India saves import bills worth Rs 41,000 crores with Ethanol Blending

One of the key resources for a modern industrialized country is energy and the main source of energy is crude petroleum. But the scattered availability of crude petroleum has created an uneven international trade balance. Crude-producing countries have immensely benefited from these fossil fuels and have tilted the balance of trade in their favour.

A country like India, which heavily depends on the import of crude for its energy needs, has always struggled to maintain its internal as well as import budget. According to Economic Survey 2021-22, the crude import bill for India touched around USD 73.3 billion in 2021 alone. So it becomes very important to find a substitute for these fossil fuels which not only cost the country in terms of money but also in terms of the environment.

Rs 41,000 crores saved from ethanol blending

Ashwini Kumar Choubey, Minister of State for Environment, Forests and Climate Change speaking at an online event has said that “use of 10% ethanol-blended petrol has led to a saving of over 41 thousand crore rupees in the foreign exchange for the country”.

Further explaining the next target of the government related to ethanol blending he added, “The next target is to achieve 20% ethanol blending and it is projected to be completed by 2025-26”.

The minister’s statement reflects the government’s aggressive push to find alternatives to the petroleum source of energy. Niti Aayog’s report, Ethanol Blending in India 2020-25 predicts that after the final completion of E20 programs, India can save around USD 4 billion per annum which is Rs 30000 crores. Besides giving a safe, secure, pollution-free environment, it will provide a strategic power to the country.

Ambitious Biofuels Targets

Amending the key targets of the National Policy on Biofuels in 2022, the government revised it from ESY (Ethanol Supply Year) 2030 to 2025-26 for 20% blending of ethanol in petrol. To complete the target, on one hand, the government is aggressively providing technological support to farmers for the ethanol production pushing supply and on the other, the Indian vehicle industry has been ordered to calibrate vehicle engines to a particular degree of ethanol blending or produce flex-fuel vehicles that can run on pure or blended fossil fuels creating demand.

The production of blended ethanol by mixing sugarcane with petrol will solve the double edge problem of the state. On one hand, it will reduce the import bill of the country and on the other; it will reduce the pollution in the environment as ethanol is a clean-burning, particulate-free fuel source. When ethanol is burnt with oxygen, it releases only carbon dioxide

For the Ethanol Blended Petrol (EBP), the government of India has estimated to divert around 35 LMT (Lakh Metric Tonne) in the season 2021-22 and it is expected to grow around 60 LMT of sugar to ethanol. Moreover, from Ethanol Supply Year (ESY) 2013-14 to ESY 2020-21, about 53000 crore revenue has been generated by sugar mills from the sale of ethanol to Oil Marketing Companies (OMCs). And, it is expected that in the ESY 2021-22, more than Rs 18000 crore revenue is expected to be generated by sugar mills from the sale of ethanol to OMCs.

The target for the ethanol production of India from molasses-based distilleries is 760 cr liters and from grain-based distilleries is 740 cr liters. This will require 60 lakh MT of sugar and 165 lakh MT of grains per annum in ESY 2025 to be used for producing ethanol, which the country can support.

The EBP will solve the three concurrent problems, first, it will reduce the import oil bill, second, it will reduce environmental costs, and third, it will increase the financial condition of farmers. Further, reducing the dependency on foreign imports for its energy demand will provide strategic leverage to India in the world.