- Brazil model not successfully replicated in India
- E85 has a future, but only with solid implementation
If there is a deadlock in policy, it has to be the one related to ethanol blending. Yes, we import our energy, and the effects of the ongoing war and the closure of the Strait of Hormuz are very real. On one hand, it has been a clarion call for transitioning to independence in energy, but on the other, lies a herculean challenge.
The Brazil Model
Back in the 1970s when OPEC increased crude prices sharply, Brazil had already started exploring the transition to ethanol-blended petrol. By 2000s, it became a massive hit with the advent of Flex-fuel vehicles (FFVs). However, FFVs are not new. They have been used in the WW-II era, as well as Henry Ford’s first car. In the post-war era, petrol got cheaper than ethanol, and the latter gradually became irrelevant, a Yale study noted.
The first FFVs in Brazil started their market innings from as early as the 2000s, and one example is the 2002 Ford Fiesta FFV. It is important to know what feedstock is used to produce ethanol, its trade-offs, and cost compensation. Sugarcane is a cheap input source, and an efficient one for the production of ethanol. In a country like Brazil that is not population-dense, sugarcane-based ethanol production is efficient. At the same time, petrol was not phased out, and Brazil-spec vehicles were already compatible with higher ethanol blends. Even if the country now mandates E30 as the minimum standard for petrol, vehicles have been ready for it. However, the consumer can choose between E30 and E100 fuel, depending on what is cheaper at the time of filling the tank.
The 1970 Oil Crisis Also Hit India
India, much like the global landscape, was also affected by the aftershocks of the 1970s Yom-Kippur war. But it did not go down the ethanol route back then, given the agricultural needs. The country resorted to natural gas via ONGC, making energy a central, strategic arm, and also discovering an off-shore oil field for crude oil – Bombay High. This oil field, located on the west coast of Mumbai, has produced over 500 million metric tonnes of crude oil since its inception.
But Bombay High is not the long-term solution. The oil rig is mature, which means it cannot supply enough for India’s oil needs. In the mean time, India has grown to be one of the largest ethanol producers, so it only makes sense to exploit it efficiently. Cut to this day, the ethanol policy is a bright outlook. But its implementation? Not so much.
The Bottleneck
Ethanol blending started in India as early as 2003 with the EBP (Ethanol-Blended Petrol) program, where oil companies were directed to use 5 per cent ethanol in petrol. Back then, grain-based ethanol distilleries were excluded from this program, leaving limited ethanol feedstock. It was also taxed at 18 per cent, which increased the take-home price. This was mitigated post 2014 with a 5 per cent taxation rate, and a mandate for steady ethanol supply.
Fast forward to 2026, we face another crisis situation. The closure of the strait of Hormuz has forced countries to re-think their energy strategy. India has mandated E20 as the minimum standard, but the question about E5- and E10-compliant vehicles remains. We were not ready for this. No preparations were made. From April 2026, all petrol pumps now use E20 as the minimum standard, and the government has not charted out a clear strategy for vehicles compatible with lower ethanol blends.
Unlike Brazil that sells E30 as the minimum, and vehicles are already compatible with this standard, the consumer has a choice to either go for E30 or even E100. Cultivation of sugarcane requires water, and in a population-dense country like ours, we start competing with resources rather than making the most out of them. To top it off, BIS has notified standards for ethanol blends up to E30, and older vehicles are not ready for it. Given the E20 spontaneity, the E30 rollout might just be around the corner.
While new vehicles like the Maruti Wagon R are now flex-fuel-compliant (FFV not launched, but only showcased), we have not been able to replicate the Brazil model quite well. Say if we do offer E30 and flex fuel as options, what about the older vehicles that do not support this blend? Unlike the more successful ethanol model, the India strategy leaves the prospective buyer in a deadlock.
Long-term Implications
The Brazil model has shown that ethanol blending can have a bright future. However, India is a different ballgame. It needs a clearly outlined policy on older vehicles, as it surges forward with higher ethanol blends. Sugarcane-based ethanol production has to be carried out responsibly, and in a population-dense country like ours, a multi-faceted approach will lead us to a path of self-reliance.
A step in the right direction is incentivising EVs, too. Charging infrastructure still needs work. For ICE-powered vehicles, the government needs to support manufacturers and reassure buyers that their vehicles can truly be long-term investments. Additionally, given the current price of ethanol at ~Rs. 82/litre, the 25-30 per cent hit in fuel efficiency does not reduce running costs, but increases them. While we make an attempt to become independent in energy, the cost of fuel, be it ethanol-blended petrol or flex fuel, has to be passed to the consumer. The policy, if right, has a bright future for India, so that crises like these do not affect our energy security.
(Third-party images sourced from ONGC)
