India is one of the world’s largest sugar producers and aims to achieve a 20% ethanol blend in gasoline by 2025.
To achieve this, the national E20 Ethanol Blending Programme (EBP) was introduced by the Indian government in 2003 and renewed in 2018 to encourage excess sugarcane and bagasse to be converted into ethanol for gasoline blending. However, recent drops in sugarcane harvest have made achieving the goal of a 20% blend of ethanol in gasoline by 2025 more challenging.
Our client, a major Japanese investment house, asked us to provide an overview of the Indian ethanol market with particular emphasis on understanding future ethanol blending capacities, feedstock sources and the impact of electric vehicles on gasoline demand.
CZ Approach
- In-house and external data sources to model three scenario forecasts over a ten-year period.
- Liaising with CZ’s internal ethanol trading and procurement desk on latest ethanol trends.
- Interviews with on-the-ground Indian sugar and ethanol experts.
CZ Solution:
Delivered a comprehensive due diligence report to our client, enabling them to understand the Indian ethanol market and assess prospective investments in the ethanol blending.
“In 2021, we traded over 2.4 million metric tonnes of VIVE-verified sugar, and at year end over 3.2 million metric tonnes of product was available, including bagasse and molasses.”
Outlook
Our estimates show that domestic crop-based ethanol is unlikely to meet the fuel-bending targets by 2025. As such, CZ envisages the government may seek to encourage new ethanol production capability in the coming years, potentially in the form of 2G ethanol.
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