How methanol as a fuel can help India reduce its emissions and import bill?

The Indian government has said that methanol has the potential to replace petrol and diesel in transportation and LPG in cooking fuel.

With India moving towards its goals of net-zero emissions and energy self-sufficiency, the government is looking at fuel options which would help the country in achieving the set targets.

Methanol, a clean fuel, has come up as an efficient option for India as it would reduce the country’s import dependency for fuel and also lower emissions. Energy needs of India are expected to be among the highest in the world in the coming years but the country’s energy needs are majorly met by imports.

Moneycontrol looks at the use of methanol as a fuel in India and its implications on emissions and import bill of the country.

Why methanol is being considered as an option?

As India advances towards net-zero emissions goals, alternative fuels such as methanol, green hydrogen and renewables have come in focus. The Indian government has said that methanol has the potential to replace petrol and diesel in transportation and LPG in cooking fuel. Methanol is a low-carbon, clean fuel produced from high ash coal, agricultural residue, carbon dioxide from thermal power plants and natural gas.

India’s consumption of petrol has increased by over 6 percent in the financial year 2023-24 from last year, while diesel consumption was up by 4 percent. The consumption of these fuels is expected to continue to rise in the coming years as well with India’s economic growth.

Meanwhile, India is dependent on imports of crude oil—key requirement for manufacturing petrol and diesel—for over 85 percent of its needs. Methanol, therefore, could bring down India’s energy imports and in turn reduce its import bill.

What are government’s targets for methanol?

The government plans to blend methanol with petrol for which Ministry of Road, Transport and Highways has issued notification for M-15 (15 percent methanol with 85 percent petrol), M-85 and M-100 blends. The government think-tank Niti Aayog has said blending 15 percent methanol in gasoline can result in at least 15 percent reduction in the import of gasoline/crude oil.

Test standards and plans for the M-15 blend are being evolved in consultation with the Indian Oil Corporation Limited (IOCL), Automotive Research Association of India and Society of Indian Automobile Manufacturers (SIAM).

Other than petrol, the Bureau of Indian Standards has notified 20 percent blending of DME (di-methyl ether), which is a derivative of methanol, with LPG. Blending 20 percent DME in LPG could save Rs 6,000 crore annually, while it could help consumers in saving between Rs 50-100 per cylinder, according to government data.

What would be the impact on India’s emissions?

Use of methanol at the set targets is expected to bring down greenhouse gas emissions by 20 percent in India. Road and Highways minister Nitin Gadkari had earlier recommended the use of methanol trucks and methanol-blended diesel to bring down the cost of logistics. In 2022, IOCL had rolled out M-15 in Assam on a pilot basis.

The government has said that use of methanol would also create close to 5 million jobs through methanol production, application and distribution services.

What other alternative fuels are being explored by the government?

Similar to methanol, the government has been pushing for the increased use of ethanol in the country. According to the oil ministry, ethanol blending with petrol was around 13 percent in February while 11,444 PSU outlets out of 80,751 total PSU retail outlets are currently dispensing E20 or 20 percent ethanol blended petrol.

For India to achieve energy independence and meet its net-zero targets by 2070, the government is focusing on several alternate fuels including compressed biogas (CBG), renewables, green hydrogen, and natural gas as a transition fuel.