India, being the third-largest energy consumer in the world, has long relied heavily on oil imports to meet its rapidly growing energy needs. This has led to a huge decline in foreign reserves and aggravated energy insecurity in the form of vulnerability to global price shocks and geopolitical tensions. So, the Government of India has resorted to ethanol, a vital resource, to meet the increasing energy demands along with tackling environmental issues. This is a major step to curb the use of fossil fuels across the country, to promote agricultural economy, thereby facilitating rural development.
Defining Energy Security
Energy security refers to the uninterrupted availability of energy sources at affordable prices. It ensures that energy is accessible to the consumers in different forms at reasonable rates and in adequate amounts. It reduces the dependence of imported energy supplies which can often be volatile and irregular.
India’s Perspective on Energy Security
As India is one of the fastest-growing economies, it has been struggling with energy security, owing to the advancement in industry and urbanisation. In order to generate energy, India chiefly uses fossil fuels, such as coal and oil, mostly imported from other countries. Therefore, economic stability of the country is marred by the global oil price fluctuations, trade deficits, and geopolitical tensions.
Recognising these risks, India has embraced a strategy of diversifying its energy sources, with a focus on renewable energy to achieve sustainability and self-reliance.
What is Ethanol?
Ethanol is a renewable bio fuel that is produced via fermenting sugars from crops like sugarcane, maize (corn), and other biomass materials by yeasts. It can also be synthesised with the help of petrochemical processes such as ethylene hydration.
Biofuels
Biofuels are hydrocarbon fuels derived from organic matter including plant and animal sources, within a short-time frame. They exist in solid (wood, plant residues), liquid (bio-ethanol, biodiesel), and gaseous (biogas) forms.
They serve as cleaner alternatives or supplements to fossil fuels in transport, power generation, and heating.
Biofuels are classified into
- first generation (food crops);
- second generation (non-food biomass);
- third generation (algae); and
- fourth generation (genetically engineered crops with carbon capture).
Advantages of Using Ethanol as a Fuel When used in petrochemical processes, ethanol is blended with petrol or gasoline to power vehicles, thereby curbing air pollution and making air cleaner and safer to breathe. Thus, ethanol can be used as a replacement of fossil fuels and can, in turn, decrease the rate of emission of greenhouse gases.
Since 2014, the Ethanol Blended Petrol (EBP) Programme has helped reduce CO2 emissions by about 544 lakh metric tonnes, supporting India’s climate commitments made under the Paris Agreement.
Since different types of feedstock can be used to make ethanol, it is very versatile. It serves a number of purposes, such as for blending fuels, as a chemical solvent, a medical disinfectant or an antiseptic, and as raw material in pharmaceutical industry. In India, sugarcane has been the dominant feed stuck due to its widespread cultivation and established processing infrastructure.
Role of Ethanol in India’s Energy Security India’s energy security is undergoing a massive change, as ethanol blending is increasingly being used to reduce the use of fossil fuels. With this sustainable practice, issues like climate change can be tackled easily, owing to reduced carbon footprint and lower pollution levels. This also reduces the reliance on imported oil, which keeps our foreign currency intact, thereby saving billions of dollars. In this way, there is more stable economic growth in the country. Besides, less fossil fuel usage means less greenhouse gas emission, which provides cleaner environment.
Between 2014 and August 2024, India saved approximately 1.06 lakh crore rupees in foreign exchange by substituting around 181 lakh metric tonnes of crude oil through ethanol blending.
Locally-produced biofuel such as ethanol is eco-friendly and sustainable. The production of ethanol provides additional income to farmers and other rural workers, thereby improving their standard of living. It is in compliance with the ‘Make in India’ initiative and national objectives such as generation of employment (wealth from waste) created with the establishment of distilleries and processing plants. The initiative is also in line with the Swachh Bharat Mission.
In 2001, the Indian government launched a pilot project of ethanol blending. But the considerable advancement in ethanol production and usage has been made only in the recent years, through several wide-ranging government reforms.
Demand for Ethanol in India Due to rapid urbanisation, industrialisation, economic growth, ever-increasing population, and changes in lifestyle, the demand for ethanol in India is increasing persistently. At present, merely 28 per cent fuel for road transport is derived from ethanol; while 98 per cent fuel for road transport is derived from fossil fuels. As we greatly rely on fossil fuels, our energy security is uncertain. Besides, foreign reserves are depleting, and our environment is also adversely impacted. This shows that it’s high time that we increase the production of bio-fuels in the country.
