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.

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