<p>India has recently crossed a milestone in its clean energy journey: the nationwide rollout of E20 fuel (petrol blended with 20% ethanol). Ethanol blending is claimed to reduce carbon emissions, save foreign exchange, and boost rural incomes. Yet, the transition has not been without friction. Consumers have voiced their outrage over reduced mileage, engine compatibility, etc. But as India accelerates towards its ambitious target of E30 by 2030, critical questions arise: Will rapid blending bring environmental gains without economic distortions? Can India balance fuel security with food security?</p>.<p>The rationale behind blending ethanol with petrol is that it reduces the use of fossil fuels and lowers greenhouse gas emissions. Ethanol is produced mainly from sugarcane, corn, and other biomass. Unlike fossil fuels, it burns cleaner, reducing carbon monoxide and particulate matter.</p>.Unseen Price of Ethanol | Food, forex, and fiscal fallout.<p>India imports 85% of its crude requirement, with the oil import bill at about $137 billion in FY 2024-25. A successful ethanol programme can help reduce this dependence. According to government estimates, E20 could save India $4 billion annually in import costs, besides substantially cutting carbon dioxide emissions.</p>.<p>Ethanol blending in India has seen gradual increase in the beginning due to supply bottlenecks and pricing issues. After the initial constraints, the programme has seen a fast-paced increase in blending rates, mostly ahead of the planned schedule. From a blending rate of 1.5% in Ethanol Supply Year (ESY) 2013-14 to 10% in ESY 2021-22 and now, the nationwide implementation of 20% blending rate in August, 2025, the government has shown intent in transitioning to a higher blended fuel.</p>.<p>One of the key advantages of ethanol blending is its ability to lower carbon emissions. Studies show that ethanol is less carbon-intensive than petrol, though the extent of emissions depends heavily on the choice of feedstock. In India’s case, sugarcane-based ethanol is the dominant feedstock. This ethanol does deliver significant carbon savings but its cultivation is highly water-intensive, leading to higher extraction of groundwater. Corn-based ethanol has lesser carbon savings especially if the cultivation is fertiliser-intensive. Second-generation ethanol made from agriculture residues has the cleanest emission profile, but India is still far from scaling it up commercially. A study estimated that E20 blending could help India avoid nearly 10 million tonnes of CO₂ each year. Still, the environmental dividend must be balanced against hidden costs such as groundwater depletion and soil erosion.</p>.<p>Ethanol blending has direct rural benefits. The government projects that ethanol demand will grow from 500 crore litres in 2022 to over 1,500 crore litres by 2030. This creates a steady market for sugarcane and corn farmers and provides them income security. However, rapid expansion also risks economic distortions. Diverting food grains to ethanol could tighten supply and push up prices, leading to food inflation. Subsidies, incentives, and soft loans for ethanol distilleries imply a fiscal burden, raising questions about the long-term financial sustainability of the programme.</p>.<p><strong>Green, with conditions</strong></p>.<p>Globally, ethanol blending is not new. Brazil, the pioneer, runs on ethanol flex-fuel vehicles (roughly 85% of vehicle sales) that can operate on blends of up to 100% ethanol. Its blending rate has long been around 25-27%. The United States relies mainly on corn-based ethanol with an average blending rate of 10% (since 2005), though E15 and E85 options exist in some states. The European Union promotes biofuels under its renewable energy directive, but blending levels remain below 10% in many member states due to land-use concerns.</p>.<p>India’s E20 achievement is remarkable when seen against this backdrop. However, global experience also offers cautionary tales. It shows moving beyond modest blending levels is never easy. Brazil, despite being the ethanol pioneer, has often had to adjust its blending mandate downwards in years of poor sugarcane harvests. In the US, higher blends like E15 and E85 have struggled with limited infrastructure and consumer acceptance, as many existing vehicles and fuel stations were not compatible. The EU has faced resistance, with concerns that greater biofuel use might accelerate deforestation or compromise food security.</p>.<p class="bodytext">The programme promises reduced emissions, foreign exchange savings, and farmer incomes. But the road to E30 by 2030 is filled with challenges: food security risks, water stress, fiscal costs, and technological gaps. For ethanol blending to truly deliver, India must prioritise sustainability, diversify feedstocks, and align fuel policy with broader climate goals. The adoption of higher blending fuel requires a phased rollout, with consumer safeguards and visible pricing advantage. Otherwise, the “green fuel” may create new trade-offs while addressing old challenges.</p>.<p class="bodytext"><span class="italic">(The writer is an assistant professor at RV University, Bengaluru)</span></p>
