What’s in the news?

• The Union Cabinet has approved the expansion of interest subvention scheme to also include grain-based distilleries besides molasses-based distilleries for the production of ethanol.
• The government would bear interest subvention for five years including one year moratorium against the loan availed by project proponents from banks @ 6% per annum or 50% of the rate of interest charged by banks whichever is lower.
• The scheme would be available to only those distilleries which will supply at least 75% of ethanol produced from the added distillation capacity to oil companies.
• The blending percentage of ethanol with petrol is expected to go up from 1.53% in 2013-14 to 8.5% in 2020-21. The National Biofuel Policy 2018 envisages an indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030.

Significance

• The government has procured 173 crore litres of ethanol in 2019-20. India needs 1000 crore litres of ethanol to achieve the 20% blending target by 2030. For that we need to enhance production capacity and availability of raw material. It cannot be achieved through sugarcane only. So, the government has approved use of cereals for ethanol production.
• The decision would encourage ethanol production from grains like barley, maize, corn and rice. The scheme would boost production and distillation capacity to 1,000 crore litres and help in meeting the goal of 20% ethanol blending with petrol by 2030.
• The proposed intervention would enhance production of ethanol from various feedstocks. It would promote ethanol as a fuel which is indigenous, non-polluting and virtually inexhaustible. 
• It would improve the environment and the eco-system and result in savings on the Oil Import Bill. It will also ensure timely payment of dues to farmers.

Related Information

• Biofuels are liquid or gaseous fuels produced from biomass that are generally high in sugar (such as sugarcane, sugarbeet, sweet sorghum), starch (such as corn and cassava) or oils (such as soybeans, rapeseed, coconut, sunflowers, and palms). The two most commonly used biofuels are ethanol and biodiesel.
• Pradhan Mantri JI-VAN Yojana: It provides Viability Gap Funding (VGF) to Second Generation bio-ethanol manufacturing projects to increase availability of ethanol for ethanol blending programme.
• Categories of Biofuels:

1. First generation Biofuels are mainly produced from food crop feedstock, such as oil, sugar and starch crops, thus competing for agricultural areas used for food production.
2. Second generation Biofuels differ in feedstock which, in this case, comes from nonfood plants such as agricultural crops, residues and wood (so-called lignocellulosic biomass).
3. Third generation Biofuels are produced from micro-organisms like algae. Its production is supposed to be low cost and high-yielding – giving up to nearly 30 times the energy per unit area as can be realized from current, conventional ‘first-generation’ biofuel feedstocks.
4. Fourth generation Biofuels use genetically modified (GM) algae to enhance biofuel production. Key to the process is the capture and sequestration of CO2, a process that renders fourth-generation biofuels a carbon negative source of fuel.