National Policy on biofuels / EBP programme – Striking a balance between consumer rights and Public Policy

National Policy on biofuels / EBP programme - Striking a balance between consumer rights and Public Policy

By – Sangeeth Narayanan and Debasmita Goswami

Table of Contents

Introduction

The Government of India passed the National Policy on Biofuels, 2018 (policy) with the vision of increasing usage of biofuels in the energy and transportation sectors of the country during the coming decades. The policy aims to utilize, develop and promote domestic feedstock and utilization for production of biofuels thereby increasingly substitute fossil fuels while contributing to National Energy Security, Climate Change mitigation and creating new employment opportunities in a sustainable way. The aim of the policy is to enable availability of biofuels in the market and increase its blending percentage. The policy aimed to increase the percentage of ethanol blending in petrol to 20% by 2030. It can be safely said that the policy has achieved its target with respect to ethanol blending as the policy has successfully increased the percentage of ethanol blending which was around 2.0% in 2018 to 20% in 2025, five years earlier than the initially targeted deadline.

Overview of the Ethanol Blended Petrol Programme (EBPP)

This article focuses on the Ethanol Blended Petrol Programme (EBPP). Ethanol is one of the principal biofuels, which is naturally produced by the fermentation of sugars by yeasts or via petrochemical processes such as ethylene hydration. It is considered to be one of the most suitable alternative blending, transportation fuel due to its better fuel quality since it has a higher octane number and environmental advantages. The policy aims to increase the use of biofuels inorder to reduce the country’s dependence on the fossil fuels. It  promotes and encourages use of feedstock such as corn, cassava, rotten potatoes, damaged food grain like broken rice, food grains unfit for human consumption, maize, sugarcane juice & molasses, agriculture residues such as rice straw, cotton stalk, corn cobs, saw dust, bagasse etc. The Policy aims to increase usage of biofuels in the energy and transportation sectors of the country during the coming decade and aims to utilize, develop and promote domestic feedstock and its utilization for production of biofuels thereby substituting the fossil fuels while contributing to the National Energy Security, Climate Change mitigation apart from creating new employment opportunities in a sustainable way. It will also encourage the application of advance technologies for generation of biofuels. 

Over the last decade, Government has undertaken various interventions to promote biofuels in the country through various programmes such as the EBPP. The Government has undertaken suitable steps to revamp the EBPP. For example, the Government has opened alternate route for ethanol production under the EBPP whereby the scope of raw materials for procurement of ethanol has been increased. The policy now allows production of ethanol from damaged food grains like wheat, broken rice etc. which are unfit for human consumption.

Purpose of passing the policy/EBPP

India is one of the fastest growing economies in the world. Energy sufficiency and security are extremely crucial for achieving the economic goals of the country. While energy sufficiency is about meeting the energy needs of the country, energy security is a broader concept that focuses on reliable flow of energy and is a stepping stone towards energy independence.  Conventional or fossil fuel resources are limited, non-renewable, polluting and therefore need to be used prudently. Whereas, renewable energy resources are indigenous, non-polluting and virtually inexhaustible. Therefore, their use is being encouraged in every possible manner. Further, the crude oil prices have been fluctuating in the world market. Such fluctuations are straining various economies world over, particularly the developing economies. The domestic crude oil production is able to meet only a tiny fraction of the demand, while the rest is met from imported crude. India’s energy security will remain vulnerable until alternative fuels to substitute/supplement petro-based fuels are developed based on indigenously produced renewable feedstock. In this regard Indian Government has prepared a road map in order to reduce the import dependency in Oil & Gas sector by adopting a five pronged strategy which includes Increasing Domestic Production, Adopting biofuels & Renewables, Energy Efficiency Norms, Improvement in Refinery Processes and Demand Substitution. This envisages a strategic role for biofuels in the Indian Energy basket.

Advantages of the National Biofuels Policy and EBPP

The policy is stated to bring the following advantages to the country:

Reduce import dependency

With the increased ethanol production, India has saved approximately 1.36 lakh crore rupees in foreign exchange by reducing its dependency on imported crude oil.

Cleaner environment

The environmental impact has been significant. The use of ethanol blended petrol has helped reduce carbon dioxide emissions by 698 lakh tonnes contributing to India’s climate goals.

Growth of domestic biofuel industry

Under the policy, Rs. 1.96 lakh crore have been paid to distilleries providing a major impetus to the domestic biofuel industry.

