Ethanol blending is the practice of blending petrol with ethanol. Many countries, including India, have adopted ethanol blending in petrol in order to reduce vehicle exhaust emissions and also to reduce the import burden on account of crude petroleum from which petrol is produced. The renewable ethanol content, which is a by product of the sugar industry, is expected to result in a net reduction in the emission of carbon dioxide, carbon monoxide (CO) and hydrocarbons (HC).
In countries like US, blending is allowed upto 10%. Subsequent to Brazil’s bio-fuel programme, which began in 1976, close to 94% of cars sold in Brazil are flexible fuel cars that can handle ethanol blends from 18 per cent upward .
The Indian government had launched the programme EBP in 2003 on pilot basis which was subsequently extended to 21 states and four Union Territories to promote the use of alternative and environment-friendly fuels. But the target of 10 percent blending of ethanol in petrol was never met. Since 2014, the government notified an administered price for ethanol. This move has significantly improved the supply of ethanol in the recent four years.
Ethanol blending is predicted to grow to 8% since better prices have been offered by oil marketing companies as per Petroleum Minister, Dharmendra Pradhan. Additional loans would be provided to mills producing ethanol to increase their capacity. Blending of ethanol with oil has significantly grown from 1% to 4% in the last half a decade. And it is very well expected to reach 7-8 percent in 2018-19 sugar year (October-September).
However, increasing the production of biofuels can strain India’s water resources and affect food availability. Among biofuels, ethanol appears to be the most viable alternative, and the government intends to raise ethanol blending in petrol to 20% by 2030 from the current 2-3%. India’s water requirements for producing ethanol are not met through rain water.
The government has provided soft loans for the first applicants for increasing their ethanol production capacity and will soon be sanctioning loans for the second group. So far, the government has approved loans of almost Rs 4440 crore for the same which will bear them interest of about Rs 1332 crore over the next 5 years.
Later in September, the government approved an over 25 per cent hike in the price of ethanol produced directly from sugarcane juice for blending in petrol in a bid to cut surplus sugar production and reduce oil imports.
There has been a peak rise in the volume of ethanol produced by public sector OMCs from 38 crore in 2013-14 to an estimated 150 crore in 2017-18. OMCs have ordered 260 litres more and hence ISMA president Gaurav Goel is confident that the ethanol blending will reach 8%. For 10 per cent blending, there is a requirement of 330 crore litres of ethanol.