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BUSINESS & TRADE SEPTEMBER 18, 2026 | The Indian Eye 42

Ethanol’s Next Test:

Finding a Bigger Market Beyond E20

With ethanol production now exceeding current E20 blending requirements,

India’s fuel market is entering a new phase where demand, vehicle technology and

pricing will determine the future of biofuels.

OUR BUREAU and industrial economy, the impact
on overall crude-oil dependence will
New Delhi / Mimbai
remain limited.
ndia’s ethanol story is entering a This is why the government
new phase. After rapidly expand- is looking at technologies such as
Iing production and achieving the isobutanol and biofuel applications
E20 petrol-blending target, the gov- beyond road transport. Cooking
ernment is now confronting a differ- and industrial uses are also being
ent challenge: how to create enough explored, while sugarcane residues,
demand for the additional ethanol byproducts and surplus food grains
being produced. could provide additional feedstock
Prime Minister’s Advisor Tarun and markets.
Kapoor said on Wednesday that eth- Compressed biogas (CBG) is
anol production had exceeded both another part of this broader strategy.
earlier expectations and the quantity Kapoor acknowledged that progress
currently required for petrol blend- in CBG has been slower than expect-
ing. “Ethanol production has gone ed but said the Gobardhan scheme
beyond our imagination,” Kapoor could help bring together incentives
said, adding that it was now “more and benefits available through differ-
than what we had planned for and, ent ministries.
rather, more than what we actually Prime Minister Narendra Modi launched E20 fuel and flags off Green Mobility Rally at the The expansion of ethanol has
need for blending.” also revived the debate over food
The development marks an im- occasion of India Energy Week 2023 (ANI file) security, land and water. A separate
portant shift in India’s fuel market. CRID India study estimates that
Ethanol was initially seen largely across the entire ecosystem — from The bigger economic attraction ethanol-attributable land use was
as a way of reducing petrol imports vehicle technology and fuel distribu- for India is energy security. Ethanol around 3.46 million hectares in 2023-
and creating an additional market tion to pricing and consumer accep- can reduce the amount of crude oil 24, or about 1.58 per cent of India’s
for sugarcane and other agricultural tance. required for petrol production and gross cropped area. The issue will be-
products. But with E20 now estab- A recent roadmap prepared by create a domestic market for agricul- come increasingly important if etha-
lished, the industry and government the All India Distillers’ Association tural products and industrial byprod- nol production continues to rise.
are looking beyond conventional and IIT Delhi highlights precisely ucts. At a time when India remains The challenge, therefore, is no
petrol blending. this challenge. Its study on flex-fuel heavily dependent on imported longer simply producing ethanol.
The immediate question is what vehicles examines vehicle technolo- crude, every additional domestic fuel India has demonstrated that it can
happens to the surplus production gy, fuel pricing, infrastructure, sus- source has strategic value. create capacity and reach ambitious
capacity. The answer could reshape tainable feedstock, financing and But ethanol also exposes an blending targets. The next challenge
the fuel market over the coming consumer adoption. Its 10-point imbalance in India’s fuel economy. is ensuring that the capacity remains
years. roadmap seeks to create a commer- Kapoor pointed out that the country economically viable.
The government is examining cially viable FFV ecosystem as India needs to balance petrol and diesel The government’s search for
ethanol blending beyond E20, but moves beyond E20. demand, given the large share of die- new applications is ultimately about
higher blends will require flex-fuel For the automobile industry, this sel in refinery output. He suggested protecting investments already
vehicles (FFVs) capable of using dif- could eventually mean a wider range that biofuel products that can be made by producers while creating
ferent ethanol-petrol combinations. of vehicles designed to run on higher used in diesel could be particularly a larger domestic biofuel economy.
Kapoor said petrol pumps would ethanol blends. For fuel companies, valuable. The post-E20 phase will depend on
also have to provide higher ethanol it could mean new grades of petrol “If we can also get some product whether India can connect ethanol
blends, including pure ethanol with and potentially pure ethanol becom- which can be used in diesel, then it production with vehicles, fuel sta-
suitable additives, alongside vehicles ing available at retail outlets. For will be great,” he said. tions, pricing, agriculture and indus-
designed to use them. consumers, however, the econom- That is significant because sim- trial demand.
This creates a new link between ics will be crucial. Higher ethanol ply producing more ethanol does Ethanol has already changed In-
the fuel and automobile industries. blends will have to offer a compelling not solve the broader energy prob- dia’s petrol market. Its next impact
Higher ethanol consumption cannot proposition if FFVs are to move be- lem. If ethanol expands rapidly on could be much larger — if the country
simply be mandated at the refinery yond a policy-driven market and gain the petrol side while diesel demand succeeds in building the market that
or retail level. It requires investment widespread acceptance. continues to dominate the transport its expanding production now requires.

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