INDIA REPORT
The government of India has amended its National Policy on Bio-fuels that will accelerate the adoption of E20, allow the use of new bio-fuel feedstocks, and grant permission for bio-fuel exports under certain conditions.
Source: Ethanol Producer Magazine Read The Article
PSR Analysis: To tackle soaring fuel oil prices, India plans to introduce 20% ethanol blending with gasoline in several regions of the county beginning in April 2023, and it will be implemented nationwide starting in FY25. The Indian government has expediated the process to increase local oil production and the transition to alternative fuels to reduce the dependencies on other countries. Currently, India is using a 10% mixture of ethanol and gasoline.
According to the India government think tank Niti Aayog, India’s net import of petroleum was 185 Mt at a cost of US$ 55 billion in 2020-21. A successful ethanol blending program is expected to save US$ 4 billion annually. Availability of large areas of arable land, rising production of food grains and sugarcane leading to surpluses, availability of technology to produce ethanol from plant-based sources, and the feasibility of making vehicles compliant to ethanol blended petrol make E20 an important strategic requirement. The government hopes to save up to US$ 6.5 billion in the current FY from ethanol blending
However, the biggest challenge with this process is the shortage of ethanol. The country needs more than 1,000 crore liters of ethanol to achieve its 20% target and the country needs an estimated 600 crore liters more ethanol to meet this goal. Ethanol is the byproduct of the sugar industry, and it may have to divert 60+ lakhs tons of extra sugar to meet the ethanol demand.
The country also needs to introduce more area under cultivation of raw material products which can be converted into ethanol.
However, using food-based raw material to generate ethanol will affect India’s world hunger index (currently 101 in 106 countries). Also, existing vehicles are compatible with 7-10% ethanol-blended gasoline, so an increase in blending would mean reduced efficiencies of engines. Replacing vehicle inventories would require significant investment in retrofitting and calibrations. This level of modification and calibration of vehicles will require large scale investment in infrastructure. To offset this, the government might have to consider tax incentives on E10 and E20 fuel. PSR
Aditya Kondejkar is Research Analyst – South Asia Operations for Power Systems Research
