In the past decade, India has been scrupulously working towards reducing its reliance on foreign oil sources which stands at a record-breaking level of 84.5% as of FY19. The traditional method of moving away from oil entails internally allocating resources to potentially eradicating foregin oil dependency. However, given the scarce nature of fossil fuels it seems nearly impossible. Hence, India is investing into alternative energy sources, one of which is Ethanol.
Theoretically, ethanol burns well and cleanly. In the long run, we can produce enough ethanol to meet our future demands. Unlike petrol, ethanol is not derived through crude oil but is a complex byproduct while processing sugarcane and can be produced using molasses. Other methods include extraction from rotten potatoes, bamboo and likes of corn -- all of which are abundant in the Indian context. That’s part of the reason why the Indian government is putting in a conscious effort into promoting ethanol production, addressing the need of the hour which paves a way towards self-sustainability in India through the National Policy on Biofuels (2018)
The plan is rather simple, which accounts for accelerating ethanol production and slowly merges it with petrol to reach a point where foreign oil imports would reduce substantially.
The goal stands at achieving a target blend at 10% by 2022, which will be pushed to 20% by 2030. Looking at the larger picture, roughly 20% of all the necessary fuel we consume today should be replaced by ethanol by the end of this decade. This means, people will then be using a mixture of the two fuels in their day-to-day lives, such as for meeting consumer requirements for petrol.
However, there are always two sides to a coin just like in this case. To begin with, capacity issues - although India is one of the major ethanol producing countries, we cannot use them all in order to obtain the desired blend rate. Starting back in 2016, we produced nearly 300 crore litres of ethanol where only 100-200 litres were used for blending at a bare rate of 3.5% after the 200 litres were distributed to distilleries and factories to produce subsidiary chemicals. However, our situations have improved to some extent where we managed to reach a blend rate of about 6% last year but here also roughly 20% of the ethanol was imported from the States. Leaving us with not our desired results instead just an opportunity cost.
The other issue is seasonality that arises from sugarcane production. If the monsoons are not of satisfactory levels in drought-prone areas like Maharashtra, shortages could hamper ethanol production. For example, this year’s blend rate estimates to 5% only. While some could blame the nationwide lockdowns, the droughts in parts of Karnataka and Maharashtra played a major hand in the growing shortage.
Assuming we miraculously did improve blending rates, another major variable that acts like an obstacle are petrol consuming vehicles. Normally, low concentrations of ethanol in the ethanol-petrol mixture works. Although, as the blend rate starts augmenting, interesting problems take shape.
Take the case of Brazil, where back in the 70’s the government promoted ethanol only vehicles, to reduce its foreign oil dependency. The scheme proposed had ameliorated Brazil’s position, where ethanol prices were remarkably lower than petrol prices. However, the scheme lost the race to the 90's oil price crash where consumers impulsively switched back to oil guzzling cars. It didn’t stop here, the early 2000s they laid down the groundwork to empower flex-fuel vehicles (FFV). These vehicles could use both ethanol and petrol making it more suitable for brazilian consumers considering pricing and convenience, this grew into 38% of all vehicles sold in Brazil to be FFVs by 2018.
This scheme gave India a new vision and since then policymakers have been batting for the promotion of FFVs in the country to boost ethanol adoption alongside steering the EV revolution by promoting electric engines. More recently policies imposed production of the eco-friendly BS-VI compliant engines which on a whole represents how the government is expecting automakers to do a lot of things at once. Clearly indicating this may not be the wise man’s option, since the upgradation of manufacturing facilities does take years adding on a few more years for recovering the investments made.
All in all, if we are not able to determine a definite path to move on towards conquering a sustainable development for the future of India, we surely are not going to see a lot of progress that is promised. This points toward the benefits of ethanol adoption where we are likely to reduce our import expenditure, freeing up those funds for boosting agriculture, which would further help in boosting sugarcane production in drought prone areas. But on a safe bet, there is still plenty of work to be undertaken before we get to finally encounter our elaborated target blending rates.
Until then…
Kanupriya Agrawal
