For energy security, E100 alone is not the answer

Why in the News

The Central Motor Vehicles Rules, 1989 have been amended to let vehicles run on pure ethanol, branded E100, after India moved to E20 petrol (petrol blended with 20% ethanol). Ethanol blending cuts petrol use, but it does not cut crude imports by the same share. Diesel, not petrol, is the larger part of what India burns and of what a barrel of crude yields.

What are E20 and E100 meant to achieve?

1. E100: Pure ethanol can now run motor vehicles.
2. Why India blends: The policy aims to cut crude oil imports, save foreign exchange and strengthen energy security.
3. The exposure: India imports over 80% of its crude, which leaves it open to volatile prices and shocks such as the West Asia conflict.
4. The takeaway: Blending is a petrol policy, so its import effect depends on petrol’s share of a barrel and of demand.

Why does less petrol use not mean equally lower crude imports?

1. Product mix: A barrel of crude yields several products. Petrol is under one fifth of the output and diesel almost half, so ethanol targets the smaller product.
2. Blend effect: A 20% blend cuts petrol use by less than 20%, because ethanol carries less energy per litre and vehicles run fewer kilometres on it.
3. Refining limits: Refineries can shift their product mix only so far, and raising diesel output is constrained. Less petrol demand therefore does not automatically cut the crude processed.
4. Three outcomes: Petrol displaced, petrol spending avoided and the fall in crude imports are separate results. Only the last measures the energy security gain.

Why does diesel decide the import question?

1. Diesel demand: India consumed about two and a half times as much diesel as petrol between FY 2020 21 and FY 2024 25. Diesel powers freight, agriculture and industrial logistics.
2. Biodiesel lag: Biodiesel blending has lagged behind ethanol against an earlier 5% target. Past efforts using non edible oils and used cooking oil met challenges.
3. What biodiesel needs: Higher blending needs sustained research funding, better feedstock collection, viable supply chains and workable technology.
4. Diesel focus: If cutting oil import dependence is the goal, biofuel policy must give diesel greater attention.

How should the biofuel programme be judged?

1. The right measure: Judge the programme by the actual fall in crude oil demand and import spending, not by the litres of ethanol blended.
2. Full product range: Cutting import exposure means looking beyond the petrol pump to the full range of petroleum products India uses.

Challenges

1. Food versus fuel: The 2025 26 ethanol target may need 275 million tonnes of sugarcane, along with large volumes of maize and rice.
2. Subsidised grain: The government sold Food Corporation of India (FCI) rice for ethanol at ₹22.5 a kg against an economic cost of ₹42 a kg, so a food subsidy funds fuel.
3. Feed market shock: Ethanol’s by product DDGS (dried distillers grains with solubles, a protein feed) is displacing soybean meal and depressing soybean prices.

Way Forward

1. Second generation feedstocks: Shift to crop residue and municipal waste instead of food grain. Eg. Hindustan Petroleum’s Panipat plant uses crop stubble.
2. Surplus only grain ethanol: Restrict grain based ethanol to surplus years, as NITI Aayog’s 2021 Ethanol Roadmap advises, with buffer stock thresholds set first.
3. Flex fuel vehicles: Encourage carmakers to build flex fuel vehicles and give them demand certainty, so higher blends have vehicles to run in.

Conclusion

India’s energy security gain will depend on what happens to diesel, not on how much ethanol reaches the petrol pump. Watch whether the next biofuel policy revision sets a diesel side target and reports the fall in crude imports.

Key numbers

1. Barrel yield: Petrol is 15 to 18% of products from a barrel of crude, and diesel is about 44 to 45%.
2. Consumption: Between FY 2020 21 and FY 2024 25 India consumed about 503 million tonnes of diesel against 200 million tonnes of petrol.
3. Blend effect: A 20% blend cuts petrol consumption by about 15.56%.

Schemes and Initiatives for Biofuels

1. National Policy on Biofuels: It recognises four generations of biofuels, from edible feedstocks to crop residues, algae and advanced synthetic fuels.
2. Ethanol Interest Subvention Scheme: It gives distilleries soft loans with a 6% interest subvention.
3. PM JI VAN Yojana: It supports second generation ethanol made from crop residue.
4. SATAT: The Sustainable Alternative Towards Affordable Transportation (SATAT) initiative promotes Compressed Bio Gas from agricultural waste, targeting 5,000 plants by 2025.

Matching Previous Year Question

“[2020] According to India’s National Policy on Biofuels, which of the following can be used as raw materials for the production of biofuels? 1. Cassava 2. Damaged wheat grains 3. Groundnut seeds 4. Horse gram 5. Rotten potatoes 6. Sugar beet Select the correct answer using the code given below: (a) 1, 2, 5 and 6 only (b) 1, 3, 4 and 6 only (c) 2, 3, 4 and 5 only (d) 1, 2, 3, 4, 5 and 6 ANSWER: (a)”