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Published:Monday, November 19, 2018 5:26 PM

Ethanol as a fuel in Indian Scenario

Ethanol as a fuel

Ethanol blended with gasoline and diesel play a major role to become alternative fuels in Indian petroleum industry. Increasing demand of crude oil will have positive significant impact in production of ethanol. The government of India, Sugar mill, and Indian refinery has been working progressively to increase the production of ethanol in upcoming years. The Indian strategy for implementation of ethanol blended fuel is based on production of ethanol from sugarcane molasses by fermentation process, starch and plants.

India is the second largest sugarcane producer and a major manufacturer of ethanol in the world. As per Agriculture Ministry, there are four states such as Uttar Pradesh, Maharashtra, Karnataka and Tamil Nadu contributed more than 80% of the country’s total sugarcane production. However, as per the report of Expert Committee on Auto Fuel Vision and Policy 2025, ethanol blended program has been running in 20 states and 4 union territories in India. It can be mixed with gasoline and diesel to form different blends. This combination will allow the engine to more completely combust the fuel, resulting in fewer emissions and thereby reducing the carbon emission and will promote low carbon transport in India.

Demand and Supply:

In India, increasing per capital income, urbanization, and infrastructure development will led to increase demand for gasoline. During the five-year period from 2012 to 2017, demand for gasoline rose by 14%. Ethanol production has risen from 2.7 billion litre in 2013 to 3.2 billion litre in 2017. The country will need to produce 6.7 billion liters of ethanol by 2022.

The production of ethanol may hamper to achieve the target with blending in petrol and diesel. The major reason for non-realization of the Ethanol Blending for Promoting low carbon transport in India is the shortage in supply of ethanol as per the OMC.  

Role of Technology and Investments:

In order to meet the requirement of ethanol for blending will have to focus to setup plant and biofuel refinery in India. According to the national biofuel policy 2018, OMC are planning to establish of 12 second generation bio fuel refinery at an investment of more than INR 10,000 crore over the next six years. The institute of chemical technology developed technology to covert biomass to ethanol with high conversion rate and efficiency. It has transferred to Indian refinery companies including BPCL and HPCL at large scale of ethanol commercial production.

Researchers have moved beyond improving techniques for producing cellulosic ethanol (2G) and are investigating new technologies. These potential alternatives are primarily based on the possibility of genetically modifying crops to consume more carbon than is released when they are used as fuel. Thus, these alternatives are considered not only renewable, but carbon-negative also.

The result is that Ethanol blends have high potential for improving thermal efficiency in the range of 7%–17% compared to gasoline. Therefore, this benefit must use advanced ignition timing from engine control unit and an improvement in fuel efficiency can be achieved in modern gasoline direct engines by using ethanol-blended fuel. The use of ethanol-blended fuel is expected to improve the fuel efficiency of engine.


The government as per Indian Sugar Mills Association has authority to decide the price of ethanol. In order to improve the availability of ethanol and eliminate uncertainty regarding both pricing and supply, the Indian government fixed ethanol (B-molasses) prices range from Rs. 48.5 per litre to Rs. 49.5 per litre in 2014. In June 2018, the government increased the price of ethanol (c-molasses) from 40.85 litre to 43.70 litre for 2018-19. Indian OMC purchase ethanol from sugar mills for mixed with petrol and diesel. As per official sources, the sugar mills are predicating more than RS 5,000 Crore revenue from sale of ethanol in 2018-19 season.

Government Initiatives:

Government policy has sought to encourage ethanol production in a number of ways, including providing funds for research, grants and loans to producers, income tax credits, and subsidies. In 2015, Government of India is to set the target for ethanol blending with gasoline 8%-10% by 2022. Currently, OMC are using approximate 2% ethanol blending with petrol and 0.1% is in diesel and is anticipated to become commercial viable by 2020. As per government policy, the company would be added 20% of blending ethanol in petrol and 5% ethanol in diesel by 2030. Within last 2 years, India saved more than 4,000 crore INR by using ethanol blending with petrol and diesel. OMC hope to save up more than 12,000 crore over the next four year. Ethanol blending will help to reduce the dependency on imported crude oil in near future in India and can achieve the target 10% oil import reduction.

The government's focus towards harnessing the untapped potential of biofuels such as bioethanol have confirmed India's inclination towards becoming a clean fuel economy and reiterates country's stance to mitigate climate change related issues and providing sustainable energy for the Indian people.

Road ahead:

  • BPCL will complete commissioning of its 2G ethanol India’s first biofuel refinery at Balsungha village in Bargarh district in Odissa by 2020. The planned investment for the plant is worth more than 1,000 crore. This is the first biofuel plant in the country where ethanol will be produced from starch as feedstock.
  • BPCL is proposed to be setup 2G ethanol bio refinery in Bina, MP with a capacity to process 400 tonnes/day. The plant is anticipated to produce around 32,000 KL Ethanol per year, which is expected to be started commissioning in December, 2018.
  • Hpcl is planned to be setup 2G ethanol bio refinery in Bhatinda, Punjab with a capacity 100 KL per day.
  • IOCL approved a Rs 520 crore investment for production of ethanol by using LanzaTech gas fermentation technology at Panipat refinery in Haryana. The planned ethanol plant is considered to produce 33.5 kilotonnes per annum of ethanol for use in automotive fuel. The project has the potential of greenhouse gas reduction required to limit global climate change.


  • Feedstock – cyclic nature
  • Energy balance
  • Storage and transport cost to plants and logistics
  • Low production of sugarcane
  • Establishment of biofuel and biochemical standards

SWOT Analysis



The scenario for Ethanol in India will remain promising, considering the government’s decision to promote biofuels and advance biofuels as environmentally friendly fuels. From the view of Ethanol blending program, the ongoing sugar year will see improved cane production resulting in higher molasses availability, which can be converted to ethanol. With the continuation of the government’s policy to administer prices of ethanol for EBP, India has approved an enhanced ex-mill ethanol price in 2017–2018. As the demand for petrol rises, the production for ethanol will increase annually. Considering, estimated petrol consumption of 3.11 MMTPA during 2021-22, the Ethanol requirement for 10% blending will be 4 billion per litre per year.

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