Iran Crisis Revives Efforts to Promote Ethanol-Diesel Blending, Despite Earlier Setbacks, as PMO Considers Options

Government Weighs Ethanol-Diesel Blending Again Amid Oil Supply Concerns

The Indian government is reassessing the feasibility of blending ethanol with diesel in a bid to reduce the country's reliance on imported fuel, which has been exacerbated by the ongoing Iran crisis. Discussions at the Prime Minister's Office (PMO) are underway to explore the use of additives to enable ethanol-diesel blending, with a detailed white paper expected to be submitted to an inter-ministerial committee in the coming weeks.

The push to revive ethanol-diesel blending comes as policymakers focus on ensuring oil supply security, with India continuing to rely heavily on crude imports. The government has engaged with the industry on the issue and is examining the technical and commercial feasibility of ethanol-diesel blending, with a view to submitting a detailed white paper outlining the proposal.

Pilot Trials Show Feasibility

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Pilot trials conducted with the Karnataka State Road Transport Corp. have demonstrated the technical feasibility of blending ethanol with diesel using additives. The trials have shown that blending levels as low as 0.7 percent can be commercially viable, reducing costs and making a significant contribution to ethanol utilization.

Ethanol and diesel do not naturally mix, requiring the use of chemical stabilisers to enable blending. The additive used in the pilot trials was sourced from a Singapore-based supplier, although multiple vendors exist globally.

Shift from Isobutanol

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The renewed focus on ethanol-diesel blending follows earlier attempts to blend ethanol with isobutanol, which were found to be commercially unviable due to higher costs and weaker returns. Ethanol-diesel blending appears to be a more practical and cost-effective option, with the potential to absorb a significant portion of India's surplus ethanol.

Surplus Ethanol

Despite the viability of ethanol-diesel blending, sources suggest that it will not absorb the entire surplus. The remaining surplus ethanol can be diverted to other applications, such as cooking fuel or flex-fuel vehicles. This makes diesel blending a supplementary pathway rather than a primary demand driver.

India has invested nearly Rs 40,000 crore in ethanol capacity over the past few years, with a requirement of around 1,100 crore litres for blending. This leaves a surplus of roughly 1,000 crore litres, which is likely to increase further.

State-Led Rollout Possible

While a central policy would enable nationwide adoption, states could also move independently based on pilot success. If a central policy comes into effect, it can be implemented across India. Otherwise, states like Karnataka, where the pilot has already been conducted, can take the lead, with other states following suit.