Excessive sugar is bad for health. Too much of it can also have serious ill effects on your car. India's 50 mn auto owners are now being forced to swallow this bitter truth as GoI is enforcing one of the most audacious biofuels-blending mandates in the world.
India hit the 20% ethanol-petrol (E20) target in August, five years early. Now the petroleum ministry wants to push further, mixing more ethanol from high- starch crops like sugarcane, maize or rice into gasoline.
GoI is oiling the sarkari wheel to launch blended fuel with 27% ethanol by 2027. This, it says, will significantly reduce the crude oil import bill, carbon footprint and tailpipe emissions, while creating more green jobs and financially empowering farmers who can supply feedstock and gainfully participate in our energy economy.
It, indeed, is a bonanza for the influential farm lobby. Maize prices have risen around 70% in 5 years as farmers and distillers have ensured 17x jump in ethanol production in the last decade. Capacity addition by private sugar mills has been 3x in 5 years, while an estimated ₹40k cr has been ploughed into ethanol capacity since 2014. As per GoI, at 20% blending, farmers can expect a windfall of the exact same amount in this fiscal, and forex savings will be about ₹43k cr.
But this maths overlooks the hidden cost of mileage loss. Calorific value of ethanol is significantly lower than that of petrol, even if its octane number is higher. Ethanol packs about 35% less energy per litre than petrol. So, when blended, it reduces the energy content of road fuel. Unless car engines are recalibrated, this translates into efficiency loss. At higher blends, this impact becomes significant: 5-6% mileage loss with E20, and 7-8% with E27, even though petroleum ministry-commissioned studies report lower figures.
According to GoI, 7 bn litres of ethanol were blended in Ethanol Supply Year (ESY) 2023-24, achieving an average blending rate of 14.6% in about 50 bn l of petrol. A 2% mileage loss when moving from E15 to E20 would require consumers to buy an extra 1 bn l of petrol every year, according to a new study by Wisdomsmith Advisors. At a national average price of ₹100/l (post-tax), it means an additional fuel bill of ₹10k cr/yr for consumers.
Moving to E27 may double the burden for consumers and GoI, assuming prices and consumption remain the same. India's fossil fuel import bill (excluding coal) is about ₹22 lakh cr annually. Mileage losses at E27 or more blends could potentially wipe out over 25% of ₹43k cr forex savings claimed for this year.
Ironically, GoI's path to a cleaner, greener environment relies on plant-based alternatives like ethanol that are worse for the climate in the long term than petrol. It's highly energy-intensive to make, and releases considerable amount of CO2.
By turning large agricultural parcels into cash fields of intensive maize or water-guzzling sugarcane farms, the policy whets the appetite of small, influential interest groups. But the misalignment feeds food inflation. This vicious cycle perpetuates as farmers must plant more crops and use more fertiliser, thereby producing more emissions.
Thrusting such a radical fuel transition on consumers is wrong. 90% of cars are non-compatible with E20 standards, and higher blends decrease mileage, corrode the fuel tank, and damage other crucial parts of an older car. Overnight, their maintenance cost and petrol bill have gone up. Baby steps with differential petrol pricing for various grades of gasoline could have been a smarter start.
What is aggravating their backlash is zero information on how much ethanol is flowing into fuel tanks at petrol pumps. It's near impossible to find, and use, unblended fuel. Such non-transparency, coupled with poor messaging, is fuelling confusion, consternation and chaos among OMCs, carmakers, insurers and consumers, each blaming the other.
The auto industry also has had over two years to deliver flexi-fuel cars and save the public from mass anxiety at the petrol station or when registering insurance claims. Being a polarised fraternity - ICE, EVs and hybrid - it gets that much tougher for any one side to exert dominant influence.
Blends are here to stay. But we should flush out ethanol from our fuel tanks and go for battery cars, especially for personal mobility. India can also jump- start usage of bio-blends in mass transportation, trucking or even aviation, where mass electrification remains a pipe dream. This would be a workable alternative to diesel.
