Ethanol Blending of Petrol and its challenges: Explained, pointwise

Introduction

Recently the Prime Minister announced to prepone the 20% ethanol blending of petrol to 2025. The government has also identified 11 sectors that can leverage resources by recycling them through modern technology.

Earlier, the government has set targets of 10% bioethanol blending of petrol by 2022 and to raise it to 20% by 2030 under the Ethanol Blended Programme (EBP). By the recent announcement, India’s EBP target of 20% will be achieved five years earlier.

About Ethanol

Ethanol is one of the principal biofuels. It is naturally produced by the fermentation of sugars by yeasts or via petrochemical processes such as ethylene hydration. Ethanol has medical applications as an antiseptic and disinfectant. It is used as a chemical solvent and in the synthesis of organic compounds, apart from being an alternative fuel source.

Why the world needs Ethanol Blending?

At present, the global transportation sector is facing three major challenges, namely

• Depletion of fossil fuels,
• Volatility in crude oil prices and
• Stringent environmental regulations.

Alternative fuels specific to geographies can address these issues. Ethanol is considered to be one of the most suitable alternatives for blending, transportation fuel due to its better fuel quality (ethanol has a higher octane number) and environmental benefits.

Why India needs Ethanol Blending?

According to NITI Aayog, India’s net import of petroleum was 185 Mt at a cost of US $ 55 billion in 2020-21. Hence, a successful Ethanol Blended Programme can save the country US $4 billion per annum, i.e. Rs. 30,000 Crore.

• Besides, ethanol is also a less polluting fuel and offers equivalent efficiency at a lower cost than petrol. But, achieving the target is not an easy one and India need drastic reforms to achieve that.

About 20% Ethanol blending of petrol

The National Policy on Biofuels – 2018, provides an indicative target of 20% ethanol blending (also called E20) under the Ethanol Blended Petrol (EBP) Programme by 2030.

• According to the Society of Indian Automobile Manufacturers (SIAM), Ethanol blending at present is 10%(E10). But, a sufficient quantity of ethanol is not available in India. Therefore, only around 50% of petrol sold in India is E10 blended, while the remaining is unblinded petrol (E0). The current level of average blending in the country is 5% (2019-20 data).
• India at present has an ethanol production capacity of 426 crore ltr. For the targeted E20 by 2030, the country will need approximately 1,000-crore ltr capacity.

Government programs aimed to improve Ethanol Blending

1. Ethanol Blended Petrol(EBP) programme:
   • It was launched in 2003 by the Ministry of Petroleum & Natural Gas (MoP&NG).
   • Aim: To achieve a blending of Ethanol with Petrol. It was aimed to reduce pollution, conserve foreign exchange and benefits for farmers. It increases value addition in the sugar industry.
   • Implementation: The Government is implementing the programme through Oil Marketing Companies (OMCs).
2. National Policy on Biofuels (NBP) -2018: This policy envisages an indicative target of blending 20% ethanol in petrol by 2030.
   
3. Ethanol from Sugarcane: Government has allowed the production of ethanol from sugarcane and food grain-based raw materials.
4. BS-VI emission norms are also applicable for E-20 Vehicles.
5. Department of Food and Public Distribution (DFPD) is the nodal department for the promotion of fuel-grade ethanol-producing distilleries in the country
6. Pradhan Mantri JI-VAN (Jaiv Indhan- Vatavaran Anukool fasal awashesh Nivaran) Yojana: The scheme aims to create an ecosystem for setting up commercial projects and boost Research and Development in the 2G Ethanol sector.
   

Challenges in achieving 20% Ethanol Blending in India

1. Less Production: Currently, domestic production of bioethanol is not sufficient to meet the demand for ethanol for blending with petrol at Indian Oil Market Companies.
   • Sugar mills are the key domestic suppliers of bio-ethanol they supply 57.6% of the total demand. But there are certain limitations with them. Such as,
     • Sugar mills do not have the financial stability to invest in biofuel plants.
     • These mills are heavily concentrated on certain regions alone.
2. Inter-state movement of ethanol: The central government amended the Industries Development and Regulations Act to ensure smooth implementation and transportation of Ethanol across the country. But only 14 states have implemented the amended provisions. As a result, states that produce ethanol more than the requirement for blending cannot transport the Ethanol to other states.
3. Non-uniform availability: Ethanol is not produced or available in some states for ethanol blending. About 50% of total pump nozzles in India are supplying only E0. This is especially in large fuel pumps in North-East states. 
4. The transport of ethanol to different places for blending will increase the cost of logistics and transport-related emissions.
5. Infrastructural challenges: Marketing places require an underground tank, pipes/hoses and dispensing units for ethanol-blended petroleum supply at retail outlets. This will create space constraint at various present retail outlets.
6. Challenges to vehicle manufacturers: Even though, Vehicles made in India are material compatible with E10 and fuel-efficient compliant with E5 since 2008. There are certain inherent challenges. Such as,
   • With the proposed target of E20, the vehicles are now required to become both materials compatible and fuel-efficient compatible for E20 fuel.
   • The cost of E20 compatible vehicles is expected to be higher

Suggestion to achieve 20% Ethanol Blending in India

1. Augmenting Ethanol producing capacity: According to NITI Aayog, to achieve 20% ethanol blending, India has to augment both the sugarcane-based and grain-based ethanol production capacities by 78% and 187% respectively.
2. Uniform availability of ethanol blends: All the states have to implement the amended Industries Development and Regulations Act for facilitating the Inter-state movement of ethanol.
3. Faster environmental clearances: Currently, ethanol production plants/distilleries fall under the “Red category” and require environmental clearance under the Air and Water Acts for new and expansion projects. The government can remove them from the red category. This will facilitate more ethanol production plants/distilleries
4. Suggestions for Vehicle manufacturers: Once India achieves E20 the government will push towards E-85 fuel (85% ethanol by volume), E100 [pure ethanol] and ED95 [95% ethanol and 5% additives (co-solvent, corrosion inhibitors and ignition improvers)] for diesel vehicles. So, the vehicle manufacturers have to produce equipment future-ready.
5. Pricing of Ethanol blended petrol: For better acceptability of higher ethanol blends in the country, the retail price of blended petrol should be lower than normal petrol. The government can consider providing tax breaks on ethanol.
   • To ensure predictability and to encourage investment by entrepreneurs, the government has to declare a floor price of ethanol for five years.

Conclusion

Ethanol blending of petrol is not only a national imperative but also an important strategic requirement. The government should make rapid moves to put in place a favorable regulatory and retail ecosystem for safe, and effective use of ethanol-blended petrol.