Trailblazing Ethanol Blending Target E20
India, due to the coordinated efforts of the Public Sector Oil Marketing Companies (OMCS), has attained an average 10 per cent ethanol blending in petrol under the Ethanol Blended Petrol (EBP) programme across the country in May 2022 much ahead of the targeted timelines of November, 2022. This achievement in the course of last eight years has not only augmented India’s energy security but also translated into a forex impact of over Rs 41,500 crore, reduced Green House Gas (GHG) emissions of 27 lakh Metric Tonne (MT) and also led to the expeditious payment of over Rs 40,600 crore to farmers.
In 2022, according to United States Department of Agriculture (USDA) Foreign Agricultural Services (FAS), India is estimated to achieve an average annual national ethanol blend rate of 9.3 per cent, a new record, and a 15 per cent increase over last year. India’s average monthly blending rate reached 9.9 per cent in May 2022 with recovering transportation fuel demand which remained well below pre pandemic levels.
On May 18, 2022, the Union Cabinet approved amendments to the National Policy on Biofuels (NPB) - 2018. The main amendments approved to the NPB include - to allow more feedstocks for production of biofuels; to advance the ethanol blending target of 20 per cent blending of ethanol in petrol to ethanol supply year (ESY) 2025-26 from 2030; to promote the production of biofuels in the country, under the Make in India programme, by units located in Special Economic Zones (SEZ)/ Export Oriented Units (Eous); to add new members to the National Biofuel Coordination Committee (NBCC); to grant permission for export of biofuels in specific cases, and to delete/ amend certain phrases in the Policy in line with decisions taken during the meetings of NBCC.
This amendment will attract and foster developments of indigenous technologies and will pave the way for Make in India drive thereby generating more employment and leading to reduction in import of petroleum products by generation of more and more biofuels. Since many more feedstocks are being allowed for production of biofuels, this will promote * Atmanirbhar Bharat and give an impetus to India becoming 'energy independent' by 2047.
The ‘National Policy on Biofuels’ notified by the Government in 2018 envisaged an indicative target of 20 per cent ethanol blending in petrol by year 2030. However, considering the encouraging performance, due to various interventions made by the Government since 2014, the target of 20 per cent ethanol blending was advanced from 2030 to 2025-26. This will be introduced throughout the country from April 1, 2023.
However, USDA FAS New Delhi (Post) noted that ethanol supplies for the EBP are forecast to undergo a downward correction from June through September when many distilleries pause operations. Additionally, FAS New Delhi (Post) has revised its 2021 ethanol blending rate with petroleum estimate upward to 8.1 per cent due to increased diversion of Extra Neutral Alcohol (ENA) toward ethanol in the last three months of last year. India will likely achieve E10 in ESY 2022-23. India is well within reach to optimally develop its sugarcane/molasses-based distillation infrastructure to support reaching E20 by 2025.
India’s biofuel policy remains focused on increasing self-sufficiency and rural development, given past investments to develop its fossil fuel resources (like coal) and expand oil refining capacity, ethanol imports for blending remain prohibited, and high biodiesel tariffs remain in place. Additionally, the policy supports local resource development and diverts surplus sugar created by India’s sugar price support mechanisms and export subsidies (since rescinded), with gradual increased focus on efforts to address human health and environmental benefits.
For India to meet its long-term biofuel blending targets, for ethanol and biodiesel, FAS has ascertained for over a decade that biofuels and biofuel feedstock imports are needed to supplement domestic production. As India expands its production capacity and contemplates biofuel exports under the amended NPB, imported feedstocks will be needed to augment domestic supply, boost domestic production, and align with the government’s 'Make in India' campaign.