Blending dilemma: Conflicting priorities on flex-fuel need clear policy

India’s ethanol-blending programme, designed to reduce dependence on fossil fuels and lower carbon emission, is a bold and commendable step towards sustainability. By blending ethanol with petrol, the country seeks to enhance energy security, mitigate the environmental impact of vehicular emission, and reduce dependence on imported crude oil, thereby strengthening its external position. In the past decade, India saved Rs 1.1 trillion in foreign exchange and 50 million tonnes of carbon-dioxide equivalent in emission. Ethanol-production capacity has more than doubled in the past four years to reach 16,230 million litres. In fact, the country has already achieved 14.6 per cent blending, aiming to increase it to 20 per cent by 2025. The government last week notified a lower price for rice supplied to ethanol producers.

 

However, the journey to increase it beyond 20 per cent and catch up with Brazil, a world leader in ethanol blending and second-generation ethanol production, is fraught with several challenges. Even as India tries to rapidly accelerate its biofuel production and blending capacity, investing around Rs 40,000 crore since 2014 in setting up ethanol distilleries, it should stay mindful of the inherent tradeoff between food security and fuel security. Ethanol in India is derived primarily from sugarcane, a crop that is not only water-intensive but is also being increasingly diverted to ethanol production, driving up retail sugar prices. The process of cultivating sugarcane has an adverse impact on groundwater levels. This can exacerbate water shortages, particularly in states like Maharashtra, Karnataka, and Uttar Pradesh. India witnessed a surge in demand for maize to arrest the heavy reliance on sugarcane-based ethanol. For the first time in several decades, the country became a net importer of maize because maize can also be used as the primary feedstock for the production of ethanol, used in blending with petrol. The provision of price support to farmers implies that food crop-based ethanol blending in petrol leads to high ethanol prices in the country. This area deserves attention from policymakers.

 

Yet another concern is related to the demand for ethanol blending. Other than feedstock issues and meeting the twin challenges of energy and food security, the demand for vehicles to use ethanol remains low. The automobile industry in the country seems reluctant to switch to making flex-fuel vehicles (FFVs). While the government is pushing for increased ethanol blending, the adoption of FFVs remains sluggish. FFVs are vehicles designed to run on more than one type of fuel, such as ethanol and petrol, offering greater flexibility for consumers. However, the lack of infrastructure for ethanol distribution, coupled with limited consumer awareness and higher costs associated with FFVs, has stifled demand. Overall, there is a need to shift to alternative feedstock like agricultural waste, non-edible oils, or second-generation biofuels. These alternatives could potentially provide a less resource-intensive pathway to achieve ethanol targets without compromising food security or exacerbating water stress. Additionally, without significant improvement in the adoption of FFVs, the ethanol-blending targets risk falling short of their potential impact.