Not much has been written in the thread about ethanol industry. So here is my write up.
The United States is the world's largest producer of ethanol, having produced nearly 15 billion gallons in 2015 alone. Together, the U.S. and Brazil produce 85% of the world's ethanol.
The vast majority of U.S. ethanol is produced from corn, while Brazil primarily uses sugarcane.
In USA a few years back there used to be debate on Food vs. Fuel but as time progressed production of corn increased and since 2013 corn prices are decreasing.
Next is ethanol from sugarcane. Brazil is world's largest sugar producer so it was natural for them to produce Sugarcane-based ethanol. Also Sugarcane-based ethanol has an energy balance that is 7 times greater than that of corn-based ethanol.
Energy balance is the difference between the energy expended to convert the crop into ethanol and the amount of energy released from its consumption. There are several reasons why this occurs.
Till now Majority of India's ethanol requirement was fulfilled by sugar and in some near future we can expect this to continue but we know that India doesn't have as much cultivatable land as US or Brazil. Also prices of sugar in India is twice of Brazil.
And therefore if we press on using sugar for ethanol, Fuel vs. Food Debate is bound to ensue and that's where Second generation Ethanol comes into play. It uses multiple feedstock including Corn Cobs, Corn Stover and Bagasse to produce ethanol.
While energy efficiency will be lower as compared to ethanol from sugarcane but most of the feedstock used in second is waste, so overall it would be profitable for companies to produce ethanol.
[ 1) Molasses feedstock cost ₹4500-6500/MT 2) Corn cobs cost ₹2000-4500/MT (based on Praj estimates) 3) Rice straw cost ₹1500-2500/MT 4) Bagasse cost ₹4000-4500/MT]
Now comes the blend.Blends of 90% unleaded petrol and 10% fuel ethanol are commonly referred to as E10. This is how it looks in Brazil.
In US it is currently at E10 but they are trying to increase it constantly. New York considers raising ethanol blend limit.
I included data of only these two countries because it is widely available for both of them. But it's easy to predict that many more countries are looking to increase their economic blend for sustainable future.
India is no different. After 3 years, India is still trying to achieve 5% ethanol blending. But it's not easy. OMCs (oil marketing cos.) are struggling to achieve 5% ethanol blending target across the country. During 2014-15, OMCs reached 2.3%, with the government confident of achieving 4% blending target during the current year (Source).
The delivered price of ethanol was fixed in the range of Rs.48.50 per litre to Rs.49.50 per litre for last year. In future, govt. will move towards market dynamic pricing system for ethanol. It remains to be seen the effect of this deregulation on domestic ethanol Industry. But one thing is for sure.... Ethanol is here to stay.
Disc.: Not invested. Planning to add in future.