Ethanol Push in India’s Auto Sector: Did Govt Overlook Potential Cost for Vehicle Owners?

India’s ethanol revolution in the automobile sector has become a hot topic of discussion for various stakeholders, including the government and consumers, in the past few weeks. The government has backed its 20% ethanol blended petrol (EBP) fuel, highlighting several benefits like reduction in greenhouse gas emissions, improvement in air quality, enhancement in engine performance, and ₹1.4 lakh crore savings in foreign exchange. 

But customers, a crucial stakeholder in the overall scheme of things, feel a sense of betrayal. Social media platforms, which have turned into an unofficial complaint forum for vehicle owners, have been flooded with issues faced by customers, like a decrease in mileage and an increase in the cost of ownership. Their biggest concern, however, comes from a lack of information regarding the potential consequences of using E20 fuel. 

Ethanol is an alcohol-based biofuel that is typically produced from renewable plant sources like sugarcane or corn.

How did the Govt React to Complaints? 

Ethanol blending in petrol has helped the government to save ₹1.44 lakh crore in foreign exchange, crude oil substitution by around 245 lakh metric tonnes and CO2 emissions reduction by nearly 736 lakh metric tonnes, according to government data. But vehicle owners, especially those using the older vehicles, have argued that E20 fuel resulted in a “drastic” dip in mileage and fuel efficiency. 

The issue, however, is that most customers using older model vehicles haven’t got them tuned to E20 fuel. According to the government think tank NITI Aayog’s report published in 2021, when E20 is used in four-wheelers that are originally designed for E0 and tuned for E10, there is an estimated loss of 6-7% fuel efficiency and 1-2% for those designed for E10 and calibrated for E20. 

The Narendra Modi-led government, however, refuted the claims, pointing to several benefits of using it, including improvement in acceleration, ride quality and carbon emissions reduction of 30% compared to E10. 

“The use of E-20 gives better acceleration, better ride quality and most importantly, lowered carbon emissions by approximately 30% as compared to E10 fuel,” the petroleum ministry said. “Vehicles tuned for E20 deliver better acceleration which is a very important factor in city driving conditions,” the ministry added. 

Additionally, recently at the Pioneer Biofuels 360 Summit, the Minister of Petroleum and Natural Gas, Hardeep Singh Puri, countered the claims made by users by citing Brazil’s example. Puri, who had served as India’s Ambassador to Brazil from 2006 to 2008, said the country has run on E27 for years without any issues. 

Did Govt Ignore Potential Consequences? 

The national policy on biofuels, introduced in 2018, was amended in 2022 to bring down the target of 20% blending of ethanol in petrol from the initial 2030 to 2026. The amendment was made after the public sector oil marketing companies (OMCs) had achieved the target of 10% ethanol blending in petrol in June 2022, five months ahead of their Ethanol Supply Year (ESY) deadline of 2022. 

Apart from the aim to reduce emissions, the move focused on promoting the production of biofuels under the Make in India initiative, resulting in employment generation and additional income to farmers, the Ministry of Petroleum & Natural Gas said in a statement. Additionally, it also aimed to reduce dependence on petroleum products to power Modi government’s vision of ‘Energy Independent’ by 2047 and the Net Zero 2070 goal. 

While the above points highlight the positives that the government has been focusing on, it seems to have ignored issues like the reduction in marginal fuel efficiency for four-wheelers designed for E10, which was flagged by an inter-ministerial committee. The NITI Aayog, in its report, had also raised concerns that most of the existing vehicles on the road are compatible with E10, but they aren’t tuned to E10 for maximum performance efficiency. 

“The existing vehicles on road are material compatible to E10 but their engine/vehicles are not tuned to E10 for optimum performance efficiency,” NITI Aayog had stated. “Developing parts with upgraded material for a large number of vintage variants with a wide range of fuel system component designs and then getting the customers to get their vehicles upgraded is a mammoth task,” the think tank added. 

The Society of Indian Automobile Manufacturers (SIAM) had suggested to the government committee that with modifications in engine hardware and tuning, loss of efficiency due to the use of blended fuel can be reduced, the petroleum ministry noted. 

While the OMCs met their target of 10% ethanol blending in 2022 and were shown the greenlight for 20%, the original equipment manufacturers (OEMs), or the automakers, were suggested to catch up with the pace to ensure smooth functioning of vehicles. 

“In the past, OMCs and OEMs (Oil and Auto industry) moved together for implementation of BS6 emission regulations...This needs to continue in future also to ensure portability of vehicles by customer, especially for vehicles designed for higher blends of ethanol keeping,” NITI Aayog mentioned in the report.