<p>India has recently crossed a milestone in its clean energy journey: the nationwide rollout of E20 fuel (petrol blended with 20% ethanol). Ethanol blending is claimed to reduce carbon emissions, save foreign exchange, and boost rural incomes. Yet, the transition has not been without friction. Consumers have voiced their outrage over reduced mileage, engine compatibility, etc. But as India accelerates towards its ambitious target of E30 by 2030, critical questions arise: Will rapid blending bring environmental gains without economic distortions? Can India balance fuel security with food security?</p>.<p>The rationale behind blending ethanol with petrol is that it reduces the use of fossil fuels and lowers greenhouse gas emissions. Ethanol is produced mainly from sugarcane, corn, and other biomass. Unlike fossil fuels, it burns cleaner, reducing carbon monoxide and particulate matter.</p>.Unseen Price of Ethanol | Food, forex, and fiscal fallout.<p>India imports 85% of its crude requirement, with the oil import bill at about $137 billion in FY 2024-25. A successful ethanol programme can help reduce this dependence. According to government estimates, E20 could save India $4 billion annually in import costs, besides substantially cutting carbon dioxide emissions.</p>.<p>Ethanol blending in India has seen gradual increase in the beginning due to supply bottlenecks and pricing issues. After the initial constraints, the programme has seen a fast-paced increase in blending rates, mostly ahead of the planned schedule. From a blending rate of 1.5% in Ethanol Supply Year (ESY) 2013-14 to 10% in ESY 2021-22 and now, the nationwide implementation of 20% blending rate in August, 2025, the government has shown intent in transitioning to a higher blended fuel.</p>.<p>One of the key advantages of ethanol blending is its ability to lower carbon emissions. Studies show that ethanol is less carbon-intensive than petrol, though the extent of emissions depends heavily on the choice of feedstock. In India’s case, sugarcane-based ethanol is the dominant feedstock. This ethanol does deliver significant carbon savings but its cultivation is highly water-intensive, leading to higher extraction of groundwater. Corn-based ethanol has lesser carbon savings especially if the cultivation is fertiliser-intensive. Second-generation ethanol made from agriculture residues has the cleanest emission profile, but India is still far from scaling it up commercially. A study estimated that E20 blending could help India avoid nearly 10 million tonnes of CO₂ each year. Still, the environmental dividend must be balanced against hidden costs such as groundwater depletion and soil erosion.</p>.<p>Ethanol blending has direct rural benefits. The government projects that ethanol demand will grow from 500 crore litres in 2022 to over 1,500 crore litres by 2030. This creates a steady market for sugarcane and corn farmers and provides them income security. However, rapid expansion also risks economic distortions. Diverting food grains to ethanol could tighten supply and push up prices, leading to food inflation. Subsidies, incentives, and soft loans for ethanol distilleries imply a fiscal burden, raising questions about the long-term financial sustainability of the programme.</p>.<p><strong>Green, with conditions</strong></p>.<p>Globally, ethanol blending is not new. Brazil, the pioneer, runs on ethanol flex-fuel vehicles (roughly 85% of vehicle sales) that can operate on blends of up to 100% ethanol. Its blending rate has long been around 25-27%. The United States relies mainly on corn-based ethanol with an average blending rate of 10% (since 2005), though E15 and E85 options exist in some states. The European Union promotes biofuels under its renewable energy directive, but blending levels remain below 10% in many member states due to land-use concerns.</p>.<p>India’s E20 achievement is remarkable when seen against this backdrop. However, global experience also offers cautionary tales. It shows moving beyond modest blending levels is never easy. Brazil, despite being the ethanol pioneer, has often had to adjust its blending mandate downwards in years of poor sugarcane harvests. In the US, higher blends like E15 and E85 have struggled with limited infrastructure and consumer acceptance, as many existing vehicles and fuel stations were not compatible. The EU has faced resistance, with concerns that greater biofuel use might accelerate deforestation or compromise food security.</p>.<p class="bodytext">The programme promises reduced emissions, foreign exchange savings, and farmer incomes. But the road to E30 by 2030 is filled with challenges: food security risks, water stress, fiscal costs, and technological gaps. For ethanol blending to truly deliver, India must prioritise sustainability, diversify feedstocks, and align fuel policy with broader climate goals. The adoption of higher blending fuel requires a phased rollout, with consumer safeguards and visible pricing advantage. Otherwise, the “green fuel” may create new trade-offs while addressing old challenges.</p>.<p class="bodytext"><span class="italic">(The writer is an assistant professor at RV University, Bengaluru)</span></p>
