Ethanol Blending in India
India has advanced its ethanol blending target, achieving 20% ethanol in petrol five years ahead of schedule under the National Policy on Biofuels. This shift, primarily supported by fiscal incentives to the sugarcane industry, aims to address multiple goals, including reducing greenhouse gas emissions, supporting farmers' incomes, and decreasing oil imports.
Economic Impacts and Governmental Measures
- India has saved over ₹1.40 lakh crore in foreign exchange through petrol substitution since 2014-15.
- NITI Aayog suggests tax incentives to mitigate consumer efficiency losses from ethanol fuels.
- Despite a 65% decrease in oil prices, IOC and BPCL only reduced petrol prices by 2%, despite their increased dividend payouts.
Environmental Concerns
- The reliance on sugarcane for ethanol production raises environmental concerns due to the crop's high water demand, contributing to groundwater depletion.
- Reports indicate unsustainable agriculture practices leading to land degradation, with 30% of India's land being degraded.
- Efforts to diversify ethanol sources include increasing rice and corn allocations for ethanol production, although this has increased corn imports.
International Trade and Future Outlook
- The U.S. has pressured India to relax restrictions on ethanol imports, viewed as trade barriers by the 2025 National Trade Estimate report.
- India aims to reduce carbon emissions with ethanol-blended petrol, but transitioning to EVs promises greater reductions.
- The adoption of EVs in India stands at 7.6% of vehicle sales in 2024, requiring significant growth to meet government targets by 2030.
Challenges in the EV Sector
- India's EV sector faces challenges due to the dependence on Rare Earth Elements (REEs), primarily sourced from China.
- Supply disruptions have impacted production targets, such as Maruti Suzuki's EV plans.
- The government is engaging diplomatically with China to address the REE supply crisis.