Inside the growing rift in ethanol economy

Source: The post is based on the article “INSIDE THE GROWING RIFT IN ETHANOL ECONOMY” published in the Livemint on 11th January 2023.

Syllabus: GS 3 – Energy.

Relevance: About the advantages and challenges in increasing ethanol-blending.

News: Today, the two-wheeler industry is looking at green and sustainable future mobility solutions spanning across electric, hybrid and alternate fuels. In such a scenario, ethanol-based products are an important option.

About the global success story of ethanol in Brazil

The biggest success story for ethanol in the world right now is Brazil. The country started blending ethanol with gasoline for transport in the mid-1970s.

A vast majority of vehicles on the road in Brazil—about 86%—are powered by flex fuel technology that gives consumers the flexibility to use ethanol blends between 20% and 85%. The country has achieved an average blend of 48%, by far the highest in the world.

What are the advantages of increasing ethanol blending?

a) It is a replacement for imported crude and also helps to save foreign exchange, b) It is also cleaner with lower carbon monoxide and hydrocarbon tailpipe emissions, c) As ethanol is produced by fermenting sugarcane juice, it has also been lauded as the panacea for the surplus sugar issue.

What are the challenges in increasing ethanol blending?

Despite various promotion measures, India has only achieved a 10% blend under its Ethanol Blended Petrol(EBP) Programme (10% of ethanol blended with 90% of petrol).

While India has ample sugarcane, the country doesn’t yet have enough fermentation capacity required to make ethanol.

The rise in the blending percentage of ethanol in petrol would make fuel distribution more complex. For instance, To achieve E20 itself, require separate fuel pumps, tanks to store the fuels, and tankers to transport them. This sort of a supply chain will come at a significant cost for oil marketing firms.

In India, older vehicles don’t get phased out automatically. So, India would need to keep the supply of E10 fuel besides operating additional pumps with higher blends.

According to Niti Aayog, the price of flex-fuel four-wheelers could shoot up in the range of ₹17,000-25,000. These are only preliminary estimates and the actual figures could be higher.

Ethanol has 27% less energy than petrol. So, with higher levels of blending, the fuel economy of the vehicle will diminish by 4-8%. In short, the consumer will pay more for a less fuel-efficient vehicle.

Promoting ethanol will directly promote Sugarcane, which is a water guzzling crop. 

Above all, ethanol doesn’t even solve the entire problem as diesel is the majority transport fuel in the country (petrol accounts for 31% of transport fuel consumption).

What should be done for increasing ethanol blending?

Sugar-producing states of Uttar Pradesh, Karnataka and Maharashtra can initially adapt to the ethanol economy.

India requires a major overhaul of not only vehicles that would need flex fuel engines but also the infrastructure to support various fuel types.

The government is yet to stipulate a roadmap for flex fuel technologies. Ideally, the government should set targets for emissions and create a road map.

Directly incentivize consumers like Brazil: In Brazil, pure ethanol has been incentivized by lower taxation—it is approximately 30% cheaper than E27 fuel. Consumers were also directly incentivized through tax exemptions for buying flex fuel vehicles. India can follow a similar approach.