Future of Ethanol Blending in India | 17 Aug 2022

The energy demand in our country is rising due to an expanding economy, growing population, increasing urbanisation, evolving lifestyles and rising spending power. About 98% of the fuel requirement in the road transportation sector is currently met by fossil fuels and the remaining 2% by biofuels.

The National Policy on Biofuels 2018, provides an indicative target of 20% ethanol blending under the Ethanol Blended Petrol (EBP) Programme by 2025.

Achieving energy security and the transitioning to a thriving low carbon economy is critical for a growing nation like India. Blending locally produced ethanol with petrol will help India strengthen its energy security, enable local enterprises and farmers to participate in the energy economy and reduce vehicular emissions.

While ethanol blending can reduce CO₂ emissions, inefficient land and water use for ethanol extraction as well as food security concerns still remain.

What do We Understand by Ethanol Blending?

• Ethanol is an agricultural by-product which is mainly obtained from the processing of sugar from sugarcane, but also from other sources such as rice husk or maize.
  • Blending ethanol with petrol to burn less fossil fuel while running vehicles is called Ethanol Blending.
• Currently, Ethanol makes up 10% of the petrol we use in our vehicles.
  • The original target for India was to raise this ratio to 20% by 2030, but that deadline was pushed back to 2025 when the NITI Aayog released its ethanol roadmap in 2021.

What is the Significance of Ethanol Blending for India?

• India has adopted ethanol blending in petrol in order to reduce vehicle exhaust emissions.
  • India’s net import of petroleum was 185 million tons in 2020-21. Most of the petroleum is used by vehicles and therefore a successful 20% ethanol blending programme can save the country 4 billion dollars per annum.
• The renewable ethanol content is expected to result in a net reduction in the emission of carbon dioxide, carbon monoxide (CO) and hydrocarbons (HC).
  • Ethanol itself burns cleaner and burns more completely than petrol it is blended into.
• Ethanol blending will help bring down our share of oil imports on which India spends a considerable amount of precious foreign exchange.
  • It is estimated that a 5% blending (105 crore litres) can result in replacement of around 1.8 million barrels of crude oil.
• More ethanol produced from farm residue will boost farmers' income and minimise air pollution by reducing the amount of stubble burned.

What are the Challenges Associated with Ethanol Blending?

• Shift Towards Sugarcane Production: In order to achieve a 20% blend rate, almost one-tenth of the existing net sown area will have to be diverted for sugarcane production.
  • Any such land requirement is likely to put a stress on other crops and has the potential to increase food prices.
  • There are already indications that more sugarcane is being grown and that the Government of India encouraged more corn production at the India Maize Summit in May 2022.
• Storage Constraint: Annual capacity of required bio-refineries is stipulated to be 300-400 million litres, which is still not enough to meet the 5% petrol-ethanol blending requirement.
  • Storage is going to be the main concern, for if E10 supply has to continue in tandem with E20 supply, storage would have to be separate which then raises costs.
    • E10 fuel is 90 % petrol mixed with 10% ethanol.
    • E20 fuel is 80 % petrol mixed with 20 % ethanol.
• Food Insecurity: Sugar and cane production that end up in the petrol tank cannot also appear on the dinner plate, in animal fodder, be stored in warehouses, or be exported.
  • India may not find it easy to simultaneously strengthen domestic food supply systems, maintain an export market for grains, and divert grain to ethanol at the expected rate in coming years, and this is an issue that warrants continued monitoring,
• Instability of Ethanol Movement Between States: There are restrictions on inter-state movement of ethanol due to non-implementation of the amended provisions of Industries (Development & Regulation) Act, 1951 by all the States.
  • Ethanol blending has not been taken up in North-East states due to non-availability of feedstock or industries.
  • In order to develop Ethanol Blended fuels and vehicles on a pan-Indian scale, this concern must be addressed.
• No Reduction in Emission of Nitrous Oxide: Because ethanol burns more completely than petrol, it avoids emissions such as carbon monoxide. However, there is no reduction in nitrous oxides, one of the major environmental pollutants.

What Should be the Way Forward?

• Ensuring Uniform Availability of Ethanol Blends: To enable a pan-Indian roll-out, ethanol would need to be supplied from surplus to deficit states as per requirements so as to ensure uniform availability of ethanol blends in the country.
• Promoting Advanced Biofuels: Technology for production of ethanol from non-food feedstock, called “Advanced Biofuels” Including second generation (2G) should be promoted so as to tap this abundantly available resource without causing any trade off with the food production system.
  • Ethanol produced from rice straw, wheat straw, corn cobs and other such materials falls under the category of second generation (2G) ethanol.
• Supply Enrichment: Schemes for ethanol production from different feedstocks and encouragement to augment bio-refineries and their capacities.
  • For better implementation, it is necessary to optimise engines for higher ethanol blends and ensure durability test mechanisms.
• Single Window for Clearances: A system for single window clearances should be formulated to accord speedy clearances for new and expansion projects for ethanol production.
• Setting a Floor Price for Ethanol: In order to bring predictability and to encourage investment by entrepreneurs in expansion/new ethanol capacities, the government may devise a floor price of ethanol for a few years with an escalation clause for purchase by oil marketing companies.
  • Special efforts are needed to attract investors to the North East India.
• Balance between Food Security and Ethanol Blending: India’s biofuel policy stipulates that fuel requirements must not compete with food requirements and that only surplus food crops should be used for fuel production.
  • Producing ethanol from crop residue will then be a good alternative.