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Ecology & Environment
Mahesh

18/08/25 09:36 AM IST

Impact of Ethanol Blending

In News 
  • Ethanol blending in India rose from just 1.5% in 2014 to 20% in 2025, backed by the government’s strong fiscal incentives to the sugarcane industry.
Vehicle Owners reaction 
  • Vehicles sold in India from 2023 come with E20 stickers, indicating compatibility with 20% ethanol blended petrol. Additionally, manufacturers have addressed the concerns of those who own older vehicles. 
  • Two in three petrol vehicle owners are against the E20 mandate. Only 12% of the 36,000 people surveyed across 315 districts are in favour of the switch. Critics cited a drop in mileage and increased maintenance costs. 
  •  Coal India Ltd, Oil & Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Gas Authority of India Ltd collectively contributed ₹1.27 lakh crore, or 42.3% of the total ₹3 lakh crore dividends the Union government received from non-banking Public Sector Undertaking (PSUs) between 2020-21 and 2024-25.
  • IOC and BPCL together saw a 255% rise in their dividend payouts since 2022-23 and a 65% decrease in oil prices. However, the two PSUs only passed on a 2% decrease in petrol prices to the public.
Impact on agriculture 
  • Sugarcane-based ethanol supply has grown from 40 crore litres in FY14 to nearly 670 crore litres, derived from about 9% of total sugar output, in FY24.
  • The Union government says it has paid “over ₹1.20 lakh crore to farmers” since FY15. But how environmentally friendly is India’s dependence on sugarcane for ethanol?
  • About 60-70 tonnes of water is required to cultivate one tonne of sugarcane. Many sugarcane growing regions in India do not receive the 1,500 to 3,000 millimetre rainfall that is necessary for the crop’s optimal growth.
  • This leads to groundwater extraction and unsustainable irrigation methods.
  • A 2023 Central Groundwater Board report says that sugarcane growing districts in Maharashtra extract more groundwater than nearby regions.
  • Distress among sugarcane growers in that State has been widely reported. Unsustainable agriculture practices accelerate land degradation.
  • The Desertification and Land Degradation Atlas of India 2021 found that almost 30% of India’s land is degraded.
  • The water intensive nature of sugarcane and the impact on ground water reserves at a time of extreme weather has been absent from the discussion on ethanol-blended petrol.
  • The Centre, however, says it is looking to diversify ethanol supplies.
  • The Food Corporation of India’s rice allocation for ethanol jumped to a record 5.2 million metric tonnes, which is about 3.6% of output, from less than 3,000 tonnes allocated last year.
  • Similarly, in 2024-25, over 34% of corn output was diverted for ethanol production. This diversion forced India to import about 9.7 lakh tonnes of corn during 2024-25 — a six-fold increase over the previous year’s 1.37 lakh tonnes.
  • Despite diversification efforts, area under sugarcane cultivation this year is estimated to be 57.24 lakh hectare against 57.11 lakh hectare last season.
  • The assured payment mechanism for sugarcane, the Fair and Remunerative Pricing, is the key reason farmers bet on the crop as a source of stable income.
  • India’s booming ethanol economy has also come under the gaze of the U.S. The Trump administration is pushing India to relax restrictions to its ethanol imports.
  • The 2025 National Trade Estimate report noted India’s policy as a significant “trade barrier.”
  • Import relaxation could potentially undermine years of investment and capacity building in ethanol production. The Indian Sugar Mills Association has urged the government to maintain the restrictions.
Affect to Electric vehicles 
  • The Ministry of Petroleum and Natural Gas said the shift to ethanol-blended petrol “has helped India reduce carbon dioxide emissions by 700 lakh tonnes.”
  • Shifting to EVs, however, will achieve far higher rates of emissions reductions and speed up transport’s decarbonisation, which is the third largest carbon emitting sector globally after energy and industry.
  • The success of cities like Beijing in cutting air pollution is mainly due to the rapid adoption of EVs.
  • Of course, this switch has to be backed by renewable energy rather than coal, to aid in decarbonising transport.
  • Adoption of EVs has been much slower in India when compared to other large economies like the U.S., the European Union and China.
  • About 7.6% of vehicle sales in 2024 was electric. Sales of EVs have to increase by over 22% in the next five years to reach the government’s own target of 30% by 2030.
  • Another challenge to wider EV adoption in India is its dependence on Rare Earth Elements (REE).
  • According to the Ministry of Mines, before China’s export curbs were imposed, only 2,270 tonnes of REEs and compounds of REEs were imported in 2023-24.
  • But this relatively lower level is critical for the industry to sustain the current level of EV production. The production and processing of many REEs is geographically concentrated in China, making global supply vulnerable to several risks.
  • Going forward, there is uncertainty on whether the Centre wants to push ahead with ethanol blending beyond 20%. While Minister Puri said the government will push for blending beyond 20%, the Union government in March said that there has been no decision yet.

Source- The Hindu

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