboratory analysis report of the effluent and air emissions.
• Environment Clearance (if applicable)

Registration Process for Consent NOC for a Bio-ethanol industry

Obtaining the abovementioned licences and approvals in a time-bound manner will require the project proponent to strategise and arrange documents for every application process, which can be challenging and time-consuming. Assistance in procedural legalities can give the business the crucial advantage of time and precise planning to focus on their business. The Pollution NOC from the Pollution Control Board has been explained to provide a general idea of the basic procedure.

Market overview of the Molasses-based Bio-ethanol industry

In ESY 2021-22, 3.75 bn litres of ethanol was produced in India for blending with petrol. About 84 % of it came from sugarcane juice, B-heavy and C-heavy molasses, 10% from FCI's rice stocks, and the remaining 5 % from maize/damaged food grains. India will need 10.16 bn litres of ethanol to achieve E20 by 2023. Of this, 55 per cent or 5.59 billion litres will come from sugarcane (and its products) and the remainder from grains, including rice (from FCI and open market), maize, and more. By 2025-26, all the excess sugar (around 60 LMT annually) will likely be diverted every year to ethanol production, hinting at the massive demand for the product in the near future.

Scope of the Ethanol Industry

India is the third largest energy consumer worldwide and will soon face a greater fuel demand. To reduce its reliance on the import of crude oil from other countries, India has been searching for the perfect substitute for crude oil and has found one in the form of bio-ethanol. At a 20% blending level, bio-ethanol demand is expected to increase to 10.16 bn litres by 2025. The worth of the bio-ethanol industry can increase by more than 500%, i.e. from Rs. 9,000 crores to over Rs. 50,000 crores. The demand will require an increase in distillation capacity in the country by more than three times to 1,500 Crore litres annually.

How will Enterclimate Assist You?