India’s Ethanol Drive: Achieving 15% Blending in 2024, Targeting 20% by 2025 for Energy Security

India is advancing on a transformative journey toward energy self-sufficiency with its commitment to ethanol blending as a key sustainable solution. As one of the world’s largest energy consumers, India’s longstanding reliance on oil imports has strained both its economy and energy security. By embracing ethanol—a renewable fuel derived largely from sugarcane—the country has set a promising course to lessen its oil dependency, bolster rural economies, and reduce environmental impacts. Ethanol blending reduces fossil fuel use and cuts down on carbon emissions, which are linked to climate change and public health concerns.

Started in 2001, India’s ethanol-blending program initially saw slow progress. Only through recent reforms has India been able to significantly increase ethanol production, with benefits now extending beyond energy security to boost rural incomes and support the agricultural sector. To underscore its dedication, the government advanced its goal of achieving a 20% ethanol blend from 2030 to 2025. Minister for Petroleum and Natural Gas, Hardeep Singh Puri, highlighted this success at the 7th G-STIC Delhi Conference, stressing India’s long-term vision for energy security and sustainable practices.

Ethanol: A Multi-Purpose Biofuel

Ethanol, a biofuel created through the fermentation of sugars or chemical processes, is commonly used in transport fuels and various industries as a solvent and chemical base. It also has applications as an antiseptic and disinfectant. Given India’s expanding energy demand- driven by population growth, urbanization, and economic development- ethanol holds vast potential.

Currently, nearly all the fuel used in Indian road transport comes from fossil fuels, with biofuels accounting for only a small percentage. As a locally produced alternative, ethanol helps reduce dependence on imported oil, supports local industries, and aligns with India’s sustainability goals, including job creation, waste-to-wealth initiatives, and the Swachh Bharat Mission.

Key Milestones and Benefits of the Ethanol Blending Program

Prime Minister Narendra Modi’s government has implemented major reforms to enhance energy security and support climate goals through the Ethanol Blended Petrol (EBP) Programme. Originally set for 2030, the goal of a 20% ethanol blend was moved up to 2025 by the Cabinet Committee on Economic Affairs in 2020. Since 2013, the ethanol production capacity has more than doubled, reaching 1,623 crore liters as of September 2024. India’s commitment is evident in its remarkable blending progress, rising from 1.53% in 2014 to 15% in 2024.

The journey began modestly in ESY 2013-14, with a blending volume of 38 crore liters (1.53%). By 2020-21, that figure had increased to 302.3 crore liters, achieving an 8.17% blend. Recent years have seen an even greater increase, with over 500 crore liters blended by 2022-23, raising the blending rate to 12.06%. As of August 2024, blending had reached a notable 13% with 545.05 crore liters, positioning India well toward its 20% blending goal by 2025.

The benefits are substantial: the program has saved approximately Rs1,06,072 crore in foreign exchange, cut CO₂ emissions by 544 lakh metric tons, and replaced around 181 lakh metric tons of crude oil. Economic gains are equally significant, with oil marketing companies (OMCs) disbursing Rs1,45,930 crore to distillers and Rs87,558 crore to farmers.

Strategic Actions for Achieving 20% Ethanol Blending by 2025-26

To reach the 20% target by 2025, India will need 1,016 crore liters of ethanol, with total demand across all uses estimated at 1,350 crore liters. By 2025, India aims to establish an ethanol production capacity of 1,700 crore liters, assuming 80% operational efficiency. The government is prioritizing production through initiatives that include:

• Pradhan Mantri JI-VAN Yojana Extension: In August 2024, the Union Cabinet extended this scheme until 2028-29, broadening it to include advanced biofuels from agricultural waste, industrial byproducts, and algae, making it more attractive for investors.

• Comprehensive Roadmap: A detailed plan has been developed to guide the national ethanol blending strategy.

• Diversified Feedstock: The government is exploring broader ethanol feedstock options, ensuring stable and sustainable production.

• Favorable Pricing and Tax Adjustments: Ethanol pricing under the EBP Programme ensures fair compensation, while the GST on ethanol has been reduced to 5%, making it more attractive for producers and consumers.

• Policy Adjustments for Ease of Production: Amendments to the Industries (Development & Regulation) Act facilitate the free interstate movement of ethanol, simplifying blending operations.

• Interest Subvention Scheme: The scheme provides interest subsidies to boost ethanol production capacity across India.

• OMCs' Role: Public sector OMCs are fostering market growth by regularly issuing Expressions of Interest for ethanol procurement.

A Sustainable Path Forward

India’s ethanol program represents a sustainable approach to meeting its energy needs, with extensive benefits for the environment, the economy, and energy security. From strengthened rural economies to reduced oil dependency, India’s commitment to reaching a 20% blend by 2025 is a significant step forward. Government initiatives such as the modified Pradhan Mantri JI-VAN Yojana and a robust policy roadmap underscore India’s proactive stance in clean energy, potentially setting an example for others in biofuel adoption. With these strategic measures, India is charting a resilient path toward a cleaner, energy-secure future.