Govt mulls steps to put excess biofuel capacity into use

By Sandip Das

The ministry of petroleum and natural gas is formulating a mechanism to address the issue of excess ethanol capacity with the sugar and food grain processing industry, in consultation with the ministry of food.

The options include easing export of ethanol and laying a road map for increasing the share of biofuel blended with petrol.

Exploring exports and future blending targets

At present, oil marketing companies procure 11,000 million litres of ethanol made from sugarcane, rice and maize annually for 20% blending with petrol while the existing manufacturing capacity is of around 17,000 million litres.

“Excess capacities in ethanol manufacturing can be dealt through exploring the possibility of exports while we will discuss with stakeholders to increase further blending of biofuel with petrol,” petroleum minister Hardeep Singh Puri stated in Lok Sabha on Thursday.

In September, the directorate general of foreign trade, had allowed second generation (2G) ethanol, made from non-food materials like bagasse, wood waste, agricultural residue, grasses and other renewable resources.

However general or 1G ethanol exports remain mostly restricted for achieving domestic biofuel blending targets.

Recently Grain Ethanol Manufacturers Association had sought a cap on further investment in the sector, till the government makes a long term roadmap for future expansion of ethanol blending programme.

The association had stated that clear roadmap for higher ethanol blending should be set before granting approval for the new bio-fuels manufacturing units.

Ethanol programme’s economic and environmental impact

According to the petroleum ministry, ethanol blending in petrol has increased from 38 crore litres in 2013-14 (ESY) to more than 1000 crore litres in 2024-25 (ESY) , thereby achieving an average blending of 19.24%. Till October, 2025, 19.97% ethanol blending has been achieved.

“We will soon achieve a 20% ethanol blending with petrol target,” Singh said.

In the 2025-26 ethanol supply year (November-October) only 2890 million litres of ethanol, just 28% of the total requirement, have been allocated from sugar-based feedstocks , compared to 72% or 7610 million litres from grain-based sources – 4780 million litres from maize (45%), and 2830 million litres from rice (22%).

Currently out of the total 400 ethanol manufacturers, around 250 units are grain based (rice and maize). Rest of the units manufacturer ethanol from sugarcane

The bio-fuel programme has resulted in expeditious payment to farmers to a tune of over Rs. 1.36 lakh crore during ESY 2014-15 up to October 2025, besides savings of more than Rs 1.55 lakh crore of foreign exchange, net CO2 reduction of approximately 79 million tonne (MT) and substitution of more than 26 MT of crude oil, according to the petroleum ministry.

The Roadmap for Ethanol Blending in India 2020-25 has not identified any negative impact on engine health due to blending of ethanol in petrol up to E20. A study on life cycle emissions of Ethanol done by NITI Aayog has said that GHG emissions in case of use of sugarcane and maize based Ethanol are less by 65% and 50%, respectively than those of petrol.

This article has been republished from The Financial Express.