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The issue of ethanol blending has occupied centre stage in India’s policy today. To reduce carbon emissions and cut down the huge crude oil import bill, the government has actively pushed the National Policy on Bio-fuels.
The rollout of E20 fuel (petrol mixed with 20 per cent ethanol) has have become a reality across the country. While the direct economic benefits of this programme are huge, a serious ecological issue looms in rural areas. As the government increases ethanol production capacity to meet its targets, will this policy worsen aquatic environments scarcity?
The biggest benefit of the ethanol blending programme is reducing oil imports. India imports greater than 85 per cent of its crude oil standards, which is a huge drain on our forex reserves.
In FY25,234.3 million tonnes (mt) of crude oil were imported at $137 billion. At the 20 per cent blending level, India can save forex worth about ₹40,000 crore a year on its crude oil import bill.
Furthermore, there are environmental benefits as well. Ethanol contains oxygen that helps petrol burn completely, reducing the discharge of harmful atmosphere contaminants like carbon monoxide and particulate matter from vehicles. This programme can also benefit farmers by creating a guaranteed market to rice, maize and sugarcane.
However, what is the cost of producing this fuel at the farm level? Unlike developed nations that consumption non-food crop residues and wood discarded materials to make cutting-edge bio-fuels, India relies almost entirely on primary agricultural crops, mainly sugarcane, paddy and maize.
India’s annual sugarcane production is at around 455 mt. The juice and heavy molasses from this crop are utilized to distillation. Paddy, which has an annual production of 150 mt and maize, with a production of about 43 mt are now being diverted to distilleries. Even though the government states that only surplus or damaged grains are utilized, the substantial targets of the E20 mandate mean that millions of tonnes of food crops are being earmarked to fuel.
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