Ethanol taking centerstage in India's clean energy landscape amid growth in biofuels

Ethanol, the renewable fuel made from plant materials, is fast gaining prominence in India's clean energy sector with its increasing use in replacing fossil resources as part of a larger movement favouring biofuels. Consider the fact that the average Ethanol Blending Percentage achieved by the Oil Marketing Companies (OMCs) reached 18.4 per cent at the end of March 2025, from 14.6 per cent in the previous year, inching closer to the national target of 20 per cent.

"As far as use of biofuels in the transport sector is concerned, ethanol blending has been a great success and we are now touching 20 per cent of ethanol bending in gasoline. There are discussions on ethanol blending beyond 20 per cent. There are talks about using flex fuel vehicles which are also coming up. All the OEMs have been given a target to come out with flex fuel vehicles in this year. With that ethanol blending percentage will go higher," said Alok Sharma, Director (R&D) at Indian Oil Corp.

The oil companies are also working on an Alcohol to Jet (ATJ) fuel plan. While these plants are in the initial stages they will also come up in the next 2-3 years as the blending percentage increases slowly. Thanks to the aviation boom and the upcoming CORSIA mandates oil firms are shifting focus to Sustainable Aviation Fuel (SAF). IOC, for instance, is trying to use Used Cooking Oil (UCO) for making SAF, and the first plant is likely to be commissioned by October 2025 on Coprocessing route. IOC plans to produce at least up to 1-2 per cent of SAF blended ATF.


"By 2030, there is a likely mandate that 5 per cent of aviation fuel will be SAF. We are also trying to modify some of the plants where we can use UCO in our refineries. There are dedicated plants also being thought of where we can use UCO without co-processing to produce neat SAF. So, Ethanol is definitely going to be a centerstage going forward in the form of ethanol blending in gasoline, ethanol blending in diesel, and it will also be used as feed for producing aviation fuel," Sharma said.
Parallely, Indian Oil has set up its first plant for 2G Ethanol -- produced from agricultural residues and non-food crops -- at Panipat even as it faces a few issues in handling of the feed. It is running the plant at around 50 per cent capacity while the scale up-related issues are sorted. Other OMCs are also setting up at least three more plants. The companies see 2G ethanol too playing a critical role in boosting clean energy uptake as the issues surrounding feed supply chain, feed handling and the high price of 2G ethanol are addressed.

Apart from Ethanol, the past few years have witnessed progress on bio-CNG front too, which is receiving push under the SATAT scheme. Indian Oil has already set up three CBG plants under SATAT and it has plans to set up around 30 plants this year. "The CBG programme has received a push also because of the CBG blending mandates -- 1 per cent by 2026, and increasing to 5 per cent by 2030. There are various schemes launched by the government on these initiatives including on Ethanol blending, biofuel policy, PM JI-VAN Yojana, Gobardhan etc. A lot of policies have been launched to push these fuels in the energy mix," Sharma said.

Another key promising area in fuel research is bio-Hydrogen used in the transport industry. IOC is working in this direction. Apart from Hydrogen production from the electrolysis of water, work on biomass gasification as a pathway is gaining traction. Indian Oil is trying to produce green Hydrogen via this route jointly with the Indian Institute of Science (IISc). The OMC has already developed a process allowing 5 kg per hour of Green Hydrogen to be produced from biomass gasification and it plans to scale it up in one of its refineries. The company also sees potential in using CBG reforming as a Green Hydrogen pathway.

Overall, the biofuel sector in India is grappling with five broad challenges including skills, standards, segregation of waste, scale up and supply chain but Sharma believes there are many opportunities too in areas like 2G Ethanol, WTE, and non-food crops. India is aiming to become Net Zero by 2070, and in the Oil & Gas sector most of the companies have already announced their Net Zero targets.

For example, IOC has plans to achieve operational Net Zero by 2046. Sharma believes in order to achieve the Net Zero goal, action is required on key areas like energy efficien cy, renewable energy including biofuels, Green Hydrogen, and Carbon Capture, Utilization and Storage (CCUS). The focus on biofuels must be ramped up specifically in view of their critical role in the decarbonisation of the automobile sector too.