EBP (Ethanol Program)

EBP Program

How India changed its strategy

Ethanol is a significant biofuel to act as an alternative to fossil fuels. Fermented yeast creates raw ethanol. There are other procedures for producing ethanol. The sugar industry produces ethanol as a byproduct, predominantly made from molasses. The higher the sugar cane supply, the lower the prices. This affects the sugar industry, where there is a payment delay to the farmers. The Indian government introduced the “Ethanol Blending Petrol” (EBP) Program. The aim is to reduce pollution, reduce reliance on imports, boost the agriculture sector, clear the cane price arrears of farmers, conserve foreign exchange and address the long-term environmental concerns.

Launching of EBP Program

  • The Centre launched several pilot projects in 2001. One of the projects involves combining 5% ethanol with gasoline and distributing it to a retail outlet.
  • Launch of Ethanol Blended Petrol Program (EBP) in 2003.
  • In 2005, a political party proposed mandatory ethanol, based on the Renewable Fuel Standard, to convert corn into fuel for replacing regular gasoline.
  • Public Sector Oil Marketing Companies (OMCs) permitted the sale of 5% ethanol blended gasoline in nine states and four UTs in 2006.
  • CCEA met in 2007 to discuss a mandatory 5% ethanol-to-petroleum blend. 
  • The Centre Reinstated a 10% mandatory blend in 2008.
  • Low availability and other issues faced by each state slowed the progress of ethanol production in 2009.
  • CCEA decided to purchase ethanol from domestic sources in 2013. Sugarcane prohibition resulted in a shift in ethanol production from molasses.
  • In 2014, the government facilitated several initiatives to boost ethanol production. Initiates are to reintroduce the price mechanism, explore an alternate production route, and have regular discussions with state governments based on the ethanol blending roadmap.
  • In 2018, the national biofuels policy stated a target of 20% ethanol blending in gasoline by 2030.
  •  Launch of the EBP Program in 21 states and four UTs On March 31, 2019. OMCs in the public sector bought and sold 10% ethanol blended gasoline.

Roadmap for ethanol blending by 2025

“World Environment Day” on June 5, 2021: Honorable Prime Minister Narendra Modi released the “Expert Committee” report on the “Roadmap for Ethanol Blending in India by 2025.”

The roadmap for ethanol blending is a clear pathway for achieving 20% ethanol blending. It mentions the intermediate milestone of 10% ethanol blending by November 2022. The report includes an annual plan for the country’s gradual transition to E20 ethanol. It proposes specific responsibilities for Union Ministries, State Governments, and vehicle manufacturers for the production, supply, and gradual implementation of 20% ethanol blending in gasoline by 2025.

As per the reports, there is a budget of 30,000 crores for foreign exchange per year. The information includes the immense benefits of 20% ethanol blending, such as energy security, lower carbon emissions, better air quality, utilisation of damaged food grains, employment opportunity, increment in farmer’s income etc.
Dr Rakesh Sarwal, Additional secretary of NITI Aayog, is leading the inter-ministerial committee. It involves the representatives of the Ministries of Petroleum, Food and Public Distribution, Road Transport and Highways, Heavy Industry, Indian Oil Corporation, and the Automotive Research Association of India served on the committee.

Milestone mentioned in E-20 Roadmap :

  • To increase the capacity of ethanol production in India from 700 to 1500 crore litres.
  • Roll out of E10 compatible vehicles by April 2023.
  • Manufacture of E20 engines powered vehicles begins by April 2025.
  • To encourage the production of water-saving crops like maise.
  • To improve the technology of extracting ethanol from non-food feedstocks.
  • Tax incentives for the blended ethanol fuel producers.
  • Nationwide education campaign of ethanol.
  • To use a single-window mechanism to speed up governmental regulatory clearances for ethanol distilleries.
  • The EBP procurement procedure for ethanol is simplified.
  • Availability of denatured ethanol (called denat alcohol) all over the country.

Initiatives by the government

  • The Central Government has increased blending targets under the Ethanol Blending Programme(EBP) from 5% to 10%. 
  • The EBP procurement procedure for ethanol, simplified to streamline the entire ethanol supply chain. and the remunerative ex-depot price of ethanol has been fixed. 
  • A “grid” that connects distilleries to OMC depots and details quantities to be supplied has been developed to help meet new blending targets. 
  • A state-by-state demand profile has been projected, taking into account distances, capacities, and other sectoral demands. 
  • Sugar mills have waived excise duty on ethanol supplies to OMCs for EBP during 2015-16. (up to 10 August 2016). The results have been promising, with supplies doubling each year.

Yearly-based ethanol supply from 2013-2018 

  • 2013-14  Supply of thirty-eight crore litres of ethanol for blending.
  • 2014-15 Under the modified EBP, supplies increased to 67 crore litres. 
  • 2015-16 The ethanol supply was historically high in the ethanol season, reaching 111 crore litres with 4.2 per cent blending. 
  • 2016-17 Approximately 66.51 cr litre of the 80 cr litre contracted for the ethanol season was supplied. 
  • 2017-18 During the ethanol season, an LOI was issued for the supply of 139.51 cr litres of ethanol, of which 136 cr litres have been signed and 46.25 cr litres have been supplied so far.

In addition, OMCs have opened a second round of bidding for the procurement of 117 million litres of ethanol under the EBP. The Indian Sugar Mill Association

estimated 2.4 billion litres of supply in 2019 based on 1.8 billion litres of C-Heavy molasses, 425-430 million litres of B-Heavy molasses, 165-170 million litres of damaged food grains, and 20 million litres of sugarcane juice.

