Understanding India’s ethanol blending policy

What is the News?

The Union Cabinet has approved amendments to the National Policy on Biofuels, 2018 to advance the date by which fuel companies have to increase the percentage of ethanol in petrol to 20%, from 2030 to 2025.

What is Ethanol?

Ethanol or Ethyl Alcohol is a hydrocarbon that when burnt can generate heat and power engines.

Advantages: Ethanol can be sourced from sugarcane, molasses and maize which given India’s agricultural base can substantially reduce India’s dependence on petroleum.

Disadvantages: It takes much more ethanol to power a vehicle’s engine than petrol. It also leaves residual by-products that can corrode and damage the vehicle.

Hence, when vehicles can be run on ethanol, they need to be tuned accordingly so that they don’t compromise on efficiency and usability. 

What is Ethanol Blended Programme?

In 2002, India launched the Ethanol Blended Petrol(EBP) Programme and began selling 5% ethanol blended petrol. However, until 2013-14, the percentage of blending never crossed 1.5%.

Since 2020, India has been announcing its intent to achieve 10% blending by the end of 2022 and 20% blending by 2030. The Centre has also targeted a 5% blending of biodiesel with diesel by 2030.

How does Ethanol blending effect vehicles?

When using E20, there is an estimated loss of 6-7% fuel efficiency for four-wheelers which are originally designed for E0 and calibrated for E10. Carmakers have said that with modifications in engines (hardware and tuning), the loss in efficiency due to blended fuel can be reduced. 

Moreover, to compensate the consumers for a drop in efficiency from ethanol-blended fuels, tax incentives on E10 and E20 fuels may be considered.

What is the International experience with ethanol blending?

Flex Fuel Engine technology(FFE) or vehicles that run entirely on ethanol are popular in Brazil and comprise nearly 80% of the total number of new vehicles sold in 2019. However, the cost of these vehicles are higher compared to regular petrol vehicles. 

In terms of Global Production of ethanol, the U.S. and Brazil make up 84% of the global share followed by the European Union (EU), China, India, Canada and Thailand.

Moreover, the prices of ethanol produced in India are higher compared to the U.S. and Brazil because of the minimum support prices that the government provides.

What is the environmental cost of Ethanol Blending?

No reduction in Nitrous Oxide: ​​Because ethanol burns more completely than petrol, it avoids emissions such as carbon monoxide. However, tests conducted in India have shown that there is no reduction in nitrous oxides, one of the major environmental pollutants. 

More usage of Land: A report by the Institute for Energy Economics and Financial Analysis (IEEFA) says that for India to meet its target of 20% ethanol blended in petrol by the year 2025, it will need to bring in 30,000 additional sq km of land to come under maize cultivation. However, the report says that half of that land can be used more efficiently to produce clean electricity from solar energy.

High Usage of Water: For India, sugarcane is the cheapest source of ethanol. On average, a ton of sugarcane can produce 100 kg of sugar and 70 litres of ethanol, but that would mean 1,600 to 2,000 litres of water to produce 1 kg of sugar implying that a litre of ethanol from sugar requires about 2,860 litres of water.

Source: The post is based on the article “Understanding India’s ethanol blending policy” published in The Hindu on 20th May 2022.