The National Biofuel Policy 2018 approved by the Cabinet has the potential to bring in multi-crore private investment in second generation ethanol production.
Second generation ethanol refers to alcohol generated from unconventional raw material such as agro waste.
The policy will drive over ₹10,000-crore investment in this sector by the Oil Marketing Companies which together have plans for a dozen such ethanol plants. These are to support the ethanol-blended fuel programme announced by the Centre.
Private sector boost
Atul Mulay, President, Bioenergy, Praj Industries, a leading domestic player in biofuels and second generation ethanol manufacture, said the policy gives a much needed fillip to the industry.
The investment potential is multiple times that envisaged as of now and opens out this opportunity to the private sector.
The plan to give a higher, differential pricing to second generation ethanol and viability gap funding for projects will drive private sector investments, he said.
As an indication of the potential, he pointed out that the Centre hopes to bring in 20 per cent ethanol-blended automobile fuel by 2020. At the targeted 5 per cent blending now, about 50 plants of one crore litre a day, the standardised capacity, will be needed. This alone will involve investment of over ₹35,000 crore.
In India, traditionally, ethanol is produced by distilleries linked to sugar mills. They use molasses generated as a by product of sugar production as a raw material.
A major benefit of using agro waste for ethanol production is that it will address the problem of air pollution caused by burning of agriculture waste, he said. The dozen units planned by OMCs alone will use about 18-20 lakh tonnes of agro waste annually.
At least half a dozen of second generation ethanol units are in various stages of implementation. Each of these units will have a capacity of about one lakh litres of ethanol daily and is expected to start production by end-2020.
Praj Industries, which has developed technology in-house, is executing two projects, one at Odisha for BPCL and another at Panipat for IOC. These will use rice straw as a raw material.
Discussions are on with HPCL, which went for a global tender for a unit to come up at Uttar Pradesh.
In addition, two more plants are coming up elsewhere backed by BPCL and HPCL using technology available with the Department of Biotechnology, Government of India.
A European company is associated with a plant Numaligarh in a 50-50 joint venture.