Bring back E10 for older vehicles: India's top economic adviser
What's the story
Chief Economic Advisor (CEA) V Anantha Nageswaran has suggested that Indian government should consider bringing back E10 petrol for older vehicles. The recommendation comes amid the ongoing debate over the introduction of E20 petrol and its impact on older two-wheelers. Nageswaran, along with Akash Poojari, a consultant with the Department of Economic Affairs, made this suggestion in a column published in The Indian Express on Monday.
Proposal details
E10 option for pre-BS-IV 2-wheelers
Nageswaran and Poojari estimate that there are around 75-80 million pre-BS-IV carburettor-equipped two-wheelers in India.
They argue that these vehicles could be given the option of E10 alongside E20.
This would provide a lower-blend option while retrofits are being done and also reduce overall ethanol consumption compared to running the entire fleet on E20.
Trade-off analysis
Food, feed, and water trade-offs
The authors also raise concerns over the food, feed, and water trade-offs before going for higher ethanol blends.
They argue that while some policy decisions can be reversed easily, changing cropping patterns and committing land and water to fuel production can be much harder to undo.
This brings the food-versus-fuel question at the center of India's ethanol policy.
Program expansion
Ethanol blending in India
India's ethanol program has expanded rapidly, with the country achieving its 20% blending target much earlier than planned.
The government defends the program on the grounds of reducing crude oil imports, saving foreign exchange, and creating an additional market for farmers and ethanol producers.
However, higher blending requires more ethanol, which in turn requires more feedstock.
Crop competition
Food vs fuel debate
India produces ethanol from sugarcane, maize, rice, and other grains. As demand for ethanol rises, these crops get another major buyer in distilleries.
This creates a basic economic trade-off where the same crop can be used to produce fuel or serve food, feed, or other industrial markets.
The column particularly focuses on maize as greater demand from ethanol producers can push up its value as a fuel feedstock.
Resource allocation
Need to consider water usage
The authors also emphasize the need to consider water usage in growing crops that eventually become ethanol. This is especially important for sugarcane, a water-intensive crop.
They warn that once land and water are committed to fuel production, reversing those choices can be difficult.
This argument extends beyond the current E20 controversy and raises questions about potential hidden costs elsewhere in the economy due to increased energy security from ethanol blending.