From potholed roads and traffic snarls to waterlogged cities, not to mention paying one of the highest car taxes in the world, India's vehicle owners have many woes. Why add more bitterness to the mix?
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India hit the 20% ethanol-petrol (E20) target in August, five years early. Now the petroleum ministry wants to push further, mixing more ethanol from high- starch crops like sugarcane, maize or rice into gasoline.
GoI is oiling the sarkari wheel to launch blended fuel with 27% ethanol by 2027. This, it says, will significantly reduce the crude oil import bill, carbon footprint and tailpipe emissions, while creating more green jobs and financially empowering farmers who can supply feedstock and gainfully participate in our energy economy.
It, indeed, is a bonanza for the influential farm lobby. Maize prices have risen around 70% in 5 years as farmers and distillers have ensured 17x jump in ethanol production in the last decade. Capacity addition by private sugar mills has been 3x in 5 years, while an estimated ₹40k cr has been ploughed into ethanol capacity since 2014. As per GoI, at 20% blending, farmers can expect a windfall of the exact same amount in this fiscal, and forex savings will be about ₹43k cr.
But this maths overlooks the hidden cost of mileage loss. Calorific value of ethanol is significantly lower than that of petrol, even if its octane number is higher. Ethanol packs about 35% less energy per litre than petrol. So, when blended, it reduces the energy content of road fuel. Unless car engines are recalibrated, this translates into efficiency loss. At higher blends, this impact becomes significant: 5-6% mileage loss with E20, and 7-8% with E27, even though petroleum ministry-commissioned studies report lower figures.
According to GoI, 7 bn litres of ethanol were blended in Ethanol Supply Year (ESY) 2023-24, achieving an average blending rate of 14.6% in about 50 bn l of petrol. A 2% mileage loss when moving from E15 to E20 would require consumers to buy an extra 1 bn l of petrol every year, according to a new study by Wisdomsmith Advisors. At a national average price of ₹100/l (post-tax), it means an additional fuel bill of ₹10k cr/yr for consumers.
Moving to E27 may double the burden for consumers and GoI, assuming prices and consumption remain the same. India's fossil fuel import bill (excluding coal) is about ₹22 lakh cr annually. Mileage losses at E27 or more blends could potentially wipe out over 25% of ₹43k cr forex savings claimed for this year.
Ironically, GoI's path to a cleaner, greener environment relies on plant-based alternatives like ethanol that are worse for the climate in the long term than petrol. It's highly energy-intensive to make, and releases considerable amount of CO2.
By turning large agricultural parcels into cash fields of intensive maize or water-guzzling sugarcane farms, the policy whets the appetite of small, influential interest groups. But the misalignment feeds food inflation. This vicious cycle perpetuates as farmers must plant more crops and use more fertiliser, thereby producing more emissions.
Thrusting such a radical fuel transition on consumers is wrong. 90% of cars are non-compatible with E20 standards, and higher blends decrease mileage, corrode the fuel tank, and damage other crucial parts of an older car. Overnight, their maintenance cost and petrol bill have gone up. Baby steps with differential petrol pricing for various grades of gasoline could have been a smarter start.
What is aggravating their backlash is zero information on how much ethanol is flowing into fuel tanks at petrol pumps. It's near impossible to find, and use, unblended fuel. Such non-transparency, coupled with poor messaging, is fuelling confusion, consternation and chaos among OMCs, carmakers, insurers and consumers, each blaming the other.
The auto industry also has had over two years to deliver flexi-fuel cars and save the public from mass anxiety at the petrol station or when registering insurance claims. Being a polarised fraternity - ICE, EVs and hybrid - it gets that much tougher for any one side to exert dominant influence.
Blends are here to stay. But we should flush out ethanol from our fuel tanks and go for battery cars, especially for personal mobility. India can also jump- start usage of bio-blends in mass transportation, trucking or even aviation, where mass electrification remains a pipe dream. This would be a workable alternative to diesel.
From potholed roads and traffic snarls to waterlogged cities, not to mention paying one of the highest car taxes in the world, India's vehicle owners have many woes. Why add more bitterness to the mix?
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Arijit Barman