Home / News / India /  India oil firms go slow on plans to build second generation ethanol plants

India’s state-run refiners are going slow on plans to build second generation or 2G ethanol plants, and will instead set up first generation or 1G plants, which are more cost-effective, said officials from oil marketing companies.

Indian Oil Corp. Ltd (IOCL), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) have found setting up of 2G plants as unviable as they are much more expensive to build than 1G plants, the officials said, requesting anonymity.

“We had decided to put up 12 2G ethanol plants but only five will happen now. Setting up one 2G plant costs 1,000 crore. But a 1G plant can be set up for 100-200 crore. So, the oil ministry has asked us to put up around 5,000 kilo litres per day of plants," said a senior official from an oil marketing company. The OMCs did not respond to emailed queries.

Ethanol is produced using non-edible agricultural waste left over after harvesting. This can include corn cobs, rice straw and wheat straw, which is converted into cellulose and later fermented to form ethanol, which in turn can be blended with conventional fuel.

India plans to achieve blending of 20% ethanol with 80% petrol by 2025 to help reduce its dependence on costly oil imports. The country is the world’s third-biggest oil importer.

The oil marketing companies had decided to set up 2G ethanol plants between 2016 and 2017. But the high capital expenditure was a constraint. While IOCL and BPCL were to construct three 2G ethanol plants each, HPCL was to set up four and one each by Mangalore Refineries and Petrochemicals Ltd and Numaligarh Refinery Ltd.

The plan also included converting thousands of tonnes of agricultural waste in northern India into biofuel, lessening toxic air pollution.

“But compressed bio-gas (CBG) plants and 1G ethanol plans can be set up at a fraction of 2G ethanol plants’ cost. Plus, with CBG plants utilizing agricultural waste, sugarcane press mud and municipal waste, we realized that 2G is not viable," said another senior official from an oil marketing company. 1G ethanol plants utilize feedstock such as cereals and sugarcane juice and molasses as raw materials, while 2G plants utilize surplus biomass and agricultural waste to produce ethanol.

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