A government committee is working on the pricing formula for 2G ethanol based on the feedstock used to produce the green fuel such as bamboo, rice straw, etc, a senior government official told Moneycontrol.
The committee expected to present the draft report by the end of April, the official added.
“The talks are currently pre-mature. The committee is working on a pricing formula for different feedstocks such as bamboo, maize, rice straw, etc,” the official said.
India is about to receive its first 2G ethanol produced from bamboo at the state-run Numaligarh Refinery Ltd’s (NRL) bio-refinery plant in Assam. The company will begin commercial production of the country’s first 2G ethanol made through bamboo by the end of 2025.
Ethanol, an organic chemical compound, is a renewable fuel made from various plant materials that are collectively referred to as biomass. The first generation (1G) ethanol is manufactured from feedstock such as cereals, sugarcane juice and molasses as raw materials, while 2G ethanol plants utilise surplus biomass and agricultural waste to produce ethanol.
Bhaskar Jyoti Phukan, managing director, NRL, told Moneycontrol that he expects a higher price of 2G ethanol than 1G ethanol, on account of the higher capital expenditure involved in the production of 2G ethanol. The refinery is also planning to export part of the produced 2G ethanol with the expectation of getting a premium in the international market.
“2G ethanol should not be expected at the same price as 1G ethanol because the process itself is very complex, and you spend a lot of money in the capex as compared to the 1G ethanol plant. Therefore, to expect a higher price for 2G ethanol is natural.
On the other hand, we have been given the freedom to export 2G ethanol as we may get a premium in the international market. We are also looking at it,” said Phukan.
Pricing tangle
Meanwhile, Ranjit Rath, chairman of Oil India, the parent company of NRL, said the byproducts with 2G ethanol would additionally help cover the higher price of the bamboo-based ethanol. The Assam-based refinery would produce around 50,000 metric tonnes of ethanol annually.
“By the virtue of having additional products, we have hedged our risks. Today, 1G ethanol is administered, so a view will have to be taken for the 2G ethanol price point. Currently, the pre-commissioning and commissioning of the plant are underway, we will wait for the stabilisation of the plant. We have got a defined price point for 1G ethanol; 2G ethanol will either be mapped or benchmarked to 1G ethanol,” said Rath.
NRL is setting up India’s first bio-refinery which uses bamboo as the feedstock, resolving the long-standing debate of food versus fuel around ethanol production. The government is pushing for secondary sources such as bamboo, broken rice, maize, and other feedstock for ethanol production as India intensifies the use of alternative sources of energy.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
