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Mumbai.CEA flags E20 risks, seeks E10 option as ethanol demand threatens vehicles, food prices and water security

India’s ethanol-blending push, which helped the country achieve its target ahead of schedule and save billions of rupees on crude oil imports, is now raising concerns over vehicle compatibility, food inflation and water use. Chief Economic Adviser V Anantha Nageswaran has argued that E10 petrol should again be sold for older vehicles until they are suitably modified.

Eight crore older vehicles face E20 problems

Nageswaran, writing in The Indian Express, said around eight crore older motorcycles and scooters still use carburettor-based technology, largely from the period before BS-IV emission norms. These vehicles may not run properly on E20 petrol, which contains 20% ethanol. Ethanol has higher oxygen content, while older engines cannot automatically adjust the air-fuel mixture, potentially causing overheating and other operational problems.

The CEA also flagged possible damage to vehicle components. Prolonged use of E20 may affect rubber pipes and other parts inside older vehicles, increasing maintenance concerns. His suggested approach is to keep E10 petrol available at fuel stations until these vehicles are modified.

• Older carburettor vehicles may struggle with E20.
• Engines could run hotter because of fuel-mixture issues.
• Rubber pipes and components may deteriorate over time.
• E10 could remain available as a transition option.

Ethanol demand could push food prices higher

The concerns extend beyond automobiles. Rising ethanol demand is sending more sugarcane, maize and rice towards ethanol production. If ethanol producers offer higher prices for maize, poultry and dairy companies could face increased feed costs. That could eventually raise prices of eggs, chicken and milk, adding to food inflation.

Reuters has reported that around 10% of India’s annual sugar production, or nearly 30 lakh tonnes, is being diverted to ethanol this season. The government is therefore considering restricting the use of sugarcane for ethanol in the coming season to prevent a shortage of sugar and a sharp rise in prices.

Water use adds another layer of concern

Nageswaran has also questioned the water cost of ethanol production. Sugarcane requires large quantities of water to grow, making groundwater use a major part of the ethanol equation. He said the assessment should not be limited to water consumed inside ethanol plants but should also include the billions of litres of groundwater used to cultivate the crop.

The wider concerns include:

• Food crops being diverted towards fuel production.
• Higher feed costs affecting poultry and dairy businesses.
• Sugar availability and prices coming under pressure.
• Groundwater being used to support fuel production.

Government defends E20, rejects separate fuel network

The government has consistently defended the ethanol-blending programme, saying E20 saves valuable foreign exchange and provides farmers with better returns for their produce. Based on government testing, it has also maintained that there is no evidence of widespread engine damage caused by E20.

The government has rejected demands for simultaneous nationwide availability of E10 and E20, arguing that maintaining separate fuel options would significantly increase logistics and supply-chain costs. The debate, therefore, is not simply about changing fuel grades but about the economic cost of maintaining two parallel supply systems.

CEA calls for caution beyond 20% blending

Nageswaran is not calling for the ethanol programme to be abandoned. His argument is for greater caution once blending reaches 20%. The gains from energy security and lower crude imports, he suggests, must be weighed against less visible costs for agriculture, food prices, vehicles and water resources.

The larger questions now include:

• How much farmland should be dedicated to fuel?
• How much groundwater can ethanol production consume?
• Can older vehicles be protected during transition?
• Can food security be safeguarded as blending rises?

The E20 debate is thus moving beyond mileage and engine life. It is increasingly about how much of India’s land, crops and water can be committed to producing fuel without creating new pressures on food security and household budgets.