Petrol to escape Rs 2 green tax from Oct on 10% ethanol blending

NEW DELHI: India has achieved nearly 10% ethanol blending of petrol months ahead of the target, a move that will spare consumers an additional Rs 2 per litre tax from October. The budget had proposed the additional tax on unblended petrol from October to speed up adoption of the cleaner fuel as part of the country’s energy transition and climate action plans. But ethanol supply remains a concern, even though the government is pushing hard to expand capacity.

The roadmap for blending prepared jointly by the oil ministry and government think-tank Niti Ayog for developing an ethanol economy in the country had set a target of 5% blending by the end of 2022 and 20% by 2025. The Centre has also targetted 5% blending of biodiesel with diesel by 2030.

The roadmap reckons 20% blending of petrol with ethanol will result in an annual saving of $5 billion, or more than Rs 30,000 crore in India’s oil import bill. The Centre has also targetted 5 per cent blending of biodiesel with diesel by 2030.

Prime minister Narendra Modi had in June last year raised his bet on ethanol in India’s fight against climate change by advancing the date for 20% blending of petrol by 5 years to 2025 and launching a pilot project at three Pune petrol pumps for running vehicles fully on the ‘swadeshi’ fuel.

“The country is fast moving towards clean energy and we will see a great benefit from this (rapid ethanol blending), especially in the agriculture sector,” he had said addressing a function to mark World Environment Day. For the uninitiated, ethanol is ethyl alcohol – also referred as ‘drinking alcohol’ – made from molasses, grains and farm waste.

The pandemic has made ethanol a part of our everyday life as one of the alcohol options for hand sanitisers. It is less polluting, and offers equivalent efficiency at a lower cost than petrol by raising the octane level. Petrol 20% laced with ethanol is known as ‘E20’ and ethanol for automotive use is known as ‘E100’.