Ethanol Blending targets of government are ambitious, yet praiseworthy but government has been aggressively pursuing it

Ethanol- Blended Fuel for Vehicles

Despite challenges, India has been aggressively pursuing its ethanol blending programme and this is reflected in its decision to advance E20 fuel rollout; with this one move, government aims to achieve multiple objectives – clean fuel, energy security, lower import bills and better remuneration for sugarcane farmers  

India’s resolve to use cleaner vehicular fuel has taken yet another positive turn. The government has been preponing its ethanol blending targets. The country has advanced its target of blending petrol with 20 per cent ethanol by two years to 2023. Last year, it had set this target till 2030 but revised the achievement timeline to 2025, earlier this year. The aggressive stance of the government is a welcome step and is expected to hit multiple birds with just one shot.

E20 is expected to be rolled out from 1 April 2023. A gazette notification on this has been issued by the Ministry of Oil and Natural Gas.

The announcement about the advancement of ethanol blending target was made by Prime Minister Narendra Modi on World Environment Day (5 June). The PM also unveiled a roadmap which was prepared by the Ministry of Oil and Natural Gas and government think tank NITI Aayog.

The PM also launched a pilot project at three petrol pumps in Pune for running vehicles on 100 per cent ethanol fuel.

Ethanol or ethyl alcohol is drinking alcohol which is made from molasses, grains and farm waste. Currently, much of the ethanol production in India is from sugarcane molasses, but the India government is pushing for ethanol production from other sources including grains and other farm wastes. Ethanol production from other sources account just for 10 per cent.

The ethanol blending project is expected to achieve three important targets – one is helping India towards achieving its Sustainable Development Goals (SDG); ensuring energy security and self-sufficiency and also reducing its import bills. In 2014, the country had 1.5 per cent ethanol blending, which has now gone up to 8.5 per cent. The country is aiming to achieve E10 fuel by April 2022.

As per some estimates a 20 per cent ethanol blending target would reduce the import bill by as much as Rs 30,000 cr annually. The net import bill from crude oil in FY21 (April-March) stood at USD 551 billion. It could have been significantly higher without pandemic induced lockdowns in place.

India will be spending almost USD 7 billion to boost ethanol production to roll out greener mix of vehicular fuel. According to estimates, about 10 billion litres of ethanol will be required each year to meet the 20 per cent ethanol-blended fuel standard.

This will be three times the amount of ethanol that will go into the mix as compared to the year ending November 2021, when ethanol constitutes 9 per cent of blended gasoline, a media report said quoting Oil Secretary Tarun Kapoor.

India will be requiring new bio refineries and other infrastructure for production and storage. The country will be developing new bio refineries at an estimated cost of Rs 50,000 cr, another news report says.

Among the steps taken in this direction, the Cabinet Committee on Economic Affairs (CCEA) in December approved Rs 8,460 cr modified scheme for extending interest subvention for those setting up standalone ethanol distilleries. This scheme will help people who want to set-up distilleries using grain, molasses, dual feed, sugar beet, sweet sorghum, and cereals as a feedstock. The step was in line with the government’s focus on increasing the ethanol production in the country.

In order to increase private participation in this direction, it is important to introduce incentives and schemes such as this.

Allied Benefits

The E20 drive will also benefit sugarcane farmers as the procurement will significantly go up to meet the blending targets. A media report said that oil marketing companies (OMCs) including the big three – Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) procured ethanol worth about Rs 21,000 cr annually.

While this will serve as a big incentive for sugarcane growers, the emphasis is also on producing ethanol from grains and farm wastes as sugarcane is a water guzzling crop. The amount of water consumed by sugarcane crop is almost three times that of grains.

This will also be more remunerative in terms of current production. India is a sugar surplus nation and this has caused a depression in sugar prices.

E20 Gasoline – Challenges

The biggest challenge for this initiative is production of enough ethanol to meet the E20 targets. There is a demand-supply gap as the reliance for ethanol production is primarily on sugar mills. Also setting up bio-ethanol plants require significant investments.

It just not ends there as the sugar mills have often complained about mismatch between sugarcane prices and production cost. The prices of sugarcane and ethanol are fixed by the central government.

There are safety aspects involved with ethanol production and storage as it is highly inflammable. This is another major challenge that the industry faces.

Another major challenge is on the side of the consumers and automobile industry. The vehicles currently available are largely made to consume non-blended petrol or E0 and E10 fuel. An Expert Committee on Roadmap for Ethanol Blending in India by 2025 has noted that there was an estimated loss of 6-7 per cent fuel efficiency for 4-wheelers and 3-4 per cent for 2-wheelers when using E20 fuel.

However, industry body SIAM (Society of Indian Automobile Manufacturers) is of the view that with modifications in engines (hardware and tuning), the loss in efficiency due to blended fuel can be reduced.

Vehicles with E20-tuned engines can be rolled out all across the country from April 2025, SIAM has said adding that these vehicles would run on E20 only and will provide high performance.

It will be seen if this would have an added cost at a time when prices of vehicles are already skyrocketing. The consumer has been hit hard with the daily rising prices of fuel and it will also be interesting to see if the blended fuel is cheaper for the consumer as well.

The timeline for rolling out E20 material compliant and E10 compliant vehicles is expected to be from April 2023 and these vehicles will be able to negotiate 10 to 20 per cent of ethanol blended petrol without compromising too much of their efficiency.

Having said all these, it is important to note that this is a step in right direction. While, there will be initial problems along with the requirement of government handholding, but the government is quite aggressive about this, especially the Ministry of Road Transport and Highways Minister Nitin Gadkari taking special interest in this project.

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