Ethanol Blending Current Affairs - 2020

Indian Oil to set up new 2G Ethanol Plant in Panipat

The Indian Oil Corporation recently received environment clearance from Ministry of EFoCC (Environment, Forest and Climate Change), to set up a new 2G Ethanol plant at Panipat. Indian Oil will invest Rs 766 crore in setting up the plant.


  • The Ethanol produced in the plant will be exclusively used to blend transportation fuels
  • The project also aims at doubling farmers income


The Government is trying in every way to reduce the dependence on petroleum products like petrol and diesel. The GoI recently notified that no Environmental Clearance is required for sugar mills to produce more ethanol from sugarcane juice.

Ethanol as Fuel

Ethanol is most often used as motor fuel. It is predominantly used as a biofuel additive for gasoline. Brazil was the first country to produce Ethanol run car (the first ethanol run vehicle in the world) in 1978.

Ethanol in India

India initiated the use of Ethanol as a fuel in 2003. India began its journey with E5 fuel which uses 5% Ethanol and 95% diesel. In 2006, India began its second phase of E10 biofuel which consists of 10% Ethanol and 90% Diesel.

India is yet to launch E15 officially. However, the E15 outlets have grown from 180 in the year 2016 to 394.

Indian Government has set a target of 22.5%. In November, 2019, IOCL, HPCL and BPCL announced that they are investing 586 million USD to achieve the target. Around 7 ethanol producing units will be launched according to the plan.

While other countries have entered E100, India is just putting its baby steps towards biofuel. However, the potential is huge. According to IEA (International Energy Agency), around 25% of world energy demand will come via India in 2040.

Government notifies ethanol-making directly from sugarcane juice, B-molasses

Union Food Ministry has notified decision to allow sugar mills to manufacture ethanol directly from sugarcane juice or an intermediate product called B-molasses. In this regard, Sugarcane Control Order, 1966 has been amended. The move would help mills divert cane juice for ethanol manufacturing during surplus years.

Key Facts

Now in case of production of ethanol directly from sugarcane juice or B-molasses, the recovery rate of sugarcane factory will be determined by considering every 600 liters so produced as equivalent to one tonne of production of sugar. Earlier, sugar mills were allowed to manufacture ethanol from by-product called C-molasses, after sugar was taken out while processing raw sugarcane juice. Molasses is also used for manufacturing spirit and alcohol among other products.


Sugar mills are incurring losses as prices of sugar have fallen below production cost on account of record output of 32 million tonnes (mt) in 2017-18 season as against annual domestic demand of 25 mt. The production of ethanol directly from sugarcane juice or B-molasses will help to divert this overproduction. Sugar mills are expecting revenue realisation of over Rs 5,000 crore from sale of ethanol to OMCs during the 2017-18 sugar season (October-September). OMCs procure ethanol from sugar mills for blending with petrol. It has mandated blending of up to 10% ethanol in petrol but inadequate availability has restricted this to under 4%. Higher price for ethanol will incentivise higher ethanol production.