Additional income to farmers

Agricultural residue/waste which are burnt by the farmers can be converted to ethanol and can fetch a price for these waste if a market is developed for the same. Under the policy, Rs. 1.18 lakh crore have been disbursed to farmers thereby enhancing rural incomes and supporting the agricultural economy.

International Practices on Ethanol Blending in Petrol

To encourage use of biofuels several countries have put forth different mechanisms, incentives and subsidies suiting to their domestic requirements. In the International arena United States of America and Brazil contribute for 92 billion litres which is almost 84% of the global share, followed by European Union, China, India, Canada and Thailand. In order to promote usage of Ethanol for transportation usage various initiatives have been taken  by various countries.

Brazil – RenovaBio Policy

In Brazil the National Biofuels Policy, 2017 (“Renova Bio”)  issued by the Ministry of Mines and Energy was launched with the aim of supporting the Brazillian Nationally Determined Contribution (“NDC”)’s commitment under the Paris Agreement. The Policy aims at reducing the Greenhouse Gas emissions and increasing the biofuel consumption therefore, leading to an expansion in the Brazilian energy matrix. The objective of the Renova Bio is establishment of national emission reduction targets for a period of 10 years and certification of the production of Biofuels wherein different grades are assigned for each producer, in such a scenario higher grades are given for the producer who produces the highest amount of net energy.

United States – Clean Air Act and RFS Programme

Further, in United States the Clean Air Act has been designed to control air pollution on a national level.  It requires the Environmental Protection Agency (“EPA”) to develop and enforce regulations to protect the general public from exposure to airborne contaminants that are known to be hazardous to human health. It also requires the EPA to set particular Renewable Fuel Standards (“RFS”)  which is updated every year based on the availability of fuel. As per the ‘RFS programme, standards for 2026 and 2027, Partial Waiver of 2025 Cellulosic Biofuel Volume Requirement’  EPA is proposing several regulatory changes to the RFS program, including reducing the number of Renewable Identification Numbers (“RINs”) generated for imported renewable fuel and renewable fuel produced from foreign feedstocks and removing renewable electricity as a qualifying renewable fuel under the RFS program. 

European Union – RED and FQD Frameworks

In European Union, the Renewable Energy Directive (“RED”) and Fuel Quality Directive (“FQD”) implemented by the European Commission has played a significant role. The RED had set targets for renewable energy consumption, including a sub-target mandating 10% of energy used in transport to be produced with the renewable sources. The FQD had set a greenhouse gas reduction target for fuel suppliers, requiring them to reduce the CHG intensity of the fuel mix by 6% in 2020. The directives also introduced a set of sustainability criteria excluding the biofuels produced on land with high biodiversity value or carbon stocks and fuels made from feedstocks. Biofuels were required to provide at least a 35% CHG reduction compared to fossil fuels in order to be accounted in the renewable energy target and to be eligible for public financial support.

China – Ethanol Mandate

Further,  in China in 2017 the Government had announced the legislation proposing the use of ethanol in fuel with the target of 10% ethanol blending. The key motivation for the ethanol mandate in China was to reduce China’s large corn stockpiles which peaked during the time period of 2015-2016 at over four billion bushels. In this regard the primary focus of the Chinese Government is to develop a grain-based ethanol production and promoting the use of the ethanol gasoline for cars and focusing on production of bioplastic and bio-degradable materials.

Thailand – Alternative Energy Development Plan

In Thailand the Alternative Energy Development Plan  (“ADEP”) programme implemented by Ministry of Energy targets the share of renewable and alternative energy from biofuel to increase from 7% of total fuel energy use in 2015 to 25% in 2036.

Criticism of the policy/EBPP

Despite the abovementioned advantages of the policy, there are certain criticisms for the policy/EBPP as well. The following are the major criticisms of the policy:

