Stringent Emission Laws Propel Clean Fuel Push in India, Surge in Ethanol Demand Expected

The policymakers in India are strategizing to uphold clean fuel alternatives by tightening laws on carbon emissions in view to achieve 30-35% declined emissions by 2030, that complies with India’s target conceived under the Paris Climate Agreement. The transport minister, Nitin Gadkari confirmed the government’s intent to stick to its 2022 mark for implementing Corporate Average Fuel Efficiency (CAFÉ) regulations that would serve as an impetus for the automobile sector to embrace clean fuel technologies.

Under the devised strategies, India will be gradually reducing its heavy dependency (almost 70%) on imported fossil fuels and fulfilling its fuel requirements through indigenous, economical, and clean fuels like biofuels, hydrogen fuel cells, ethanol blends and hybrid electric vehicles. As a first step towards its plan, India is soon to bring into effect a mandatory rule for cars to bear flexible-fuel engines for enabling compatibility to run on ethanol blends. Elaborating on the topic, the transport minister disclosed India’s target for achieving up to 20% ethanol blending with gasoline by 2025.

Ethanol is a flammable, volatile organic liquid that can be obtained from the petrochemical route as well as the bio route. The petrochemical route involves the catalytic hydration of ethylene, whereas the bio route comprises of fermentation of natural sugars obtained from plants. Bio-based ethanol is popularly used as a blending component in gasoline as it facilitates efficient combustion of motor fuel causing limited carbon emissions.

As per ChemAnalyst, India’s ethanol demand in FY2021 stood at 3250 million litres and is projected to grow at a quite healthy CAGR of over 8% by 2030. The government’s initiative to escalate the use of biofuels and its constant push towards domestic ethanol capacity expansion for manoeuvring excess sugar inventories as well as slashing down dependence on crude oil imports will propel the rising market trend of ethanol. The resolution to reduce carbon emissions by an economy like India, which represents the world’s third-largest automobile market, has the potential to drive the ethanol market for the long term. An indirect impact of this move will also be seen on Asia’s crude oil market that may have to face subdued demand in the future.