Gaurav Kumar

After a decade-long tardy progress, the Ethanol Blending program in India started on a progressive pathway, and there has been consistent improvement in ethanol-fuel blending ratios since then, primarily due to diversification in first-generation ethanol feedstocks. India now aims to achieve a 30% ethanol fuel blending ratio in the coming years, which requires stringent planning and policy support to meet the rising demand for ethanol. With emphasis on second-generation (2G) ethanol production (from non-edible feedstocks), the Government launched a financial support scheme, Pradhan Mantri JI-VAN (Jaiv Indhan- Vatavaran Anukool fasal awashesh Nivaran) Yojana, to the tune of 230 million USD for setting up twelve integrated 2G Bio-ethanol Projects for the period 2018-19 to 2023-24. However, the issue of higher production cost of 2G ethanol makes it difficult for the oil marketing companies (OMCs) to absorb the additional cost and makes it economically unviable for adoption. This paper examines the role of techniques in production processes as well as the development of carbon markets in the production of 2G ethanol that can make it viable for long-term adoption.

Through forecasting techniques, we calculate the future ethanol requirement vis-à-vis gasoline demand while taking into account the impact of energy transition through other alternative energy sources. We then assess the environmental and economic impacts of 2G ethanol with the help of simulation, scenario, and sensitivity analysis. We then re-evaluate and compare the economic impact, taking into account carbon credits that can be generated through the adoption of 2G ethanol.

Results indicate that the cost of 2G ethanol production decreases with time. This cost decreases significantly in the case of setting up an integrated bio-refinery in place of a standalone biorefinery. However, this decrease is not enough to compensate or compete with the 1G (first generation) ethanol or petrol prices. However, while taking into consideration the social cost of carbon, the second-generation ethanol becomes economically viable when carbon credit accounting is incorporated in the economic analysis. The results are also helpful in suggesting policy measures that can aid in the long-term successful adoption of 2G ethanol.

The paper indicates the growing importance of carbon markets, which are all set to launch in India in 2026. The techno-economic analysis provides insights with regard to the impact of the process adopted for 2G ethanol production on its long-term adoption and viability. The paper also successfully highlights the importance of ethanol fuel in helping to achieve decarbonisation and strengthen energy security. Further, the ambitious targets of switching to an ethanol economy cannot be achieved alone by 1G ethanol.