Ahead of the Supreme Court hearing on September 1 on a public interest litigation (PIL) challenging the E20 fuel policy, senior leaders from auto component makers, oil companies and the testing agency ARAI came together on a panel earlier this week to try and address the confusion and fears about the usage of E20-blended fuel.
The focus was on addressing consumer concerns like the drop in mileage, damage to components and warranty validity. However, the panel also delved into just why the country is shifting to a higher blend of ethanol in petrol supply. Panellists stated that about 70 percent of the ethanol procurement value flows directly to farmers. PS Ravi, director, Federation of Indian Petroleum Industry (FIPI), said, “In the last 3-4 years, about Rs 40,000 crore has been invested in new distilleries and indigenous equipment.” However, some queries remained unanswered or were left ambiguous.
Warranty Impact of E20 fuel
Warranties will most likely stand honoured, but concerns remain for millions of older and out-of-production vehicles.
Prashant Kumar Banerjee, chief executive director of the Society of Indian Automobile Manufacturers (SIAM), said that irrespective of what is stated in a vehicle’s user manual, “there will be no warranty-related changes. Whatever warranty is committed by OEMs will be fully honoured for E20 usage,” adding that insurance claims would also remain unaffected.
We reached out to individual manufacturers to understand this, and while some are yet to respond, most have either categorically stated that the warranty will remain intact or have alluded to it.
The Automotive Research Association of India (ARAI) conducted tests on two- and four-wheelers from 2005 to 2021 and says that it sees no significant impact of E20. However, the details of the report have not been made public, with the body claiming that the full report contains OEM-sensitive data held under non-disclosure agreements. This, though, only adds to doubts among consumers.
Impact on older vehicles remains ambiguous
Another area left in doubt is the impact of E20 fuel on vehicles older than 10 years. While officials said that there have been no failures of these vehicles, no data was shared on long-term component wear. There are still millions running on Indian roads, especially two-wheelers. It is estimated that there are 75-80 million pre-BS4 motorcycles still on the roads, and for most owners, these are their daily runners. Thus, a lack of clarity on potential E20 damage to vehicles that are now out of warranty or even out of production remains a big worry.
Drop in mileage using E20
The drop in mileage with E20 is clear; however, the degree is what disagreements linger over.
Mileage, a long-held concern among Indian motorists, is a concern thanks to ethanol’s lower energy density; ethanol has about 24MJ/L, while petrol has around 34MJ/L. Thus, a litre of E20 should hold an energy density of about 32 megajoules, roughly a 6 percent drop. This, the government argues, is a small drop, and with the previous ethanol blend being 10 percent (E10), the actual drop in efficiency should be only about 2 percent. Still, owners claim as much as a 20 percent reduction. These, however, are not validated with controlled parameters; thus, the authorities are standing by their claim of a marginal drop.
Lower price for E20 fuel
However small the drop in efficiency may be, its very existence should ideally warrant a reduction in the price of blended fuel. Yet, officials repeatedly pointed to the bigger goal of the ethanol program: reducing India’s crude oil imports. This implies that we are unlikely to see a price reduction. The claim is also that sourcing ethanol is more expensive than crude oil. However, reports also state otherwise, indicating the claim isn’t as straightforward. Incidentally, in markets like Brazil and the US, blended fuels are offered at lower retail prices.
Why no parallel supply of E10 and E20 fuel?
The biggest issue isn't production but setting up parallel distribution and dispensing mechanisms.
As is the case in the aforementioned markets, India does not offer different blends of ethanol. The problem does not lie in production; that is essentially a simple downstream mix rather than a distillation differentiation. The issue rather lies in setting up parallel distribution and dispensing mechanisms. Most fuel pumps have just a single petrol bunk; the expenditure in building a parallel supply chain pan India does outweigh the challenges. “Once studies clearly showed that there would be no significant impact, and with ethanol availability ensured, we shifted to E20 as the single grade fuel, only in the last six to eight months,” said an IOCL official.
E20 communication transparency and frequency should be improved
The conference did address a lot of issues, like specifying the mileage drop and bringing to the fore the fact that manufacturers will stand by valid warranties. However, it is clear that more needs to be done. What will happen to older engines? Who will be held liable in case of any vehicle damage? And ultimately, why can’t motorists also be incentivised to switch to ethanol blends? Addressing these issues rapidly and transparently will only help India’s ethanol journey, especially so when higher blends like E27 are just around the corner.
Hormazd Sorabjee
Sahil Kukreja