Impact on crop diversification

The implementation of the EBPP has led to a considerable increase in the cultivation of ethanol feedstock crops, primarily sugarcane and maize. The Indian Sugar Mills Association 2023 report stated that ethanol production from sugarcane increased by 23% between 2018 and 2023 with Uttar Pradesh and Maharashtra emerging as biggest contributors. As per the Ministry of Agriculture & Farmers Welfare 2023 report, the area under sugarcane cultivation in the country has exponentially increased in the over the last few years, growing from 4.6 million hectares in 2017-18 to 5.1 million hectares in 2022-23. This growth shows the increasing demand for sugarcane as a primary feedstock for ethanol production. Maize cultivation has also seen considerable rise driven by ethanol demand in maize growing areas specifically in states like Bihar and Madhya Pradesh. These shifts in cropping patterns highlight how EBPP is influencing agricultural land use. The expansion of ethanol feedstock crops has resulted in reduced crop diversification raising concerns over food security and soil health. In sugarcane rich states, disruptions to traditional crop rotation practices have been noted. The increased emphasis on sugarcane for ethanol production has affected the cultivation of other important crops like legumes and oilseeds, which can have implications for soil health and overall farm sustainability in the long term. This shift reflects changing agricultural priorities influenced by the EBPP.

Water usage concerns

The shift towards sugarcane-based ethanol has increased water consumption, raising sustainability concerns. A 2023 report by IIT Delhi states that sugarcane requires approximately 2100 litres of water  per kg of biomass, making it a water-intensive crop. Groundwater depletion in Maharashtra and Karnataka worsened due to excessive sugarcane irrigation. There is a need to examine how continuous cultivation of feedstocks such as sugarcane and maize may affect regions already facing water scarcity or soil degradation over extended periods.

Impact on vehicles

One of the most frequently raised concerns with ethanol blended petrol is reduced mileage in vehicles. Ethanol has lower energy density than petrol which results in drop in fuel economy. Older vehicles which are not optimised for ethanol blended petrol, the reduction in fuel economy is claimed to be in the range of 3-6%. Another challenge faced by the older vehicles is the unusual wear and tear of key parts such as the engine, fuel tank, carburettor. Further, there are concerns of corrosion of vehicle components induced by increased ethanol blending in petrol.

Consumer rights

In addition to the abovementioned criticisms, one of the major criticisms of the EBPP is the mandate of the government to strictly impose the usage of ethanol blended petrol without providing consumers with an option of either choosing ethanol free petrol or a variant with lesser percentage of ethanol such as E5 or E10. The primary criticism is that the exclusive availability of E20 petrol without any ethanol free alternatives violates the fundamental rights of millions of vehicle owners whose vehicles are incompatible with higher ethanol blends.

Challenges to EBPP under Consumer Protection laws

Recently, a Writ Petition being Writ Petition (C) No. 813 of 2025 was filed before the Hon’ble Supreme Court of India challenging the EBPP inter alia on the ground of violation of consumer rights. The following provisions of the Consumer Protection Act, 2019 (CPA, 2019) are directly impacted by the EBPP:

  1. “consumer rights” as defined under Section 2(9) of the CPA, 2019 includes the right to be informed about the quality, quantity, potency, purity, standard, and price of goods or services. The mandatory sale of E20 without clear labelling or disclosure appears to violate this fundamental consumer right. 
  2. Section 2(11) defines “deficiency” to include any fault, imperfection, shortcoming, or inadequacy in the quality, nature, and manner of performance required to be maintained by law. The mandate of supplying only E20 fuel even to those vehicles not designed for such blends or such percentage of blend could constitute deficiency in service, particularly when it leads to vehicle damage or reduced performance.
  3. Section 18 (1) of the CPA, 2019 provides for prevention of violation of consumer rights. Pertinently, right to access to a variety of goods, products or services at competitive prices is violated when consumers do not have access to ethanol free petrol.
  4. Further, right to consumer awareness is violated when oil companies sell ethanol blended petrol in their outlets without clearly indicating that the fuel is blended with 20% ethanol.

Despite the challenge on the grounds as abovementioned and other grounds, the Supreme Court refused to intervene with the implementation of EBPP and dismissed the Writ Petition.

Suggestions as to ideal manner of implementation of the policy/EBPP

It is an undeniable fact that the policy and EBPP has various benefits to the Indian economy such as energy security, reduced spending on crude imports etc. However, it would have been ideal if the EBPP was implemented in a more transparent manner after taking the interests of all the stakeholders into consideration. The Government should have conducted a thorough study on the effects of increased level of ethanol blending with petrol. The study should have been published for the information of the public. The government should have implemented the EBPP in a phased manner. The vehicles which are currently under usage and not compliant with the increased levels of ethanol should have been excluded from the mandate. Further, the Government should have considered any possible damages to the vehicles which are not compliant to ethanol blended fuels and should have carved out a way as far as insurance claims are concerned for any potential damages emerging on account of using E20 fuel. At present, there is no clarity as to whether insurance companies would entertain any claim for damages on account of damages to vehicles due to usage of E20 fuel. And lastly, the consumers should have got choice to opt for fuels having varying levels of ethanol such as E5, E10, E20 etc. or opt for a category of fuel which is free from blending. The Government may have charged ethanol free petrol at a premium price if required to compensate for the increased imports of crude, however, the underlying principle of balancing national interest with consumer rights would have been achieved.

