A new report by global consulting company KPMG says that ethanol can become a strong backbone of India’s transportation energy system in the future. According to the report, India has achieved the target of 20% ethanol blending (E20) in petrol and now the country should move towards higher ethanol blending fuels like E85 and E100.
The report Beyond E20 states that ethanol should not be seen merely as a blended fuel, but as an important means of energy security.
Dependence on oil imports will reduce
India meets a large part of its energy needs from imported crude oil. In such a situation, the rise in oil prices in the international market or geopolitical tension has a direct impact on the country’s economy.
KPMG believes that dependence on imported oil can be reduced by greater use of ethanol. This will save foreign exchange and the impact of instability in the global oil market will also be limited. The report says that situations like the Russia-Ukraine war and tensions in West Asia have further increased the need for alternative fuels.
Ethanol ecosystem strengthened
In the last few years, India has made significant progress in the field of ethanol production and distribution. Production capacity and supply network have expanded under the government’s ethanol blending program.
Recently, the government has also decided to give exemption in excise duty on petrol with ethanol blend from 22% to 30%. This is expected to promote fuels with higher ethanol blends.
Challenges are no less
The report says that many challenges will have to be resolved to move ahead with E20. At present ethanol production is mainly based on sugarcane and other agricultural crops. New sources will be needed to increase production.
Additionally, the number of flex-fuel vehicles will have to be increased and the fuel distribution network will also have to be adapted to the higher ethanol blend.
Steps towards energy self-sufficiency
According to KPMG, if India is successful in adopting ethanol-based fuel system on a large scale, it can play an important role in strengthening the country’s energy security as well as reducing dependence on oil imports. With this, India will be able to deal with the ups and downs of the global oil market in a better way and will be able to take a big step towards energy self-reliance.
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