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Ethanol Blending

2023 DEC 12

Mains   > Economic Development   >   Indian Economy and issues   >   Renewable energy

Syllabus: GS 3   > Economic Development   >  Indian Economy and issues  >   Renewable energy



  • Recently, in a letter issued to all sugar mills and distillers, the central government directed them 'not to use sugarcane juice or sugar syrup' for ethanol production during the 2023–24 ethanol supply year. 


  • The government's decision was due to an expected drop in sugar production and price volatility following below-average rainfall in major sugarcane states like Maharashtra and Karnataka, resulting in reduced yields.
  • The government’s ambitious target of attaining  20 percent ethanol-blended petrol by 2024–25 is likely to face setbacks due to this move.
  • The Centre has also targeted 5 per cent blending of biodiesel with diesel by 2030.


  • An ethanol blend is defined as a blended motor fuel containing ethyl alcohol that is at least 99% pure, derived from agricultural products, and blended exclusively with petrol (gasoline).


  • Ethanol, a volatile, colorless liquid, is a key biofuel produced naturally by fermenting sugars or via petrochemical methods.
  • In India, ethanol is primarily produced using sugarcane molasses. As of April 2023, India's ethanol production capacity is approximately 9.5 billion liters, with 6.2 billion liters from sugarcane molasses.
  • Ethanol also produced from starches in potatoes, corn, wheat, and other plants.
  • Since ethanol is produced from plants that harness the power of the sun, ethanol is also considered as renewable fuel.


  • Energy security:
    • Higher usage of ethanol as an automobile fuel will help save import costs, as India's dependence on crude oil imports has been increasing over the years. 
    • In the period from April to August 2023, this dependence rose to 87.8%, compared to 86.5% in the same period a year earlier, according to the Ministry of Petroleum and Natural Gas.
    • It is estimated that the E20 (80% petrol and 20% Ethanol) program can save USD 4 billion (Rs 30,000 crore) per annum for India.
  • Cleaner Environment:
    • One crore liter of E10 (90% petrol and 10% Ethanol) saves around 20,000 ton of CO2 emissions.
    • As the ethanol molecule contains oxygen, it allows the engine to more completely combust the fuel, resulting in fewer emissions and thereby reducing the occurrence of environmental pollution. Also, by reducing crop burning a conversion of agricultural residues/wastes to biofuels there will be further reduction in Green House Gas emissions.
  • Additional Income to Farmers:
    • By adopting 2G technologies, agricultural residues/waste can be converted to ethanol and can fetch a price for Indian farmers. Also, conversion of surplus grains and agricultural biomass can help in price stabilization.

Categories of biofuels

Biofuel can be categorized into different categories depending on the materials used for its production.

  • First Generation Biofuel: Conventional biofuels, derived from food sources such as starch, sugar, and vegetable oil, like ethanol from sugarcane or sugar beets.
  • Second Generation Biofuel: Also known as "olive green" or "cellulosic-ethanol," produced from sustainable non-food materials, including waste vegetable oil and forest residues.
  • Third Generation Biofuels: Referred to as "algae fuel" or "oilage," sourced from algae, generating a high yield of biofuels like biodiesel, gasoline, and ethanol.
  • Fourth Generation Biofuels: Involves the use of advanced biotechnology, featuring bio-engineered trees and algae, known for carbon capture and storage capabilities, representing a significant advancement in biofuel technology.
  • Waste Management:
    • It is estimated that annually 62 MMT of Municipal Solid Waste gets generated in India. There are technologies available which can convert municipal solid waste to drop in fuels.
    • One ton of such waste has the potential to provide around 20% of drop-in fuels.
  • Cheaper alternative:
    • While petrol is subject to excise dutyGST is levied on ethanol. Hence, the usage of ethanol blended fuel will enable consumers to save Rs 30-35 per liter.
  • Investment in Rural Areas:
    • Oil Marketing Companies are in the process of setting up 2G bio refineries across the Country. This will spur infrastructural investment in the rural areas.
  • Employment Generation:
    • Ethanol production and bio refinery can contribute to jobs in Plant Operations, Village Level Entrepreneurs and Supply Chain Management.
  • Other benefits of ethanol being used as engine fuel:
    • With a 113 octane rating, ethanol is the highest performance fuel on the market and keeps today's high-compression engines running smoothly.
    • Ethanol-blended fuel keeps the fuel system clean for optimal performance because it does not leave gummy deposits. Ethanol helps prevent wintertime problems by acting as a gas-line antifreeze.


  • An FFV is a modified version of vehicles that could run both on conventional petrol and doped petrol with different levels of ethanol blends.
  • These vehicles are a logical extension of the Ethanol Blended Petrol (EBP) programme launched by the Union Ministry of Petroleum and Natural Gas in 2003.
  • These are currently being used successfully in Brazil, giving people the option to switch fuel (Petrol and ethanol) depending on price and convenience.