FAQs

  1. What is India’s National Policy on Biofuels, 2018?

    India’s National Policy on Biofuels, 2018 sets out a long-term framework for increasing the production and use of domestically sourced biofuels. The policy seeks to substitute a portion of fossil-fuel consumption with renewable, indigenous alternatives while improving energy security, reducing carbon emissions, and generating rural employment. It promotes the development and utilisation of domestic feedstock, encourages investment in biofuel manufacturing, and aims to support India’s climate-change commitments and energy-independence goals in a sustainable way.

  2. What is the Ethanol Blended Petrol (EBP) Programme?

    The Ethanol Blended Petrol (EBP) Programme requires Oil Marketing Companies to sell petrol blended with ethanol, with current blending levels reaching up to 20 percent. The programme is designed to promote cleaner, renewable fuel options, reduce dependence on imported crude oil, create a steady market for agricultural produce used in ethanol production, and strengthen India’s energy security. The Government has advanced the target of 20 percent ethanol blending from 2030 to the Ethanol Supply Year 2025–26, supported by the “Roadmap for Ethanol Blending in India 2020–25.”

  3. What are the objectives of India’s E20 ethanol blending policy?

    The E20 policy aims to strengthen India’s energy independence by transitioning to cleaner domestic fuels and reducing reliance on petrol-based energy sources. It seeks to scale up biofuel usage, support renewable-energy goals, and increase the utilisation of domestic feedstock for ethanol production. The policy is framed to advance climate-change mitigation efforts, promote rural economic growth, and generate sustainable employment through the expansion of the biofuel ecosystem.

  4. What are the benefits of ethanol blending in petrol?

    The National Policy on Biofuels brings several measurable economic and environmental benefits. India has reduced its import bill by an estimated ₹1.36 lakh crore through increased ethanol blending, directly cutting crude-oil imports. Ethanol-blended petrol has lowered carbon dioxide emissions by around 698 lakh tonnes, supporting India’s climate-action targets. The policy has strengthened the domestic biofuel industry, with over ₹1.96 lakh crore paid to distilleries, and has improved farmer incomes by creating a market for agricultural residue and low-value crops, with ₹1.18 lakh crore disbursed to farmers so far.

  5. How has ethanol blending impacted India’s energy imports?

    Higher ethanol production and blending have enabled India to substitute a portion of its petrol consumption with domestically produced biofuel, resulting in estimated foreign-exchange savings of ₹1.36 lakh crore. This reduction in import dependence contributes directly to India’s energy security objectives.

  6. What are the environmental benefits of biofuel adoption in India?

    Biofuel adoption offers both environmental and economic advantages. It helps reduce air pollution and greenhouse-gas emissions, supports the shift away from imported fossil fuels, and contributes to maintaining a balanced carbon cycle. Biofuels also align with sustainability goals by promoting renewable energy use and strengthening rural economies through new income streams and employment opportunities.

  7. What are the major criticisms of the E20 blending policy?

    Key criticisms of the E20 policy relate to concerns over agricultural land-use patterns, water consumption, vehicle compatibility, and consumer choice. Increased demand for ethanol feedstock has encouraged shifts toward sugarcane and maize cultivation at the cost of crop diversity, putting pressure on soil health and water-stressed regions. Higher ethanol blends may also cause reduced mileage and accelerated wear in vehicles not designed for E20. Finally, the lack of alternative fuel options such as E0, E5, or E10 has raised consumer-rights concerns.

