The USA-India Alliance to Thrust Ahead Ethanol Ecosystem in India

Tuesday’s meeting of the USA - India Trade Policy Forum held in New Delhi witnessed the USA’s manifestation to back India in achieving 20% ethanol blending with petrol targets by 2025. The support extended by the USA will primarily involve supplying extensive volumes of bioethanol to India for fuel purposes. The meeting further marked the agreement of the two countries on formulating collaborations to push forward their respective ethanol blending programs.

India’s ethanol blending target falls under the country’s strategy to endorse clean fuel alternatives that could enable it to achieve 30-35% reduced carbon emissions by 2030 in compliance with the country’s target devised under the Paris Climate Agreement. A roadmap for achieving the 20% ethanol blending target was also released by India’s prime minister in June 2021.

Ethanol is a volatile and flammable organic liquid that is industrially produced from the catalytic hydration of ethylene derived from fossil fuels in the petrochemical industry. Another method to produce ethanol is from bio-based renewable sources, such as starch, by dry- or wet-mill processing. Bio-based ethanol is getting highly popularised as a blending motor fuel for diesel, petrol, and gasoline as it facilitates efficient fuel combustion resulting in low carbon emission. 20% ethanol blending in motor fuels in India holds extraordinary benefits like reduction in automobile fuel imports, boost in agriculture with farmers gaining more income with the production of ethanol-producing crops and lowering down of the country’s carbon footprint.

As per ChemAnalyst, the USA’s open support to aid India to steadily inch to a sustainable footing is highly encouraging for the Indian economy. The establishment of an ethanol ecosystem across the world’s third-largest automobile market has huge potential in making a significant difference towards lowering down the global carbon footprint. Also, catering ethanol to such a big market is bound to surge ethanol demand in India, the load of which is likely to be shared by the USA with its commitment to provide bioethanol to Indian markets. It is expected that the bull fundamentals in the ethanol market will be the most opportune for the agriculture sector. However, India’s roadmap to sustainability will negatively impact the crude oil market which may have to witness weak demand in the near future.