The Union government has announced a pivotal policy shift, permitting sugar mills to utilize cane juice or syrup to produce ethanol for the upcoming Ethanol Supply Year (ESY) 2024-25, starting November 1, 2024. This significant update, disclosed in a notification on August 29, 2024, lifts the previous cap on the amount of sugar that could be diverted for ethanol production. This initiative is part of a broader strategy to enhance the nation’s renewable energy capabilities and reduce dependence on fossil fuels.
Under the new policy, sugar mills and distilleries will have the flexibility to produce ethanol not only from cane juice and syrup but also from B-Heavy and C-Heavy molasses. The Ministry of Consumer Affairs, Food and Public Distribution stated, “Sugar mills and distilleries are allowed to produce ethanol from sugarcane juice/sugar syrup, B-Heavy molasses as well as C-Heavy molasses during ESY 2024-25 as per the agreement with Oil Marketing Companies (OMCs).”
Boosting Ethanol Production to Support Renewable Energy Goals
This policy adjustment aligns with the government’s broader objective of promoting renewable energy and reducing the country’s reliance on fossil fuels. By enabling sugar mills to use various sugar derivatives, the policy aims to increase ethanol production and improve the efficiency and adaptability of the ethanol supply chain.
In a complementary move to bolster ethanol output, the government has also allowed distilleries to procure up to 2.3 million metric tons of rice from the Food Corporation of India (FCI) exclusively for ethanol production. This step is expected to further the government’s ethanol blending program, which seeks to blend ethanol with fuels, thereby reducing greenhouse gas emissions and enhancing energy security.
Ensuring Domestic Sugar Availability and Monitoring
To maintain domestic sugar supply stability, the Department of Food and Public Distribution (DFPD) will collaborate closely with the Ministry of Petroleum and Natural Gas (MoPNG) to monitor and review the diversion of sugar for ethanol production. A statement from the Ministry of Consumer Affairs, Food and Public Distribution underscored this commitment: “DFPD, in coordination with the MoPNG, shall periodically review the diversion of sugar to ethanol production vis-a-vis the production of sugar in the country, so that year-round sugar availability for domestic consumption is maintained.”
Market Reactions and Economic Implications
The announcement of this policy change has positively impacted the market, with shares of nearly all major sugar companies experiencing significant gains. Companies such as Dalmia Bharat Sugar, Shree Renuka Sugar, Triveni Engineering, and Bajaj Hindusthan saw their stocks rise by up to 16 percent. The policy is expected to provide a boost to the sugar industry by opening new revenue streams and enhancing profitability through ethanol production.
Conclusion
This latest policy shift reflects the Indian government’s ongoing commitment to sustainable energy practices and its strategic approach to reducing the carbon footprint of the country’s energy sector. By expanding the range of feedstocks allowed for ethanol production, the government aims to bolster the country’s renewable energy sector while ensuring a stable supply of sugar for domestic needs. The collaboration between various government departments and the proactive involvement of sugar mills and distilleries will be crucial in realizing these goals and ensuring a balanced approach to energy and food security.