OPINION | Hormuz shutdown shows ethanol blend mandate for petrol added to energy security

Geopolitical tensions around key global chokepoints such as the Strait of Hormuz serve as a stark reminder of the vulnerabilities associated with fossil fuel dependence.

In a constantly volatile geopolitical environment, energy security is increasingly becoming a matter of national security for every country particularly for India, which imports over 89% of its oil and a vast majority of its gas.

The tremors of conflict in West Asia are not merely headlines; they represent direct threats to the Indian economy. While dependence on traditional fossil fuels continues to expose the country to external shocks, a homegrown solution has quietly begun strengthening India’s energy resilience. 

Ethanol blending and the pivot to biofuels

India’s strategic pivot to biofuels, particularly ethanol blending, is increasingly proving to be an important buffer against global disruptions. In the event of supply shocks, the current 20% ethanol blending (E20) ensures that a significant portion of India’s petrol consumption is produced domestically rather than imported.

The ethanol programme currently displaces approximately 6 to 8 million tonnes of crude oil every year. This is equivalent to more than two months of India’s annual petrol consumption and nearly 3.5% of the country’s total crude oil consumption. The real value of this initiative becomes most evident during periods of global supply disruptions. 

‘Weeks of cover’ metric

When geopolitical crises erupt in regions such as the Persian Gulf, a key metric for any country is its “weeks of cover”, the time a nation can continue operating on existing fuel stocks.

By achieving 20% ethanol blending, India effectively reduces its crude oil requirement for petrol by one-fifth. In practical terms, this adds roughly one additional week of cover for every four weeks of petrol inventories, providing valuable breathing space during supply shocks.

Takeaway is the importance of policy alignment with resource availability

This reliance on biofuels as a strategic national asset has not always been widely accepted. Only a few months ago, sceptics dismissed ethanol blending as mere adulteration. Media and social media were flooded with claims that ethanol damages engines, dilutes fuel quality, and wastes public money. However, the current geopolitical uncertainty has demonstrated the strategic logic behind India’s biofuel push.

India’s ethanol journey itself is a powerful example of how policy alignment can transform sectors. By linking agricultural surplus with energy needs, the Ethanol Blended Petrol (EBP) programme has evolved from a slow-moving initiative into a major component of India’s energy strategy. In 2014, ethanol blending in petrol stood at a modest 1.5%. Within a decade, the country has achieved 20% blending, marking a major policy success with a clear roadmap for further expansion.

The benefits extend beyond energy security. By substituting a portion of every litre of petrol with locally produced ethanol, India has saved billions of dollars in foreign exchange while simultaneously ensuring that billions of rupees flow back to Indian farmers. This dual benefit supporting both rural incomes and national energy resilience has made ethanol blending one of the most effective policy interventions in the energy sector.

Biodiesel and CBG offer high potential

Ethanol’s success also provides an important blueprint for expanding other biofuels in India’s energy mix. While biodiesel and compressed biogas (CBG) are still at relatively early stages and together account for less than 1% of the country’s energy consumption, their potential remains significant for the world’s third-largest energy consumer.

Recognising this potential, the government has begun introducing similar policy frameworks for other biofuels. The Compressed Biogas Blending Obligation (CBO) will begin with 1% blending for CNG and PNG in 2025, gradually increasing to 5% by 2028–29.

In the aviation sector, a Sustainable Aviation Fuel (SAF) roadmap is also being developed, starting with 1% blending for international flights by 2027, increasing to 2% by 2028 and 5% by 2030. For biodiesel, the current indicative target is 5% blending by 2030.

In terms of crude replacement, the potential of the bioenergy sector is considerable. A fully developed bioenergy ecosystem could produce over 130 million tonnes of oil equivalent (Mtoe) by 2040, enabling biofuels to meet roughly 15% of India’s total energy demand.

Specifically, CBG alone has the theoretical potential to replace a substantial share of imported LNG, while SAF could eventually meet up to 50% of the fuel requirements for the domestic aviation sector, significantly reducing import dependency.

Geopolitical tensions around key global chokepoints such as the Strait of Hormuz serve as a stark reminder of the vulnerabilities associated with fossil fuel dependence. At the same time, they highlight the importance of strengthening domestic alternatives.

Biofuels led by ethanol have opened an important window of opportunity for India. By expanding the ethanol success story to biodiesel, CBG and SAF, the country can further strengthen this homegrown strategic shield, transforming energy vulnerability into resilience while reducing long-term import dependence.

(Pankaj Sharma, Former Additional Director, Petroleum Planning and Analysis Cell (PPAC), MoPNG.) 

(Vews expressed are personal and do not represent the stand of this publication.)