  8. How does the E20 mandate affect consumer rights under the CPA, 2019?

    The challenge before the Supreme Court argued that mandatory E20 supply impacts multiple consumer-rights protections under the CPA, 2019. The absence of clear labelling or disclosure may violate the right to be informed under Section 2(9). Supplying only E20 to vehicles not designed for such blends could amount to “deficiency” in service under Section 2(11) if it leads to performance issues or damage. Mandatory sale of only E20 restricts consumers’ right to choose goods at competitive prices under Section 18(1). Concerns were also raised over inadequate consumer awareness where fuel stations do not clearly indicate ethanol percentages. Despite these issues, the Supreme Court declined to intervene and dismissed the petition.

  9. What was the Supreme Court’s stand on the E20 ethanol blending challenge?

    The Supreme Court refused to interfere with the implementation of the E20 policy and dismissed Writ Petition (C) No. 813 of 2025. While the petition raised concerns relating to vehicle safety, consumer choice, and compatibility with the CPA, the Court chose not to halt or modify the Government’s blending programme.

  10. How can India balance ethanol blending goals with consumer protection?

    For smoother and more balanced implementation, the policy could benefit from greater transparency, phased adoption, and stronger consumer safeguards. A comprehensive public study on the effects of higher ethanol blends should have been conducted and published. Non-compliant vehicles currently in use could have been temporarily exempted, with clear guidance on insurance coverage for potential ethanol-related damage. The Government could also have ensured consumer choice by allowing multiple fuel variants such as E5, E10, and ethanol-free petrol, even at a premium. Such steps would help align national energy goals with consumer rights and vehicle safety.

References –

  1. https://mopng.gov.in/files/uploads/NATIONAL_POLICY_ON_BIOFUELS-2018.pdf
  2. https://mopng.gov.in/files/uploads/NATIONAL_POLICY_ON_BIOFUELS-2018.pdf
  3. Please see, Roadmap for Ethanol Blending in India 2020-25, Roadmap-For-Ethanol-Blending-In-India-2020-25.pdf
  4. Please note, Press Release: Press Information Bureau
  5. 3.Please see, What has been the impact of ethanol blending?  – The Hindu
  6. National Policy on Biofuels, 2018
  7. https://www.newsonair.gov.in/india-hits-20-ethanol-blending-in-petrol-5-years-ahead-of-target-union-minister-hardeep-singh-puri/#:~:text=Ethanol%20production%20has%20surged%20from,dependency%20on%20imported%20crude%20oil.
  8. https://www.newsonair.gov.in/india-hits-20-ethanol-blending-in-petrol-5-years-ahead-of-target-union-minister-hardeep-singh-puri/#:~:text=Ethanol%20production%20has%20surged%20from,dependency%20on%20imported%20crude%20oil
  9. https://www.newsonair.gov.in/india-hits-20-ethanol-blending-in-petrol-5-years-ahead-of-target-union-minister-hardeep-singh-puri/#:~:text=Ethanol%20production%20has%20surged%20from,dependency%20on%20imported%20crude%20oil.
  10. https://www.newsonair.gov.in/india-hits-20-ethanol-blending-in-petrol-5-years-ahead-of-target-union-minister-hardeep-singh-puri/#:~:text=Ethanol%20production%20has%20surged%20from,dependency%20on%20imported%20crude%20oil.
  11. National Policy on Biofuels 2018
  12. Please see, Roadmap-For-Ethanol-Blending-In-India-2020-25.pdf
  13. Please see, Rodolfo Sbrolini Tiburcio, Thales Rocha de Macedo, Ana Maria Pereira Neto, Brazilian Biofuels Policy  (Renova Bio) : Overview and generation of decarbonization credits by biodiesel production facilities https://www.sciencedirect.com/science/article/abs/pii/S0973082623001916s
  14. Please see, Clean Air Act – Climate Change Laws of the World
  15. Please see, Roadmap-For-Ethanol-Blending-In-India-2020-25.pdf
  16. Please see, 2025-11128.pdf
  17. Please see, Final recast Renewable Energy Directive for 2021-2030 in the European Union
  18. Please see, Roadmap-For-Ethanol-Blending-In-India-2020-25.pdf
  19. Please see, China’s New Nationwide E10 Ethanol Mandate and Its Global Implications | Agricultural Policy Review
  20. Please see, Status update on China’s plan to push for E10 mandate
  21. Please see, Roadmap-For-Ethanol-Blending-In-India-2020-25.pdf
  22. https://agriwelfare.gov.in/Documents/annual_report_english_2022_23.pdf
  23. https://www.agriculturaljournals.com/archives/2025/vol7issue6/PartC/7-6-12-661.pdf

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