Govt removes restriction on sugar diversion for ethanol production

For ESY 2024-25, sugar mills and distilleries can produce ethanol from sugarcane juice, sugar syrup, B-Heavy molasses, and C-Heavy molasses, with no limits on the amount of sugar diverted for ethanol production. The government has additionally permitted distilleries to buy up to 2.3 million metric tons of rice from the Food Corporation of India, exclusively for ethanol production.

The Union Government has announced a major policy change for the Ethanol Supply Year (ESY) 2024-25, starting on November 1, 2024.

According to the notification issued on August 29, 2024, sugar mills will now be allowed to use cane juice and syrup to produce ethanol, lifting previous restrictions on diverting sugar for this purpose. The policy also permits the use of B-Heavy molasses and C-Heavy molasses, broadening the scope of sugar derivatives that can be used in ethanol production. This change seeks to encourage the use of renewable energy and lessen dependence on fossil fuels.

Additionally, the government has authorized distilleries to purchase up to 2.3 million metric tons of rice from the Food Corporation of India (FCI) specifically for ethanol production. This move is part of a broader strategy to boost ethanol output and promote fuel blending, contributing to sustainable energy goals.

To ensure that these changes do not negatively affect domestic sugar availability, the Department of Food and Public Distribution (DFPD) and the Ministry of Petroleum and Natural Gas (MoPNG) will work together to closely monitor and review the diversion of sugar to ethanol production. The collaborative oversight aims to balance the increased flexibility in ethanol production with the stability of the domestic sugar market.

This policy shift is designed to increase the efficiency and flexibility of the ethanol supply chain while supporting the government’s goals of boosting ethanol production and promoting sustainable energy practices. By expanding the types of sugar derivatives that can be used for ethanol, the government hopes to enhance the sector’s adaptability and efficiency.

Industry stakeholders and market analysts will be watching the impacts of this policy change closely, as its effects on the sugar and ethanol markets could unfold in the coming months. Further details on the policy’s implementation and impact are expected to be released in due course.