The EBP Programme
Recently, a set of wide-ranging reforms have been implemented by the Government of India under the guidance of Prime Minister Shri Narendra Modi, to strengthen energy security, address climate change, and boost rural economies.
The EBP Programme, launched in 2003 initially aimed to achieve 20 per cent ethanol blending in petrol by 2030. However, in 2020, this target was advanced by 2025 by the Cabinet Committee on Economic Affairs (CCEA) reflecting the government’s aggressive and determined approach.
Outcomes of the EBP Programme The EBP Programme has been very successful. Public sector Oil Marketing Companies (OMCs) achieved 10 per cent ethanol blending in petrol in June 2022, five months ahead of the schedule during ESY 2021–22. In the last four years, the ethanol production has been doubled, reaching up to 1,623 crore litres as of September 2024.
In ESY 2013–14, the blending volume of ethanol with petrol was only 38 crore litres, with blending percentage of 1.53 per cent. By ESY 2020–21 the blending volume of ethanol with petrol rose to 302.3 crore litres. With a blending percentage of 8.17 per cent despite a 64 per cent increase in petrol consumption.
Do You Know?
The Ethanol Supply Year (ESY) runs from November 1st to October 31st of the following year.
Further in ESY 2022–23, the blending volumes rose to around 500 crore litres, with the blending percentage of 12.06 per cent. In the following year, i.e., ESY 2023–24, the blending volume increased to 545.05 crore litres, with the blending percentage going beyond 13 per cent. By the end of 2024, the blending percentage reached 15 per cent.
The EBP Programme that has continued for a decade now has been beneficial. During this period, the CO2 emission reduced by 544 lakh metric tonnes. The foreign reserves of Rs 1,06,072 crore were saved, while crude oil of approx. 181 lakh metric tonnes was replaced with ethanol.
Achieving 20 per cent Ethanol Blending by 2025 To meet 20 per cent blending goal by 2025, India needs about 1,016 crore litres of ethanol, will overall demand across sectors estimated at 1,350 crore litres. This requires at least 1,700 crore litres of installed capacity, assuming 80 per cent operational efficiency.
The increase in the number of petrol-based vehicles, particularly in the category of two-wheelers and passenger vehicles, along with the proposed sales of Motor Spirit (MS) have been taken into account for estimating the demand for ethanol required for 20 per cent ethanol blending by 2025. Besides, a number of incentives have been introduced to achieve the target of ethanol blending. These are subsidies, price support mechanisms, E20 fuel introduction, infrastructure development, and private sector investment which has significantly boosted ethanol production capacity.
(E20 fuel is a blend of 20 per cent ethanol and 80 per cent gasoline or petrol.)
Initiatives to Promote the Use of Ethanol
The government has undertaken multiple initiatives to promote the production and adoption of ethanol since 2014. These include the modified Pradhan Mantri JI-VAN (Jaiv Indhan-Vatavaran Anukool Fasal Awashesh Nivaran) Yojana, launched in 2019 and further extended to 2028–29, now supports advanced biofuels from agricultural and forestry residues, industrial waste, synthesis, gas, and algae (second generation). A detailed roadmap for ethanol blending has been developed, and several policy measures have been introduced for expanding feedstock options, ensuring fair procurement prices, providing interest subsidies, and reducing GST on ethanol for EBP to 5 per cent. It directly contributes to Sustainable Development Goals (SDGs); SDG 7 (Affordable and Clean Energy); SDG 13 (Climate action); and SDG 8 (Decent Work and Economic Growth).
To boost ethanol supply and achieve the 20 per cent blending target, the Union government approved an additional 2.8 million tonnes of Food Corporation of India (FCI) rice for ethanol production in 2024–25, raising the total allocation to 5.2 million tonnes. Announced in May 2025, this move is based on buffer stock assessments and aims to produce approximately 2.45 billion litres of ethanol, given a conversion rate of 470 litres per tonne.
Conclusion
The ethanol initiative of India is a revolutionary step that can lead to environmental sustainability, energy security, and economic development. India’s efforts in adopting biofuel in place of fossil fuel make India a pioneer in using sustainable energy solutions. Thus, India is setting an example for others to follow.
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