Indian drivers, farmers in a fix over the rushed E20 rollout. Centre is the only one to benefit

Representational image | Reuters

The green push in India got a major boost with the introduction of E20 petrol—a 20 per cent ethanol and 80 per cent petrol blend—at a few petrol stations in early 2023. It was a move toward a holistic plan to curb emissions, reduce oil imports, and promote domestic agriculture. On paper, it was a win-win situation—farmers gained a new market for their sugarcane as well as produce, consumers had access to a cleaner fuel, and the country took a step toward independence from oil imports.

But beneath the surface, a disturbing picture emerged. Reports and outcry from the public have suggested what numerous people are calling the “E20 Scam”, a multifaceted misrepresentation of fuel efficiency, costs, engine compatibility, and the real beneficiaries of the ethanol blending policy. It goes into the details of what E20 is, what was promised, and where things have gone wrong.

What is Ethanol and E20 fuel?

Ethanol is a renewable fuel, usually made by fermentation of crops like sugarcane, corn, and rice. Sugarcane is the linchpin in India due to the nation’s vast sugar industry. Ethanol can be blended with petrol to slow the use of fossil fuels and reduce carbon emissions.

E20 is 20 per cent ethanol and 80 per cent petrol. E20 is described relative to standard petrol (which is 10 per cent ethanol, termed E10), and it is projected to:

• Reduce greenhouse gas emissions.
• Increase octane rating and combustion.
• Import less foreign oil.
• Provide another income opportunity for farmers.

These are genuine advantages if done responsibly. It appears India’s problem is that it has bypassed certain key steps.

Rushed, risky rollout

Initially, the government had planned to implement E20 across the country by 2030. However, in 2023, the deadline was brought forward to 2025. The blend was launched in over 100 cities at select petrol stations, with intentions of further expanding domestically.
This step seemed ambitious and forward-thinking. But industry insiders from oil and automobiles pointed out some areas of concern:

• A few Indian vehicles are not ready for E20. No pre-2023 vehicles are E20-approved. Pre-2023 motors are only E10-compatible and are exposed to lower mileage, engine knocks, corrosion, and wear-and-tear on E20 in the long term.
• Fuel loss is substantial. Ethanol contains 30-35 per cent less energy content per litre than petrol. Consumers see a 15-20 per cent reduction in miles per litre, but are still getting charged nearly the same price per litre, essentially paying for a lesser quantity.
• Fuel price is not transparent. As ethanol is cheaper to produce than petrol, the advantage hasn’t translated into consumer benefits. Price hasn’t been determined openly by the government; therefore, oil suppliers and companies are also presumed to be making a profit.

Where’s the fraud?

To make it precise: Ethanol blending isn’t a scam per se. It does work in numerous nations such as Brazil and America, where correct vehicle norms, pricing, and infrastructure are in place.
The ‘E20 scam’ in India refers to the application of the policy, not the concept. Major areas of concern are:

1. Mileage falsification and denial

Car makers and oil merchants have sought to play down the mileage loss from E20. A significant number of consumers are dissatisfied, claiming that their vehicles, especially the old ones, attain far fewer kilometres per litre, meaning higher, not lower, running costs. No notification system was in place for alerting or informing consumers in case their vehicle was compatible with E20. Hence, people unknowingly refuel with E20, only to see a loss in performance and probable engine damage.

2. No price adjustment

Although a cheaper mix of gasoline (ethanol) was added, pump prices had not fallen. In fact, in a majority of petrol stations, E20 and E10 are retailed for a similar price, basically augmenting oil company profits and quite possibly the government through levies. Why shouldn’t the customer benefit if ethanol is cleaner and less expensive?

3. No real choice

Few petrol pumps indicate clearly E20 from E10. Most have taken E10 out of circulation completely, so everybody ends up putting in E20 regardless of compatibility. Such lack of informed choice has attracted charges of consumer deception.

4. Crony capitalism allegations

Some critics argue that the biggest beneficiaries of this policy aren’t farmers or consumers, but large sugar barons and distilleries. Most of them are politically connected. Ethanol production is being subsidised and prioritised, diverting sugarcane and rice from food to fuel, potentially fuelling inflation in food prices.

Is it even that green?

While ethanol is renewable, its environmental credentials are not clear.

1. Sugarcane is a notoriously water-intensive crop. Expanding sugarcane production for ethanol worsens India’s water crisis, especially in drought-prone areas.
2. Ethanol-focused agriculture incentivises large-scale monoculture, which depletes soil health and reduces biodiversity.
3. Diverting rice and grains to ethanol production raises ethical concerns in a country still battling malnutrition and food insecurity.

What should have been done differently?

Ethanol blending can still be part of India’s energy strategy. But several steps were skipped or mishandled:

• Instead of a blanket switch, the government should have kept both E10 and E20 available and marked pumps clearly.
• Campaigns educating drivers about E20 compatibility, fuel efficiency, and pricing should have preceded the rollout.
• Consumers should have been provided with the choice of ethanol-free fuel. 
• Owners of older vehicles should have been offered schemes helping them transition to E20-compatible engines.

The government should direct car and bike manufacturers to mark fuel compatibility prominently. And if ethanol is cheaper, consumers must be allowed to see the benefit directly.

Green policy, dirty execution

The E20 policy could have been a smart move in reducing carbon emissions, cutting crude imports, and supporting Indian farmers. Instead, due to rushed implementation, lack of transparency, and questionable economics, it’s turning into what many are calling the E20 Scam.

This isn’t just a policy misstep; it is also a wake-up call. If India wants to lead in sustainable energy, it needs to put people and facts first, not just push numbers for the sake of headlines.

Until then, drivers across the country will keep asking the same questions at the pump: What am I putting in my tank? And why does it feel like I’m the one getting burned?

Karti P Chidambaram is a Member of Parliament for Sivaganga, and a Member of the All India Congress Committee. His X handle is @KartiPC. Views are personal.

(Edited by Saptak Datta)