Brent Crude prices surged past USD 100 per barrel on Monday as the ongoing conflict in West Asia remained intense. India imports nearly 85% of its crude requirements, straining the exchequer, especially during geopolitical tensions when crude prices soar.
Chinimandi spoke with ISMA DG Deepak Ballani about how India can utilise its extensive agricultural advantage, given the sugar industry’s pioneering shift to green energy manufacturing, and what steps should be taken to maximise this vital asset.
How can India leverage ethanol to absorb crude oil shocks and look inwards?
Ethanol can act as an important strategic buffer against global crude oil volatility. India imports nearly 85% of its crude oil requirements, and it is estimated that every USD 1 increase in crude prices raises the country’s annual import bill by about USD 2 billion. With crude prices recently touching around USD 113 per barrel amid geopolitical tensions, reducing dependence on imported fossil fuels has become increasingly important.
India has already built substantial ethanol production capacity. The industry currently has a distillation capacity of about 900 crore litres, with the capability to supply around 650 crore litres annually from sugarcane-based feedstocks to Oil Marketing Companies, even after meeting industrial alcohol demand. Expanding ethanol blending enables the substitution of imported petrol with domestically produced biofuel, helping cushion the economy from crude price shocks while strengthening energy security and retaining greater economic value within the domestic economy.
At the same time, providing policy flexibility for ethanol exports during periods of surplus could further support efficient capacity utilisation. While current international prices may not always be remunerative, enabling exports would provide the sector with an opportunity to access global markets whenever prices become viable, thereby strengthening the long-term sustainability of the ethanol ecosystem.
Why should the government promote blending beyond E20?
Promoting ethanol blending beyond E20 is strategically important for India’s long-term energy security and for maximising the benefits of investments already made in the biofuel sector. India imports nearly 85% of its crude oil, making the economy vulnerable to global price volatility and supply disruptions.
The ethanol ecosystem has expanded significantly in response to the Government’s biofuel policy, with the industry creating large distillation capacities. The ethanol industry (sugar + grain) today has overall ethanol production capacity exceeding 2,000 crore litres annually, including significant capacity of almost 50% from sugarcane-based feedstocks.
Providing a progressive and calibrated roadmap beyond E20, such as moving towards blends like E22, E25 and E27, aligned with automobile compatibility and feedstock availability, would ensure better utilisation of existing capacities, strengthen energy security, reduce exposure to global oil price volatility, and provide long-term investment confidence to the bio-energy sector.