The regulatory status of ethanol as fuel 

The regulatory status and implementation details are as follows: 

  • E5 [blending 5% Ethanol with 95% gasoline] was notified in 2015 by MoRT&H6. 
  • E10 [blending 10% Ethanol with 90% gasoline] was notified in 2019 by MoRT&H7. The rubber and plastic components used in gasoline vehicles are currently compatible with E10 fuel. 
  • E85 The use  of E-85 fuel (85% ethanol by volume) was notified in 2016 for 4-wheeled vehicles, three-wheelers and two-wheelers. 
  • E100 [pure ethanol] for use in gasoline vehicles.
  • ED95 [95% ethanol and 5% additives (co-solvent, corrosion inhibitors and ignition.

Production of “Ethanol Blended Petrol” compatible vehicles

Two-wheeler and passenger vehicles produced recently are optimized for E5, with rubber and plastic components compatible with E10 fuel; their engines can be calibrated for E10 for improved performance.
As the EBP is implemented in the country, vehicles are manufactured with rubberized parts, plastic components, and elastomers that are compatible with E20, and the engines are optimally designed for E20 fuel.
SIAM has assured the government that E10 and E20 will be made available in the nation upon the release of MoPNG’s timeline. According to the roadmap, they will prepare to supply compatible vehicles.
E20 material-compliant vehicles could be available by April 2022, and E20 engine-compatible vehicles could be available by April 2023.
These vehicles can withstand 10% to 20% ethanol blended gasoline and perform well with E10 fuel.
Vehicles powered by E20 engines will be available across the country beginning in April 2025.
These high-performance vehicles will only run on E20.

Correlating higher ethanol blends with compliant vehicles

Vehicles must be designed holistically to take material compatibility, engine tuning (spark timing), and optimisation into account. It will gain benefit from higher octane ethanol blends.
High compression ratio engines are prone to suffer catastrophic failure due to engine knocking when operated with low or no ethanol content. Vehicles designed for low or no ethanol content in gasoline will have more down fuel economy when used with higher ethanol blends.

Progress in Ethanol Blended Program (Dec 2014-Jan 2021) 

2014-2015Government reintroduced an administered price mechanism for ethanol to be procured under the EBP Program.

Opened alternate route for ethanol production (2nd generation including petrochemical)

Government has since directed Oil Public Sector Enterprises to set up bio refineries.

Eased tender conditions – Multiple EOI being floated, transportation slabs and rates.
2016-2017IDR Act Amendment on 14th May, 2016 to clarify on the roles of Central and State

Government for uninterrupted supply of ethanol to be blended with petrol under the EBP Programme.

Regular interaction with States and all other stakeholders to address issues pertaining to the EBP Programme. This is a continuous exercise.
2018-2019Notified forward looking and updated National Policy on Biofuels -2018 involving all stakeholders.

Interest Subvention Scheme for enhancement and augmentation of ethanol production capacity in the country.

Allowed conversion of B heavy molasses, sugarcane juice and damaged food grains to ethanol.

Fixed differentiated ex-mill ethanol price and procurement priority based on raw materials utilized for ethanol production.

Marked beginning of an era of differentiated ethanol pricing, based on raw material utilized for ethanol production. 

Opened a fresh window for inviting applications under interest subvention scheme for ethanol projects based on cane and molasses.

Extension of EBP Program to the whole of India except Island UT’s of Andaman Nicobar and Lakshadweep Islands.

New sources of sugar & sugar syrup are introduced for ethanol production and fixed remunerative prices.
2020-2021OMC’s have enhanced their ethanol storage capacity from 5.39 crore litres in November, 2017 to 17.8 crore litres in December 2020. With the current capacity, about 430 crores litres of ethanol can be handled annually considering 15 days of coverage period.

One time registration of ethanol suppliers for long term, including giving them visibility of ethanol demand for 5 years.

OMC’s started to provide Off-take guarantee letters and consent to sign tripartite agreements with ethanol suppliers and bankers to support the ethanol capacity expansion projects.

Opened a fresh window for inviting applications under interest subvention scheme for ethanol projects based on cane and molasses.

Further ease of tender conditions by OMC’s like one time document submission, quarterly bank guarantees, multiple transportation rate slabs and transportation rates being linked to retail selling price (RSP) of diesel, reduction in security deposit and applicable penalty on non- supplied quantity.

Approval of National Biofuel Coordination Committee (NBCC) to utilize surplus stock of rice lying with Food Corporation of India (FCI) to be released to the distillers for ethanol production. Approval of NBCC10 to utilize maize for ethanol production.

Interest subvention scheme enhancement and augmentation of ethanol production capacity extended to grain based distilleries & distilleries producing ethanol from other feedstocks like sorghum, sugar, beets etc. apart from molasses-based distilleries.
Progress Chart on EBP Program

Inference and Implication

Currently, fossil fuels account for approximately 98 per cent of the fuel requirement in the road transportation sector, with biofuels accounting for the remaining 2 per cent. Eighty-five per cent of India’s oil is imported. Despite temporary setbacks caused by the COVID pandemic, the Indian economy is expected to grow steadily.

This would increase vehicular population, increasing the demand for transportation fuels. Domestic biofuels offer the country a strategic opportunity to reduce the country’s reliance on imported fossil fuels. Furthermore, biofuels can be environmentally friendly, long-term energy sources when used correctly.

They can also help with job creation, the promotion of Make in India, Swachh Bharat, doubling farmer incomes, and converting waste to wealth.