India to delay October's ethanol mandate

India's government officials are delaying a mandate for gasoline to contain 10 percent ethanol, just a few weeks before it was scheduled to go into effect.

The government will likely wait until next year to review the requirement for molasses-based ethanol, which was scheduled to start in October. The current approval for a 5-percent ethanol blend will stay in place until the government can reassess the situation sometime after October, when the sugarcane crushing season begins, according to recent government reports.

The price of sugarcane, the basis for molasses, has gone up 40 percent to 50 percent so far this year, said Gurpal Singh, deputy managing director of India’s Simbhaoli Sugars, a manufacturer that processes sugarcane into alcohol in Northern India's Uttar Pradesh.

“With today’s molasses prices being what they are, we are struggling to make the 5-percent ethanol,” Singh told the Cleantech Group. “Ten percent as it stands today might not be achievable in the near future.”

Simbhaoli operates two plants with a capacity of 180 kiloliters (almost 50,000 U.S. gallons) a day. Singh said a number of new companies are entering the ethanol market in anticipation of the government mandate, which doesn’t apply to Jammu, Kasmir and the northeast states (see Tata Chemicals hires Praj to build ethanol plant in India).

“As it stands today, the main criteria is certainly an economic one,” Singh said. “To some extent, manufacturers will produce less ethanol at the present molasses price.”

Oil imports account for 77 percent of total fuel consumption in India, so the government has encouraged the production of ethanol to increase supply and lower prices. Singh said India’s government is also pushing molasses-based ethanol because it doesn’t impact the food supply, takes little water to manufacture and reduces emissions.

The importance of not impacting food supply is also driving investment into cellulosic ethanol.

“The newer technologies all utilize enzymes or bacteria to break down cellulose and generate ethanol from that,” said Ullas Naik, managing director at Globespan Capital Partners in Palo Alto, Calif.

Globespan has invested in two cellulosic ethanol startups: Warrenville, Illinois.-based Coskata, which plans to build a $25 million facility to produce 40,000 gallons of ethanol a year from waste (see Coskata, ICM to build ethanol plant), and Menlo Park, Calif.-based ZeaChem, which says it has brewed ethanol from poplar trees (see Please sir, may I have some Mohr?).

Naik said he thinks cellulosic ethanol will be available to the U.S. market in a couple years and later licensed to companies in India and Asia. Together, the U.S. and Brazil produce 75 percent of the world's ethanol (see Officials lament U.S.-Brazil ethanol cooperation).

"Ethanol is here today, and it's going to continue to be in demand in a big way," Naik said, reiterating the need for scaling cellulosic technologies. "The only way to go longer term is to target cellulosic ethanol from woody biomass or municipal solid waste."

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