The Union government has announced a pivotal policy shift, removing the cap on sugar diversion for ethanol production for the Ethanol Supply Year (ESY) 2024-25, starting November 1, 2024. This update, detailed in a notification issued on August 29, 2024, allows sugar mills to use cane juice or syrup without restriction for ethanol production.
In addition to cane juice and syrup, the updated policy also permits the use of B-Heavy and C-Heavy molasses for ethanol production.
The Ministry of Consumer Affairs, Food and Public Distribution has confirmed that “Sugar mills and distilleries can now produce ethanol from sugarcane juice, sugar syrup, B-Heavy molasses, and C-Heavy molasses during ESY 2024-25, according to agreements with Oil Marketing Companies (OMCs).” This change is designed to support the government’s goals of enhancing renewable energy use and reducing dependence on fossil fuels.
Additionally, the government has authorized distilleries to procure up to 2.3 million metric tons of rice from the Food Corporation of India specifically for ethanol production. This move aims to boost ethanol output and advance the broader strategy of blending ethanol with fuels.
To mitigate potential disruptions in domestic sugar availability, the Department of Food and Public Distribution (DFPD) and the Ministry of Petroleum and Natural Gas (MoPNG) will collaborate to oversee and review the sugar diversion for ethanol production.
The Ministry of Consumer Affairs, Food and Public Distribution added, “DFPD, in coordination with MoPNG, will periodically review the sugar diverted for ethanol production relative to the country's sugar production to ensure year-round availability for domestic consumption.”
This policy adjustment reflects the government's ongoing commitment to increasing ethanol production and promoting sustainable energy solutions. By broadening the range of sugar derivatives eligible for ethanol production, the government aims to enhance the efficiency and flexibility of the ethanol supply chain while maintaining domestic sugar stability.
The full effects of this policy change on the sugar and ethanol markets will become clearer in the coming months, as industry stakeholders and market analysts closely monitor its impact.