Context

• Converting surplus sugarcane and its products, including sugar and cane juice, into biofuel has unwarranted ecological ramifications, which are cause for concern. 

Status of Sugar Industry

• From being a constant seeker of government assistance, the Indian sugar industry has transformed into a vibrant, self-sustaining sector, achieving performance records on all fronts without any subsidy.
• The output of sugarcane touched a new peak of 500 million tonnes in 2021-22 and that of sugar swelled to a new high of 39.4 million tonnes, of which 3.6 million tonnes was diverted to ethanol production. Sugar exports also surged to a record 11 million tonnes.
• The outstanding cane price arrears payable to farmers have shrunk to the lowest ever level of less than 2 per cent.

Reasons for Flourishing Sugar Industry

• Converting surplus sugarcane and its products, including sugar and cane juice, into biofuel has favored both the sugar industry and cane growers.
• Rise in sugar exports was aided partly by 
  • favorable international prices in the aftermath of the Russia-Ukraine conflict 
  • lower supplies from Brazil, the world’s largest sugar exporter. 
• The additional revenue generated from exports and sugarcane-based biofuel has helped improve the industry’s financial health, enabling it to make timely payments to cane growers and invest in expanding ethanol-manufacturing capacity. 

Significance of Ethanol Production from Sugarcane Surplus

• The permission granted to sugar mills to make ethanol from their surplus produce is highly significant which would otherwise have resulted in depressed domestic prices.
• The resultant increase in the availability of biofuel has enabled oil-marketing companies to raise the level of ethanol-blending of petrol to 10 per cent and look forward to increasing it further to 20 per cent by 2025.
• Note: Last year, the Union Cabinet approved amendments to the National Policy on Biofuels, 2018, to advance the ethanol blending target of 20% blending of ethanol in petrol to 2025-26 from 2030.

Adverse effects of sugarcane cultivation on groundwater resources

• Much of the expansion in cane acreage has occurred in states like Uttar Pradesh, Maharashtra, and Karnataka, where subsurface water is already being depleted at an alarming pace. 
• In any case, a land- and water-stressed country like India can ill-afford the luxury of producing first-generation (1G) ethanol from feedstock like sugarcane, including sugar, sugar syrup, cane juice, B-heavy molasses and C-heavy molasses, or cereals like rice, wheat, barley and corn, which are also now being used for biofuel production. Hence this policy would need to be revisited. 

Way Forward

• A fine balance would need to be maintained between food and water security and fuel and energy security.
• The best option for India would be to utilize the huge amount of residual biomass that its farm sector generates to produce biofuel through second-generation (2G) ethanol-production technology, rather than using water-guzzlers like sugarcane or cereals.