India's bioeconomy push targets 2G ethanol, bio-fertilizers as diversification path

India's sugar and bioenergy sector called for accelerating waste valorization and diversification into high-value biochemicals as the country approaches ethanol surplus, with carbon dioxide from fermentation and lignocellulosic biomass emerging as priority feedstocks for the next phase of bioeconomy development.

The ethanol industry should treat carbon dioxide generated during fermentation as a commercial resource rather than waste, with fertilizer manufacturing and industrial applications providing demand pathways for captured CO2, Surendra Singh, business leader at BIG Group, said at the Sugar, Ethanol and Bioenergy conference in Mumbai on June 12-13.

"CO2 produced from ethanol production is not waste. CO2 is not a low-value product," Singh said. "The ethanol industry has matured significantly and now has opportunities to generate additional value through industrial integration."

The comments come as India's bioethanol sector has expanded sixteen-fold in recent years, creating infrastructure that can be leveraged for diversified bio-product manufacturing, according to Dr. Sanjukta Subudhi, associate director at The Energy and Resources Institute.

"Ethanol is produced by microorganisms. This process can be diverted towards producing high-value chemicals, which will be beneficial for the sector," Subudhi said. "Using the same set of infrastructure, we can diversify production and expand the bioeconomy basket."

India's ethanol sector faces a capacity utilization crisis, with domestic production capacity reaching 20 billion liters/year while oil marketing companies procure only 11 billion-12 billion liters annually for the E20 mandate, leaving surplus capacity of 8 billion-9 billion liters/year.

CO2 valorization

Ethanol fermentation produces about 0.96 kg of carbon dioxide per liter of ethanol, generating a substantial CO2 stream from India's expanding distillery sector. At current production levels of 11 billion-12 billion liters annually, the industry generates approximately 10.5 million-11.5 million mt of CO2.

However, synchronization between ethanol producers and CO2-consuming industries remains a challenge, with fertilizer manufacturing identified as the primary sector capable of absorbing large volumes of captured carbon dioxide.

"Synchronization between ethanol producers and industries consuming carbon dioxide remains a challenge, but efforts are underway to expand sectors with higher CO2 demand," Singh said. "Connecting suppliers and industries that procure CO2 remains an important area for future development."

Beyond fertilizer applications, food-grade CO2 for beverage carbonation and industrial applications, including enhanced oil recovery and chemical synthesis, provides additional demand pathways, though infrastructure for capture, purification and distribution requires development.

Lignocellulosic and other pathways

Bagasse, the fibrous residue remaining after sugarcane crushing, represents an underutilized biological resource for second-generation ethanol and bio-product manufacturing, according to Dr. SSV Ramakumar, chief technology officer at AM Green.

"Collaboration between industry and academia will be essential to unlocking the next phase of growth," Subudhi said. "We can diversify production and expand the bioeconomy basket."

The same fermentation infrastructure used for ethanol can be adapted to produce higher-value chemicals, including bio-acetone, isobutanol, organic acids and specialty chemicals through modified microbial strains and process adjustments.

Priority areas identified during the discussion included press mud conversion to compressed biogas, bagasse upgrading for bio-fertilizers and soil health products, and bio-hydrogen production pathways, though commercial viability and scale-up timelines remain under development.

Even after achieving national ethanol blending targets, India could emerge as an ethanol-surplus country and should actively develop new markets and product streams, Ramakumar said.

"India's ethanol industry is entering a new phase where diversification and market expansion will become essential," Ramakumar said. "Even after achieving national ethanol blending targets, India could emerge as an ethanol-surplus country."

Platts, part of S&P Global Energy, assessed Asian fuel ethanol down $12.33/cubic meter week over week at $639/cubic meter CIF Philippines on June 15.