India is charting an ambitious course towards greater energy self-reliance and reduced emissions by significantly increasing ethanol blending in petrol. Policymakers frequently look to Brazil, a pioneer in ethanol use, as a model for success. Brazil's journey, which began in 1976, saw a major breakthrough in the early 2000s when flex-fuel vehicles (FFVs) became widely available. Today, approximately 90% of all new cars sold in Brazil are FFVs, capable of running on various blends of petrol and ethanol, including pure ethanol.
India's Ethanol Push and Challenges
India has made rapid progress in its ethanol blending program, escalating from 1.5% in 2013-14 to 5% by 2019-20. By 2025, the country aims for a 20% ethanol blend (E20), a target achieved five years ahead of schedule. The government is even considering increasing this to 30%. However, a significant challenge lies in India's vast legacy fleet of over 300 million vehicles, primarily designed for lower ethanol blends (E5 or E10).
Adopting flex-fuel vehicles is seen as the primary solution to accommodate higher ethanol blends without compromising existing vehicles. India has already seen the launch of its first flex-fuel car, the Maruti Suzuki WagonR Bioflex, with other major automakers like Tata Motors and Hyundai Motor India planning FFV versions of popular models.
Economic Hurdles for Flex-Fuel Adoption
While the technological path for flex-fuel cars is clear, the economic viability for consumers in India presents hurdles. The Maruti Suzuki WagonR Bioflex, for instance, carries a premium of about Rs 85,000 over its petrol-powered equivalent. While this premium is less pronounced in the two-wheeler segment, it remains a barrier for mass adoption.
Another critical factor is fuel pricing. E85 (85% ethanol, 15% petrol), introduced at select pumps, costs approximately Rs 82 per litre compared to Rs 102.12 for E20 petrol. However, ethanol delivers roughly one-third less energy per litre than gasoline. Industry experts, including the Society of Indian Automobile Manufacturers (SIAM), suggest that E85 would need to be priced at least 30% below regular petrol to be financially attractive for consumers.
Lessons from Brazil: Policy Enablers
Vikram Gulati, Country Head & EVP, Corporate Affairs & Governance, Toyota Kirloskar Motor, highlights Brazil's success as a blueprint. He notes that while Brazil's base blend remains E27, FFVs have pushed the national average blend to as much as 50%. Gulati emphasizes that for India, policy enablers like low-cost fuel and comparable upfront vehicle prices are essential to create an economic rationale for consumers, similar to how Brazil incentivized ethanol use.
"In Brazil, the ethanol offtake after the introduction of FFVs was a J curve, as enablers were put in place. Consumers found economic rationale to use ethanol instead of their base blend," said Gulati. "With FFVs, concerns around corrosion and mileage loss get resolved. It’s a no-brainer solution for our country. It’s the best for all stakeholders."
Brazil's position as the world's second-largest ethanol producer (27% of global output) ensures easy access to the fuel. India, now the third-largest producer, primarily uses maize and sugarcane, along with damaged foodgrain, for ethanol production. Ensuring widespread availability and competitive pricing will be crucial for India's flex-fuel ambitions to truly take off.