  • Availability of Blended fuel:
    • Ethanol production in India is heavily dependent on the production of sugar and sugarcane, which fluctuates due to the cyclic nature of the crop. Hence sufficient quantity of ethanol is not available for blending.
    • Eg: Only around 50% of petrol sold in India is E10 blended, while remaining is unblended petrol (E0).
  • Delays in getting clearance:
    • Ethanol production plants/distilleries fall under the “Red category” and require environmental clearance under the Air and Water Acts for new and expansion projects. This often takes a long time leading to delays.
  • Lower efficiency:
    • The calorific value of ethanol is low and this leads to reduction in performance.
    • Ethanol also acts as a solvent and could affect the lubrication system in engines, thereby increasing wear and tear.
  • Higher cost of vehicles:
    • According to the Society of Indian Automobile Manufacturers (SIAM), the cost of FFVs (four-wheelers) would be higher by Rs 17,000 to Rs 25,000 and Rs 5,000 to Rs 12,000 for two-wheelers compared to conventional petrol vehicles.
  • Customer acceptance:
    • Flex fuel vehicles (FFV) would be more expensive than regular vehicles due to the upgradation of materials, engine parts and fuel system. Hence, customer acceptance will be a major challenge.
  • Concerns of Industry:
    • FFVs would require additional investment in production lines and technology transfer. For auto industry, this will pose another challenge that they are already facing with the introduction of BS VI fuel, disruptions due to pandemic and competition from electric vehicles.
  • Changes in existing fleet of vehicles:
    • Currently produced vehicles in India are designed optimally for E5, with rubber and plastic components compatible with E10 fuel.
    • As E20 rolls out, vehicles need to be produced with components and elastomers compatible with E20 and engines optimally designed for use of E20 fuel.
  • Ethical concerns:
    • Despite being an agrarian powerhouse, India has a high incidence of poverty and malnutrition. In this situation, diverting food grains for ethanol production rather than addressing issues in food distribution raises ethical concerns.


  • National Biofuel Policy, 2018
    • The Policy categorizes biofuels as basic and advanced to enable extension of appropriate financial and fiscal incentives under each category.
      • Basic Biofuels: First Generation (1G) bioethanol and biodiesel.
      • Advanced Biofuels: Second Generation (2G) ethanol, Municipal Solid Waste (MSW) to drop-in fuels, Third Generation (3G) biofuels, bio-CNG etc.
    • The Policy broadens ethanol production sources to include sugarcane juice, sugar-rich materials like sugar beet and sweet sorghum, starch-based corn and cassava, and damaged grains unfit for consumption. 
    • It permits using surplus food grains for ethanol production with the National Biofuel Coordination Committee's approval. The Policy also supports advanced biofuels with a Rs. 5000 crore viability gap funding for 2G ethanol bio-refineries.
  • Pradhan Mantri JI-VAN Yojana:
    • The scheme aims to provide financial support to integrated bioethanol projects using lignocellulosic biomass and other renewable feedstock.
  • Modified scheme to produce 1G ethanol:
    • It aims for extending financial assistance for producing 1st generation (1G) ethanol from feed stocks such as cereals (rice, wheat, barley, corn and sorghum), sugarcane and sugar beet.
  • Ethanol Blended Petrol (EBP) programme:
    • The Ethanol Blending Programme (EBP), launched in January 2003, aims to mix ethanol with motor spirit to reduce pollution, conserve foreign exchange, and support the sugar industry. Initially limited to sugarcane-derived ethanol, the program expanded in 2018 to include ethanol from food grains, fruits, vegetables, and other waste.
  • Roadmap for Ethanol Blending in India by 2025:
    • The central government has recently released an expert committee report on the Roadmap for Ethanol Blending in India by 2025.
  • GOBAR DHAN Scheme:
    • Launched in 2018, GOBAR (Galvanizing Organic Bio-Agro Resources) Dhan scheme aims to positively impact village cleanliness and generate wealth and energy from cattle and organic waste.It also aims at creating new rural livelihood opportunities and enhancing income for farmers and other rural people.
  • Repurpose Used Cooking Oil (RUCO):
    • The Food Safety and Standards Authority of India (FSSAI) has launched this initiative that will enable collection and conversion of used cooking oil to biodiesel.


  • Ensure sustained production and availability:
    • Sugarcane and grain-based ethanol production capacities needs to be augmented if India is to attain the desired outcomes of ethanol blending. For this, augmentation of production and storage systems, transport of ethanol from surplus to deficit states and special efforts to attract investors needs to be taken.
  • Diversification of feedstock:
    • Sugarcane has among the highest water consumption per acre among major Indian crops. As an alternative, the production of ethanol from maize and other low-water-consuming feed stocks may be encouraged.
    • In the long term, production of ethanol from non-food feedstock (Advanced Biofuels) including second generation (2G) should be promoted so that production will sustain without causing any tradeoff with the food production system.
  • Expedite Clearances:
    • A system for single window clearances may be formulated to accord speedy clearances for new and expansion projects for ethanol production. This should include all clearances by Central and State agencies.
  • Support for industry:
    • Government may provide support to industry for introduction of FFVs, development of technologies and retrofitting of existing fleet through tax breaks, product linked subsidies etc.
  • Incentives for customers:
    • For better acceptability of higher ethanol blends in the country, retail price of such fuels should be lower than normal petrol to compensate for the reduction in efficiency and incentivize switching to blended fuel.


Q. “Ethanol blending will be crucial for India to achieve energy security and to transform to a thriving low carbon economy”. In this context, discuss the prospects and challenges associated with ethanol blending and mention the government initiatives in this regard?(15 marks,250 words)