A team of U.S. ethanol industry representatives led by U.S. Department of Agriculture (USDA) Undersecretary for Farm and Foreign Agricultural Services Michael Scuse traveled to India last week to discuss opportunities for developing clean energy solutions, technologies and policies. Seven representatives from the U.S. Grains Council (USGC), Growth Energy and the Renewable Fuels Association (RFA) as well as USDA participated in the mission, aimed at strengthening the level of cooperation and coordination between the ethanol industries of the two countries.
During a series of meetings that involved ethanol producers, oil companies and government officials, the U.S. participants received an in-depth look at the local industry’s situation and outlook. There were extensive discussions on India’s economy, political environment, energy sector, and the role of government policy as a driver of the ethanol industry’s growth.
“Macroeconomic factors like population growth, continuing urbanization and increases in disposable income mean India is poised to use more gasoline and diesel fuels,” said USGC Past Chairman Ron Gray, who was part of the group representing the U.S. industry. “Given the negative effect that petroleum-based gasoline has on air quality, we feel that the expanded use of ethanol as an oxygenate can help India reduce smog and carbon emissions in this rapidly growing developing country, particularly in its cities.”
“America’s commitment to using ethanol in our fuel has made it possible for our nation’s busiest cities to dramatically reduce levels of smog and other harmful tail-pipe emissions,” said Ed Hubbard, general counsel for RFA. “By sharing our experiences with our friends here in India, we believe we can help them significantly improve the country’s air quality.”
India already imports sizeable amounts of industrial ethanol, mostly from the United States and Brazil. In 2014, India imported $86 million of industrial ethanol, with the U.S. being the largest supplier, and USGC expects India’s imports will rise sharply, reaching $150-200 million this year.
However, members of the U.S ethanol industry believe there is significant room for growth in India’s consumption of fuel ethanol. This view was echoed by India’s sugar and ethanol sector during last week’s meetings, with the country seeking ways to increase their blend rates from current low levels as a means to improving air quality while supporting India’s sugar producers.
“India’s struggle to boost blend rates over the next decade is complicated by the likelihood that fuel demand will rise faster than the country’s production of ethanol produced from molasses, its primary feedstock,” said Jim Miller, vice president and chief economist for Growth Energy. “We believe that U.S. ethanol can play a significant role in India’s transition to higher blend rates until India’s ethanol production is able to accelerate sufficiently that it exceeds the growth in their fuel demand”.
The participants expected further engagement with their Indian counterparts in the coming years after analysis to determine how to best serve the particular needs of this market based on the information they gathered.
“With the overwhelming majority of India’s gasoline production coming from petroleum imports, increases in clean ethanol imports will come at the expense of carbon intensive petroleum imports, not India’s ethanol production. We stand ready to work with India to help achieve this,” said Mike Dwyer, chief economist at the Council.