The ethanol opportunity

Thanks to the government-mandated blending of petrol with ethanol, ethanol manufacturers are in a favourable position. Here is a promising stock to profit from this theme.

Ethanol (chemical name: ethyl alcohol), a biofuel, has been a part of the government’s energy agenda for over two decades now. Of its several uses (chemical and pharma products), this organic chemical compound, which is produced from feedstock (sugarcane, sugar, molasses, maize and damaged food grains, etc.), also blends with petrol and power vehicles.

The attractiveness of ethanol blending with petrol program stems from:

• A reduction of import dependence on fossils (estimated annual savings of ₹30,000 crore on full implementation)

• Lower emission through E20 fuel (20 per cent ethanol, 80 per cent petrol), which reduces hydrocarbon effluents by 20 per cent (carbon monoxide by 30–50 per cent)

• Additional income source and employment for farmers

• Ethanol is also a better-quality fuel due to its highoctane number, which enhances engine efficiency considerably, even though it has less calorific value than that of petrol

While the blending policy has been there since 2002- 2003, the average blending with petrol ranged between 0.1–1.5 per cent till 2013-2014. However, a series of policy interventions by the government since 2014 has resulted in ethanol gaining more prominence in the energy mix since 2013-2014.