Ethanol Blended Petrol (EBP) Programme

The Ethanol Blended Petrol (EBP) Programme is the Government of India's plan to mix ethanol, a fuel made from plants, into the petrol sold at petrol pumps. "E20" means petrol with 20% ethanol and 80% normal petrol. By mixing in ethanol, India buys less crude oil from abroad, cuts pollution and gives farmers and sugar mills an extra market. India reached about 20% blending in 2025.

What is ethanol?

Ethanol (ethyl alcohol) is the same kind of alcohol found in drinks, but made very pure for use as fuel. It is made by fermentation: tiny living organisms called yeast eat sugar or starch and turn it into alcohol, just like how idli batter ferments overnight. Because it comes from plants that can be grown again each year, ethanol is called a biofuel. Petrol, on the other hand, comes from crude oil, which took millions of years to form and will run out.

Why does the programme exist?

India imports about 85% of the crude oil it uses. This costs a lot of foreign exchange (dollars) and makes India's economy depend on world oil prices and wars far away. The EBP Programme helps in four ways:

• Energy security: Every litre of ethanol mixed in means one litre less of imported petrol.
• Saving foreign exchange: Less oil import means fewer dollars spent abroad.
• Cleaner air: Ethanol burns more cleanly than petrol and releases less carbon monoxide and other harmful gases.
• Farm income: Sugarcane, maize and rice growers get an extra buyer for their crops. Sugar mills can use extra sugar and earn money faster, which helps them pay farmers on time.

Where did it come from?

The programme began in January 2003. At first, 5% blending was made compulsory on a trial basis in 9 states and 4 Union Territories. Progress was slow for many years, and blending was only about 1.5% in 2013-14. Key milestones since then:

• National Policy on Biofuels, 2009: set an early goal of 20% blending, which was not met.
• National Policy on Biofuels, 2018: set a target of 20% blending by 2030 and allowed more feedstocks (raw materials), such as damaged food grains and surplus grains.
• 2018 to 2022: the government gave interest help (interest subvention) for building new distilleries, and fixed separate ethanol prices for each feedstock.
• June 2022: India reached 10% blending (E10), ahead of the target date.
• 2022 amendment to the 2018 policy: brought forward the 20% target from 2030 to ESY 2025-26.
• 2025: India reached about 20% blending, five years ahead of the original 2030 date.

Blending rose from about 14.6% in ESY 2023-24 to around 19% in ESY 2024-25 and about 20% in 2025.

How does the system work, step by step?

1. Farmers grow sugarcane, maize or rice and sell them to sugar mills or distilleries (factories that make alcohol).
2. Distilleries turn the sugar or starch into ethanol.
3. The three public sector Oil Marketing Companies (OMCs), which are Indian Oil (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL), buy the ethanol through tenders.
4. The OMCs mix it with petrol at their depots and sell the blended petrol at pumps.

All of this follows an Ethanol Supply Year (ESY), which now runs from 1 November to 31 October (from ESY 2023-24 onwards).

What can ethanol be made from? (feedstocks)

Making sugar from cane happens in steps. Cane juice is boiled, and sugar crystals are taken out again and again. The thick, dark syrup left after each step is called molasses.

• Sugarcane juice or sugar syrup: the richest source. Using it means the mill makes ethanol instead of sugar.
• B-heavy molasses: the leftover after the second round of taking out sugar. It still has a lot of sugar in it (about 50% to 65% fermentable sugar), so using it also means some sugar is not made.
• C-heavy molasses: the final leftover after the third round. It has less sugar (about 40% to 45%) and cannot be turned into more sugar easily. So using it for ethanol does not reduce sugar output. One tonne gives about 220 to 225 litres of ethanol.
• Grains: maize (corn), damaged food grains, and surplus rice from the Food Corporation of India (FCI).
• Second-generation (2G) feedstock: farm waste like rice straw and cotton stalks, which is not food at all.

How is ethanol priced?

