Explainer: India Achieves 10% Ethanol-Blended Petrol – What Does It Mean?

Why is India pushing for ethanol use? What are the hindrances to implementation? Here's a primer.

(Photo Courtesy: Marcom India)

Prime Minister Narendra Modi on 5 June announced that India has achieved the required targets for 10 percent ethanol-blended petrol, adding that it was attained five months before the set time. On the occasion of World Environment Day, the Modi government also revised the target 20 percent ethanol blending from 2030 to 2025.

What does this mean? How exactly will this affect citizens? Here's a primer.

What Is Ethanol? How Is It Manufactured?

Ethanol is an organic compound and biofuel that is created by processing various food materials. In 2018, the Indian government allowed the direct conversion of sugarcane and B-heavy molasses into ethanol. Type B molasses is actually the co-product that is gained out of processed sugarcane.

In 2019, the government notified sugar and sugar syrup for ethanol production. In 2020, maize and rice were used for the same purpose.

Why Is India Pushing for the Use of Ethanol?

The government is pushing for a high percentage blend of ethanol in petrol as the former is made from indigenous raw materials. This makes it cheaper than crude oil and petroleum.

This reduces the dependence on imported petrol – as lesser petrol is going into vehicles with ethanol being mixed in them.

Milind S Patke, President (Biofuels), GPS Renewable, told The Times of India, “as the second-largest global producer of sugarcane, India has significant potential to use domestically produced Ethanol which will reduce dependence on crude oil imports.”

Which Vehicles Are Compatible With Ethanol?

All India-manufactured vehicles are made for pure petrol but can be tuned to 5-10 percent based on type for fuel needs. These vehicles are material-compatible with 10 percent blending.

However, with the government announcing 20 percent, car manufacturers will have to develop updated models. Companies such as TVS and Bajaj have already developed two-wheelers capable of running completely on ethanol. Currently, there are no E20 compatible four-wheelers in India and the automobile industry confirmed that retrofitting kits to make cars E20 compatible are not possible.

But there are questions about whether ethanol affects one's engine.

According to a NITI Aayog report, "While using E20 fuel, there will be a drop in fuel efficiency by nearly (a) 6-7 percent for four wheelers designed for E0 and calibrated for E10, (b) 3-4 percent for two wheelers designed for E0 and calibrated for E10 (c) 1-2 percent for 4 wheelers designed for E10 and calibrated for E20."

Companies will have to launch completely new engines for their cars to make them compatible for 20 percent blending. This may lead to an increase in vehicle prices for consumers. According to government estimates, prices may increase by Rs 3,000-5,000 for four-wheelers and Rs 1,000-2,000 for two-wheelers.

How Does Ethanol Help Reduce Pollution?

Oxygen is present in Ethanol which helps in a more absolute combustion of the fuel it is mixed in, effectively reducing the carbon emissions.

According to the NITI Aayog report during its research, by just achieving the E20 blend, carbon monoxide emissions were observed to be 50 percent lower in two-wheelers and 30 percent lower in four-wheelers compared to petrol.

Ramya Natarajan, a research scientist at Bengaluru-based think-tank Centre for Study of Science, Technology and Policy (CSTEP), told IndiaSpend, "Our analysis says 5 percent of the transport sector emissions will be reduced in 2025 due to E20 (not including life cycle emissions)."

The Hindrances in Implementation

The foremost problem with this initiative and its target are that to produce enough ethanol, a huge number of resources need to be invested. This, however, can be diverted to creating renewable electricity plants to supplement India’s electric vehicle initiative, experts point out.

According to a report by Institute for Energy Economics and Financial Analysis, it is not a prudent move to divert more food raw material for ethanol purposes. This is after India ranked a dismal 101 out of 116 nations on the World Hunger Index. This scheme could have adverse effects on India's food security without making a big dent in carbon emissions.

Independent experts have claimed that even though ethanol-blending is good and sustainable at 10 percent, India’s ambitious aim for 20% blending is misplaced.

The foremost challenge is that of ethanol shortage for our country. Prakash Naiknavare, the managing director of the National Federation of Cooperative Sugar Factories Limited told The Indian Express that to achieve 20% blending, India would require a consistent supply of 1,500 crore litres of ethanol annually. At present, the installed capacity that sugar mills have for ethanol production is 460 crore litres, he said.

The next issue is that banks are reluctant to provide sugar mills with loans to expand their capacities due to their frail fiscal position. To counter this, the government has asked the OMCs to clear the dues of sugar mills within 21 days.

The last issue is that of consumer adaptation. Consumers may not adapt to the use of this fuel because:

• They may have to buy pricier cars for this fuel.

• The availability across India still has to be proven because even after many years of BS-VI fuel being offered, it is still not available at every petrol pump.

• They might not be willing to sacrifice their mileage.