Moneycontrol Explains: India is upbeat on its ethanol blending target. But what are the challenges?

In India’s plan of achieving net zero targets by 2070, ethanol blending in petrol has found a respectable position as the country pledges to reduce its dependency on fossil fuels.

Prime Minister Narendra Modi’s government aims to achieve 20 percent blending of ethanol in petrol by 2025, from the previous target of 2030, compared to the present levels of 10 percent.

While India achieved its target of 10 percent blending ahead of target and the government is upbeat about its next target of 20 percent blending, there will be some challenges going forward, industry players believe. Before getting into the challenges, let's understand why the government is pushing blending in petrol.

What is ethanol, and why the need for ethanol blending?

Ethanol is an organic compound primarily produced by the process of fermentation of sugar-based crops, such as sugarcane.

Ethanol, a biofuel, is also produced from corn, agriculture residues, such as corn and rice stalks, and certain heavy molasses — a byproduct of producing sugar.

The Indian government is pushing for the blending of ethanol — which can be done domestically — in petrol, to become self-reliant in energy as the country imports nearly 85 percent of its oil needs. India is the fifth-largest producer of ethanol in the world, after the US, Brazil, the European Union (EU) and China.

In addition to the plans of achieving 20 percent ethanol blending by 2025, the Modi government has also talked about E85 fuel or flex fuel. Flex fuels, also known as flexible fuels, has ethanol concentration ranging from zero percent to 100 percent.

Union Minister of Petroleum and Natural Gas Hardeep Singh Puri has often emphasised that India would not stop at 20 percent blending, but would rather aim for higher blend of the biofuel in petrol.

Are Indian vehicles ready for 20 percent blending?

Advancement of 20 percent ethanol blending by five years would mean a quicker transition of vehicles by automakers, as not all vehicles are compatible with E20 fuel.

In India, vehicles manufactured since 2008 are compatible with E10 fuel. However, for using E20 fuel, certain design and material changes would be required in automobiles. Several automakers have pledged to make their vehicles compliant with the E20 fuel by 2025.

Though no significant changes in vehicles would be required for E20 fuel, a completely new design for engines would be necessary for higher blending of ethanol in petrol than 20 percent (or flex fuel).

Additionally, the production cost of vehicles would also go up with the use of flex-fuel engines — compatible with higher ethanol concentration fuel.

What about fuel efficiency?

Compared to petrol, ethanol-blended fuel has lower energy, and therefore, would impact the efficiency of the fuel. For instance, the fuel economy for

E20 fuel (20 percent ethanol and 80 percent petrol) decreases up to 6 percent on average, depending on the type of vehicle.

When ethanol is blended with petrol, the efficiency of the fuel is compromised. To make up for the efficiency, additional changes in engine would be required.

Is the ethanol supply chain ready to deliver higher blending?

For the execution of the ambitious plan of ethanol blending, the government needs to ramp up the production of ethanol in the country.

India is one of the largest producers of sugarcane — the primary source for the production of ethanol — in the world. Though ethanol can be produced from several other sources, such as corn, rice and barley, sugarcane remains the major source for ethanol production in India.

However, increasing the production of sugarcane in the country would require large amounts of water and land. That could be a challenge for the government.

Another looming worry is that ethanol production is a food security factor. For ethanol blending plans to succeed, a significant share of sugarcane would need to be diverted towards ethanol production creating worries of food security in the country.

How can 3G ethanol help?

In another futuristic initiative related to ethanol production, the government is talking about third-generation or 3G ethanol plants. 3G ethanol is produced by algae grown in wastewater, sewage or salt water.

In India, 1G ethanol is manufactured from feedstock, such as cereals, sugarcane juice and molasses, while 2G ethanol plants utilise surplus biomass and agricultural waste as raw material.

The advantage of using 3G ethanol is that it does not interfere with food crops, thus solving the issue of food security. Unlike 1G and 2G ethanol, which use either food crops or residue of crops, 3G ethanol is produced by algae.

Oil marketing companies (OMCs), such as Indian Oil Corporation Limited (IOCL) have begun working on 3G ethanol plants.