India’s ethanol mandate comes with some hidden trade-offs
India’s energy demand has been steadily rising with the growing population and urbanisation. During the inauguration of the India Energy Week 2023, Prime Minister Narendra Modi highlighted that the country’s energy consumption is projected to increase to 11 per cent of global demand from the current 5 per cent in the near future.
Meanwhile, India heavily relies on imports to meet its energy requirements, with the country currently importing around 80 per cent of its oil requirement. Fossil fuels account for approximately 75 per cent of India’s energy demand, while the remaining share is fulfilled by biofuels derived from agricultural by-products. In this context, policymakers see the utilisation of biofuels as an opportunity to strategically reduce the country’s dependence on imported fossil fuels.
Also read: Is ethanol blending in petrol really green?
In a bid to reduce reliance on imported fossil fuels, India has outlined its intention to promote the use of ethanol, an important biofuel derived mainly from rice, corn and sugar. In 2003, the Centre launched the Ethanol Blended Petrol (EBP) Programme, which aimed to mix ethanol with petrol, reducing the demand and consequently the consumption of fossil fuels.
Initially, the EBP programme directed oil marketing companies to sell 5 per cent EBP (ethanol 5 per cent, petrol 95 per cent). Today, ethanol accounts for about 10 per cent of the fuel blend. However, this percentage is set to increase as the National Policy on Biofuels-2018 envisaged an indicative target of achieving 20 per cent blending of ethanol in petrol by 2030 under the EBP Programme.
Subsequently, in 2022, the Union Cabinet amended the National Policy on Biofuels, advancing the deadline for fuel companies to increase the ethanol content in petrol to 20 per cent from 2030 to 2025. With its emphasis on ethanol as a fuel, the Centre aims to enhance India’s energy security, curtail dependence on imported fuel, conserve foreign exchange reserves, address environmental concerns and boost the domestic agricultural industry. However, the push for ethanol as a fuel in India is not without its challenges.
Food security & environment
India would need to enhance its feedstock production to achieve its goal of blending 20 per cent ethanol in petrol by 2025 — which would require additional land. If domestic production does not rise, meeting the ethanol blending targets will require an increase in imports, which goes against the goal of energy security that the push for ethanol as a fuel aims to achieve.
NITI Aayog’s roadmap for ethanol blending, released in 2021, marked a shift in focus from prioritising waste biomass (as stated in the National Policy on Biofuels) to using food-based feedstocks to achieve the new blending target.
Currently, the government is utilising food grains from the central pool stocks to produce ethanol-blended petrol. These food grains are procured from farmers at minimum support prices and are originally intended for distribution under different schemes to assist impoverished and vulnerable groups.
However, utilising these food grains for ethanol production diverts them from those most in need, exacerbating the country’s hunger situation. It is worth noting that India ranked 107 out of 121 countries in the 2022 Global Hunger Index, indicating a deplorable state of the country’s hunger situation; this may not be the most prudent solution.
While the roadmap asserts that the surplus food grain production will be adequate to meet the ethanol blending target, reliance on excess stocks is a short-term solution, especially during droughts or when agricultural production is affected by climate change.
Ethanol-based biofuels are often considered a preferable alternative to fossil fuels due to their lower emissions. Studies indicate that burning ethanol results in lesser carbon dioxide emissions than conventional fuels.
However, these calculations typically overlook the greenhouse gas emissions associated with ethanol production. A recent study found that ethanol’s carbon intensity could be around 20 per cent higher than that of petrol due to emissions resulting from land-use changes, increased fertiliser use and harm to ecosystems.
Recent data indicates that financial incentives for ethanol blending encourage increased sugarcane cultivation — a water-intensive crop. According to a report by the government, producing a kilogram of sugar requires 1,500-2,000 litres of water — making it an unsustainable option. Therefore, the current programmes promoting ethanol-blended biofuels seem to contradict India’s efforts to transition towards more environmentally sustainable fuel options.
Additionally, in developing countries, there is often a conflict between different objectives due to the complex and multifaceted issues they face. For example, climate change is a global issue that affects all countries, but developing countries are more vulnerable to its impact due to their reliance on natural resources, limited capacity and restricted access to technology to adapt. However, addressing climate change may impede progress towards other developmental goals, such as economic expansion, food security and poverty alleviation.
Shifting the focus to food crops rather than agricultural waste can hinder India’s objective to reduce energy dependence and fulfil climate commitments. In a way, the government’s ethanol mandate significantly deviates from its own National Policy on Biofuel. The economic incentives offered by the current policy direction could lead to unsustainable land-use practices that adversely affect food security, water security and net emissions.
To navigate these complex challenges, developing countries must adopt a holistic and coordinated approach to development that recognises the interconnectedness of various objectives.
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Neha is a research associate at Social Policy Research Foundation (SPRF). Headquartered in New Delhi, SPRF is a policy think tank seeking to make public policy research holistic and accessible.
Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth