Sugarcane and ethanol is produced mainly in Uttar Pradesh, Maharashtra and Karnataka.
Sugarcane and ethanol is produced mainly in Uttar Pradesh, Maharashtra and Karnataka.
File Photo

Mumbai: The Union Cabinet on Wednesday approved a modified scheme to enhance ethanol distillation capacity in the country for producing first Generation (1G) ethanol from feed stocks such as cereals (rice, wheat, barley, corn & sorghum), sugarcane and sugar beet.

The decision was taken as the government has a fixed target of 10% blending of fuel-grade ethanol with petrol by 2022 and 20% blending by 2030.

The government has realised that the blending targets cannot be achieved only by diverting sugarcane/sugar to ethanol and therefore the 1G ethanol is required to be produced from other feedstocks like grains and sugar beet for which the present distillation capacity is also not sufficient.

This is yet another attempt to reach out to the agitating farmers.

Sugarcane and ethanol is produced mainly in Uttar Pradesh, Maharashtra and Karnataka. Transporting ethanol to far flung states from these three states involves huge transportation costs. Bringing new grain-based distilleries in the entire country would result in the distributed production of ethanol and would save a lot of transportation cost. It would also prevent delays in meeting the blending target.

To achieve 20% blending by 2030 and to meet the requirement of chemical and other sectors, about 1400 crore litres of alcohol/ethanol would be required; out of which 1000 crore litres would be required to achieve 20% blending and 400 crore litres would be the requirement of chemical and other sectors.

Further, to produce 700 crore litres of ethanol/alcohol from food grains, about 175 LMT of food grains would be utilized.

The cabinet has approved an extension of interest subvention scheme for setting up grain-based distilleries/expansion of existing grain-based distilleries to produce ethanol. However, benefits of interest subvention scheme to be extended to only those standalone distilleries which are using a dry milling process. It would be applicable for setting up new molasses-based distilleries/expansion of existing distilleries (whether attached to sugar mills or standalone distilleries) to produce ethanol and for installing any method approved by the Central Pollution Control Board for achieving Zero Liquid Discharge (ZLD).

Further, the interest subvention scheme will cover setting up of new dual-feed distilleries or to expand existing capacities of dual-feed distilleries, conversion of existing molasses-based distilleries (whether attached to sugar mills or standalone distilleries) to dual feed (molasses and grain/or any other feed stock producing 1G Ethanol); and also to convert grain-based distilleries to dual feed.

The government would bear interest subvention for five years including a one-year moratorium against the loan availed by project proponents from banks at 6% per annum or 50% of the rate of interest charged by banks, whichever is lower.

The interest subvention would be available to only those distilleries which will supply at least 75% of the ethanol produced from the added distillation capacity to oil marketing companies for blending with petrol.

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