For sugar-based ethanol, the government fixes a separate price for each feedstock. This is called differential pricing. The richer the feedstock (the more sugar is lost), the higher the price. For ESY 2025-26, the ex-mill prices were:

• C-heavy molasses: ₹57.97 per litre
• B-heavy molasses: ₹60.73 per litre
• Sugarcane juice, sugar syrup and sugar: ₹65.61 per litre

For ESY 2025-26, ethanol from surplus FCI rice is priced at ₹60,320 per kilolitre (₹60.32 per litre). Ethanol meant for blending attracts only 5% GST (cut from 18%).

Support schemes

• Interest subvention schemes (2018 to 2022): the government pays part of the interest on bank loans for new or bigger distilleries: 6% a year or 50% of the interest rate, whichever is lower, for five years.
• Pradhan Mantri JI-VAN Yojana (March 2019): JI-VAN stands for Jaiv Indhan-Vatavaran Anukool fasal awashesh Nivaran. It gives money to set up 2G ethanol plants that use farm waste such as crop stubble.

India's position and Indian examples

India is the world's second-largest sugar producer after Brazil and the largest sugar consumer. Big ethanol states include Uttar Pradesh, Maharashtra and Karnataka for cane, and many grain-based distilleries are coming up in Bihar, Punjab and other states. A major shift has happened: earlier, most ethanol came from sugarcane, but now nearly three-fourths comes from grains, mainly maize.

Brazil is the world's best example of a country running cars on high-ethanol fuel, and India often studies its "flex-fuel" vehicles, which can run on any mix of petrol and ethanol.

Commonly confused concepts

• E10 vs E20 vs E100: The number is the percentage of ethanol. E10 = 10% ethanol, E20 = 20%, E100 = pure ethanol.
• First-generation (1G) vs second-generation (2G) ethanol: 1G ethanol is made from food crops like cane, maize and rice. 2G ethanol is made from non-food farm waste like straw, which does not compete with food.
• Ethanol vs biodiesel: Ethanol is mixed with petrol. Biodiesel is made from oils and fats (like used cooking oil) and is mixed with diesel.
• B-heavy vs C-heavy molasses: B-heavy still has a lot of sugar, so using it for ethanol cuts sugar output. C-heavy is the final leftover, so using it does not cut sugar output.
• Ethanol Supply Year vs sugar season: The ESY runs from November to October. The sugar season runs from October to September.

Issues, criticism and the way forward

• Food vs fuel: Using sugarcane, maize and rice for fuel can reduce food supply and push up food prices. The current decision to stop sugar-based diversion is an example of putting food first.
• Water use: Sugarcane and rice need huge amounts of water. Critics say growing more of them for fuel can worsen groundwater depletion in dry states like Maharashtra.
• Maize prices: Rising demand from distilleries has pushed up maize prices, which hurts poultry and cattle-feed industries that use maize.
• Vehicle concerns: Some owners of older vehicles say E20 lowers mileage and may affect engine parts. Vehicles made after April 2023 are designed to be E20-compatible. On 1 September 2025, the Supreme Court dismissed a petition that asked for ethanol-free petrol to be kept available for older vehicles.
• Way forward: Experts suggest moving more to 2G ethanol from farm waste, promoting flex-fuel vehicles, using surplus grain wisely, and choosing feedstocks each year based on food stocks.

Concepts to Know

• Biofuel: Fuel made from plants or other living material that can be grown again, such as ethanol or biodiesel.
• Fermentation: A natural process in which yeast or bacteria turn sugar or starch into alcohol and gas.
• Feedstock: The raw material used to make something. For ethanol, feedstocks include cane juice, molasses and grains.
• Molasses: The thick, dark, sweet syrup left over when sugar crystals are taken out of boiled cane juice.
• Oil Marketing Companies (OMCs): Companies that sell petrol and diesel to the public through petrol pumps. In India, the three main ones are government-owned: IOCL, BPCL and HPCL.
• Energy security: A country's ability to get enough energy at a fair price without being easily hurt by supply shocks from abroad.
• Ex-mill price: The price at the gate of the mill or distillery, before adding transport cost and taxes.
• Interest subvention: When the government pays part of the interest on a loan, so the borrower pays less.