Date : 26/09/2023

Relevance – GS Paper 3 – Environment and Ecology

Keywords – Fossil fuels, E20, Flex Fuels , NITI AYOG

Context -

Global oil prices are on the rise, approaching the $100 per barrel mark once more. In the fiscal year 2023, India's reliance on imported crude oil and related products reached a record high of 87.3 percent. To lessen this dependence on imported crude oil, India requires a well-defined research and development strategy for expanding ethanol production.

What is Ethanol Blending?

Ethanol, primarily derived from sugar processing, is an agricultural by-product. Additionally, it can be sourced from alternative materials such as rice husk or maize. The practice of blending ethanol with petrol (or diesel) to reduce the consumption of fossil fuels in vehicles is known as ethanol blending.

Due to its oxygen content, ethanol facilitates more thorough combustion, leading to reduced emissions and improved environmental performance of the fuel. As part of their commitment, the automotive industry has pledged that all vehicles in India will be compatible with E20 (a blend containing 20% ethanol in petrol) by the year 2023.

Consequently, for the transportation and storage of fuel containing 20% ethanol, it will be necessary for the fuel delivery systems, plastics, rubber components, steel, and other parts of vehicles to be compatible with this blend.

Why India Should Expand its Ethanol Blending Program

India has compelling reasons to expand its ethanol blending process for several critical factors:

Escalating Energy Demand for Petrol and Diesel:

• Nearly 60% of India's petrol demand originates from two-wheelers, serving the transportation needs of citizens across various economic strata.
• The remaining 40% of demand stems from four-wheelers, and this portion is expected to grow, albeit gradually.
• According to a NITI Aayog report, petrol demand is projected to surge by more than 45% by 2030 compared to 2021.
• In this context, ethanol blending, while offering a modest reduction in overall petrol demand, plays a role in addressing the escalating energy demand.

India's Reliance on Imported Crude Oil:

• India's reliance on imported crude oil and related products reached a record high of 87.3% in FY2023, with a substantial 25.8% of the nation's import expenditure directed towards it.
• The Indian economy boasts the third-largest demand for crude oil and its derivatives globally, with substantial potential for consumption growth.
• Additionally, the International Energy Agency reports that biomass contributed up to 20% of India's total primary energy supply over the past decade, a significant portion of which was utilized by households.
• The recently established Global Biofuel Alliance under India's G20 presidency must now convert this biomass into a form capable of providing clean bio-energy for diverse applications, thereby enhancing energy security and ensuring value for public investments.

India's Initiative for Ethanol Blending

• India initiated its ethanol blending program in 2003 with the aim of diminishing its reliance on imported crude oil. However, progress remained sluggish for over a decade.
• In 2022, following five years of concerted policy efforts, India's blending program accomplished a noteworthy achievement by reaching a 10% ethanol blending rate in petrol.
• The government is now striving to accelerate its efforts, targeting a 20% ethanol blending rate (E20) by FY25-26, advancing this goal by five years.

Challenges Confronting India's Ethanol Blending Initiative

Demand and Supply Conundrum:

• In 2022, ethanol producers furnished nearly 430 crore litres of ethanol. However, the objective of achieving a 20% blending rate by 2025 will escalate India's ethanol demand to almost 1,100 crore litres.
• Fulfilling the 2025 target necessitates substantial investments and the capacity to procure and redirect the requisite raw materials for domestic ethanol production.

Limited Advanced Blending Infrastructure to Match Growing Demand:

• A significant portion of India's ethanol supply for the blending program relies on first-generation production methods, predominantly using sugarcane (84%) and grains (16%).
• First-generation ethanol is derived from food crops such as cereals, maize, sugarcane, and rapeseed.
• Although the potential for second-generation (2G) ethanol production is promising, investments in this area have been sluggish. Even state-of-the-art facilities like Indian Oil's are projected to produce just 3 crore litres of 2G ethanol.
• Second-generation biofuels are manufactured from residual and waste materials such as rice and wheat straw.
• While 12 such facilities are in various planning and construction stages, their contribution to increased ethanol supply remains uncertain.

Climate Change Concerns:

• Given the dominance of first-generation ethanol production, it is imperative to address the often-discussed food-energy-water nexus considerations.
• While ethanol provides an additional income source for the agricultural community through guaranteed procurement, climate change implications suggest that both rainfall patterns and crop yields are likely to undergo significant fluctuations, potentially leaving the supply chain vulnerable to shocks.

Way forward

Emphasis on Bio-Fuels and Flex Fuels

• Electric vehicles (EVs), despite their advantages, raise concerns due to their reliance on minerals, materials, and components, which can impact trade, employment, and the economy. In this context, biofuels and flex-fuel vehicles (capable of running primarily on biofuels) emerge as viable alternatives.
• India recently unveiled its inaugural flex fuel vehicle, underlining the potential of these options.

Research and Development Strategy for 2G Ethanol Blending Technology:

• India needs a comprehensive evaluation and a well-defined research and development plan for second-generation (2G) technologies as a prerequisite for scaling up ethanol production.

Strategic Promotion of Electric Vehicles:

• As part of diversifying India's fuel sources, policy efforts should prioritize reducing overall petrol consumption and addressing private demand for the fuel. Targeted promotion of electric vehicles in public transportation and implementing pricing strategies for private vehicle use in urban areas can facilitate a smoother transition toward higher biofuel utilization.

Monitoring Water Usage:

• The new ethanol policy should include safeguards to prevent the promotion of water-intensive crops, considering the acute water shortage in India. Rice, sugarcane, and wheat alone consume approximately 80% of the country's irrigation water. It's crucial to avoid exacerbating water scarcity issues.

Conclusion

The automotive sector is currently grappling with the formidable task of transitioning towards electric vehicles (EVs) and addressing various complexities associated with flexible and biofuel-based engines. In this context, the formulation of a meticulously planned and feasible strategy to revolutionize the mobility landscape in India holds tremendous significance. Such a strategy stands to yield multifaceted benefits, not only in terms of reducing the nation's hefty import bill related to fossil fuels but also in affording us the necessary time and leeway to facilitate the transformation of a pivotal industry within our economy.

Source – Indian Express