Food vs. fuel: Ethanol blending boom and effects

• India aims to increase the ethanol-blending ratio in petrol to 30% to reduce fossil fuel consumption.

• This requires an increase in sugar diversion for ethanol production.

• Sugarcane production has been declining since 2022, leading to a hike in the Fair Remunerative Price for the crop.

• The price of sugar has risen, impacting consumers’ pockets.

• The decline in sugarcane production has impacted retail sugar prices across the country.

• Ethanol blending adds to the price pressure by diverting a portion of the sugar.

• Government data shows a rapid increase in sugarcane-based ethanol supplied for blending over the past decade.

• The Ethanol Blending Programme (EBP) has been implementing since the start of the 2000s, allowing for a stagnant, then gradually increasing supply of ethanol.

• The rate of ethanol blending with petrol has surged from just over 1.5% in FY14 to 20% in FY25.

• The EBP had set the target of 20% blending to be achieved by 2030, but progress has been made through lifting caps and taxes.

• The government is looking at grains to make up for the shortfall and the choice between food and fuel is looming.