Oil and Gas Sector – HELP, Open Acreage Policy, etc.

Ethanol Blending


From UPSC perspective, the following things are important :

Prelims level: Ethanol blended petrol (EBP) Program

Mains level: E-vehicles, Green technologies

Prime Minister has announced that India has achieved its target of blending 10% sugarcane-extracted ethanol in petrol, ahead of schedule.

What is ethanol blending?

  • Blending ethanol with petrol to burn less fossil fuel while running vehicles is called ethanol blending.
  • Ethanol is an agricultural by-product which is mainly obtained from the processing of sugar from sugarcane, but also from other sources such as rice husk or maize.
  • Currently, 10% of the petrol that powers your vehicle is ethanol.
  • Though we have had an E10 — or 10% ethanol as policy for a while, it is only this year that we have achieved that proportion.
  • India’s aim is to increase this ratio to 20% originally by 2030 but in 2021, when NITI Aayog put out the ethanol roadmap, that deadline was advanced to 2025.

Why need ethanol blending?

  • Ethanol blending will help bring down our share of oil imports (almost 85%) on which we spend a considerable amount of our precious foreign exchange.
  • Secondly, more ethanol output would help increase farmers’ incomes.
  • India’s net import of petroleum was 185 million tonnes at a cost of $55 billion in 2020-21.
  • A successful ethanol blending programme can save the country $4 billion per annum.

What are first-generation and second-generation ethanols?

  • With an aim to augment ethanol supplies, the government has allowed procurement of ethanol produced from other sources besides molasses — which is first-generation ethanol or 1G.
  • Other than molasses, ethanol can be extracted from materials such as rice straw, wheat straw, corn cobs, corn stover, bagasse, bamboo and woody biomass, which are second-generation ethanol sources or 2G.
  • While inaugurating the Indian Oil Corporation’s (IOC) 2G ethanol plant last week, PM referred to not only the prospect of higher farmer income but also dwelt upon the advantages of farmers selling the residual stubble — left behind after rice is harvested — to help make biofuels.
  • This means lesser stubble burning and therefore, lesser air pollution.

How have other countries fared?

  • Though the U.S., China, Canada and Brazil all have ethanol blending programmes, as a developing country, Brazil stands out.
  • It had legislated that the ethanol content in petrol should be in the 18-27.5% range, and it finally touched the 27% target in 2021.

How does it impact the auto industry?

  • At the time of the NITI Aayog report in June last year, the industry had committed to the government to make all vehicles E20 material compliant by 2023.
  • This meant that the petrol points, plastics, rubber, steel and other components in vehicles would need to be compliant to hold/store fuel that is 20% ethanol.
  • Without such a change, rusting is an obvious impediment.

Are there other alternatives?

  • Auto industry prefer the use of biofuels as the next step, compared to other options such as electric vehicles (EV), hydrogen power and compressed natural gas.
  • This is mainly because biofuels demand the least incremental investment for manufacturers.
  • Even though the industry is recovering from the economic losses bought on by the pandemic, it is bound to make some change to comply with India’s promise for net-zero emissions by 2070.

What are the challenges before the industry when it comes to 20% ethanol blended fuel?

  • Key challenge is the optimisation of engines for higher ethanol blends and the conduct of durability studies on engines and field trials before introducing E20 compliant vehicles.
  • Storage is going to be the main concern, for if E10 supply has to continue in tandem with E20 supply, storage would have to be separate which then raises costs.

Sources for ethanol in India

The plan was to divert its excess sugar production to produce ethanol, 3.5 million tonnes in 2021-22 and 6 million tonnes the next year, in addition to grains like rice, corn, and barley.

  • Using surplus rice: The government’s food department revealed its plans to divert 17 million tonnes of surplus rice from its food stocks of 90 million tonnes to produce ethanol.
  • Sugarcane: This is in addition to the 2 million tonnes of sugar which is already being diverted to produce ethanol.

How would this benefit the country?

  • Cost saving: A successful biofuels programme can save India $4 billion or about ₹30,000 crore every year by lowering import of petroleum products.
  • Emission cut: Ethanol is also less polluting and offers equivalent efficiency at a lower cost than petrol.
  • Biofuel’s policy boost: Rising production of grains and sugarcane and feasibility of making vehicles compliant to ethanol-blended fuel makes its biofuels policy a strategic requirement.
  • Early rollout: Towards this, govt has put in place interest subsidies for distilleries to expand capacity while auto firms have agreed to make compatible vehicles.

What are the unintended effects of the policy?

  • Unsustainability of cash-crops: Increasing reliance on biofuels can push farmers to grow more water-intensive crops like sugarcane and rice.
  • Huge water requirement: Currently use 70% of the available irrigation water, negating some positive impact on the environment of using more ethanol.
  • Food and nutrition security: The move could impact India’s hunger situation by limiting the coverage of the food security schemes.
  • Food inflation: Diversion of mass consumption grains can also push food prices up.

How will it impact crop diversification?

  • Monotonous crops: Although the biofuels policy stresses on using less water-consuming crops, farmers prefer to grow more sugarcane and rice due to price support schemes.
  • Water stress: Growing more of them can lead to an adverse impact in water-stressed areas in states.

What about food security?

  • It is unethical to use edible grains to produce ethanol in a country where hunger is rampant.
  • India is already a poor performer in Global Hunger Index.
  • Although about 80 crore people are now receiving subsidized food grains, calculations show that over 10 crore eligible households are still excluded.


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