New Delhi : Amid the ongoing debate over E20 petrol and concerns raised by owners of older vehicles, Chief Economic Adviser V Anantha Nageswaran and Akash Poojari have suggested reintroducing E10 petrol for older two-wheelers. They have also called for a closer assessment of the food-versus-fuel trade-off before India moves ahead with ethanol blending beyond the 20% level. Nageswaran and Poojari, a consultant with the Department of Economic Affairs, argue that the question facing India is no longer simply whether E20 works in older vehicles.
The authors point to possible future blends such as E27 and E30 and caution against moving further without accounting for these costs. Their argument is that while some policy decisions can be reversed relatively easily, changing cropping patterns and committing land and water to fuel production can be much harder to undo. India’s ethanol programme has expanded rapidly, with the country reaching its 20% blending target much earlier than originally planned.
The CEA’s column focuses particularly on maize. Greater demand from ethanol producers can push up its value as a fuel feedstock, potentially influencing what farmers choose to grow and how much land is devoted to it. Maize is also an important input for poultry and livestock feed, meaning changes in its price and availability can ripple through the food economy. The question becomes even more important if India moves beyond E20 petrol. A higher blending target would mean a larger and more sustained demand for agricultural feedstocks.
The sugarcane trade-off is already visible. News agency Reuters reported earlier this month that the government was considering restricting the use of sugarcane for ethanol in the next season as it seeks to increase domestic sugar supplies and address high sugar prices. Around 3 million tonnes of sugar, or about 10% of annual output, was diverted towards ethanol in the current season, according to the report. The benefits of ethanol are generally measured through crude oil substitution, foreign-exchange savings, emissions and farmer incomes.
This is particularly significant for sugarcane, a water-intensive crop, but the authors extend the argument to agricultural feedstocks more broadly. Their concern is that once land and water are committed to fuel production, reversing those choices can become difficult. “Once land and water are committed to fuel, and distilleries and cropping patterns are built around it, pulling back can be painful,” the authors write. It is this argument that gives the column significance beyond the current E20 controversy.
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