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Biofuels
Every litre of petrol sold in India has carried 20 per cent ethanol since April, and August's argument was over what that saves and what it costs in water, food and mileage. In the same fortnight the Cabinet put ₹23,731 crore behind compressed biogas, with a blending mandate of its own. Both turn farm output into fuel, and both now turn on whether the feedstock can be collected.
UPSC has asked
- Prelims 2020: raw materials allowed under the National Policy on Biofuels
- Prelims 2013: by-products of the sugar industry, bagasse and molasses
How the two fuels are made
- Ethanol is made by fermenting sugars, whether from sugarcane juice or from the starch of maize and rice, and is blended into petrol.
- Compressed biogas (CBG) comes from anaerobic digestion, in which bacteria break down wet organic matter without oxygen and give off a gas that is mostly methane and carbon dioxide.
- Stripping out the carbon dioxide and the other impurities leaves almost pure methane, chemically what natural gas is, so it blends into compressed natural gas (CNG) for vehicles and into the gas piped to homes.
Which feedstock, and what it costs
- A first-generation biofuel is made from a food crop, so it competes for land, water and the plate.
- Maize supplies about 45 per cent of this year's blending ethanol, rice from the Food Corporation of India 22 per cent and sugarcane juice 16 per cent.
- Compressed biogas instead runs on non-food material: crop residue, cattle dung, press mud from sugar mills and municipal organic waste.
- Crop residue otherwise burnt in the field becomes a feedstock with a buyer, which is the link to stubble burning.
The blending mandate as the instrument
- In both programmes the government fixes a percentage the seller must blend, which creates demand a costlier fuel could not win on price.
- Every unit blended is a unit of petrol or natural gas India does not import, which is the energy security argument for both.
- The binding constraint in both is the feedstock supply chain: collection windows, storage and transport distance.
- Compressed biogas supply was first sought through SATAT (Sustainable Alternative Towards Affordable Transportation), which left more than 200 plants running, and GOBARdhan itself began in 2018 under the Swachh Bharat Mission (Grameen).
Where the petrol blend stands
How fast blending rose
2001
Blending begins as a pilot
2006
E5 rolled out in several States
2021-22
10 per cent blending reached
2024-25
19.2 per cent
2025-26
20 per cent
- Since 1 April 2026 all petrol sold in India must be E20 with a minimum Research Octane Number (RON) of 95, and unblended petrol is no longer sold.
What E20 gains, and what it costs
The case for
- About ₹2 lakh crore saved in foreign exchange, the government says
- Carbon monoxide and unburnt hydrocarbon emissions fall
- Cane ethanol cuts life-cycle greenhouse gases by about 50 to 70 per cent against petrol
- Mileage falls about 6 to 7 per cent, not the 30 per cent claimed online
The case against
- About 240 million older vehicles were built for E5 or E10
- One litre of cane ethanol can embody 2,000 to 3,500 litres of water
- Grain ethanol cuts greenhouse gases by only about 20 to 50 per cent
- Maize competes with oilseeds for land, and Food Corporation of India rice goes to fuel while sugar prices rise
What E20 does to engines
- Vehicles built from April 2023 are E20 compatible, and long-run tests found no extra wear.
- The exception is the 75 to 80 million pre-Bharat Stage IV carburettor two-wheelers, which run lean and hot and whose rubber seals degrade.
What has happened
29 Aug 2026
The government said the revised offtake framework for compressed biogas has no material price impact and lets plants operate sustainably.
PIB, 29 Aug 2026: Compressed biogas pricing under the revised offtake framework (opens in a new tab)
18 Aug 2026
The argument over E20 came to a head, five months after the mandate took effect.
- Government estimates put E20 above petrol in cost while crude is below about $70 a barrel, so buyers lose mileage with no lower price for it.
- The Chief Economic Adviser would restore an E10 option at pumps for older vehicles and hold at E20 until the food versus fuel trade-off is costed.
- The remedy urged is to count blue water and life-cycle emissions feedstock by feedstock, and to move to second-generation ethanol.
The Hindu, 18 Aug 2026: The E20 fuel debate (opens in a new tab) · The Indian Express, 23 Aug 2026: E20 can save India money. Why doesn't the consumer see the benefit? (opens in a new tab)
7 Aug 2026
The Cabinet approved GOBARdhan, the National Circular Bioenergy Scheme, at ₹23,731 crore to 2035-36, to raise compressed biogas output almost tenfold.
- It gathers programmes spread across four ministries under the Ministry of Petroleum and Natural Gas.
- City gas distributors must blend compressed biogas at 3 per cent in 2026-27, 4 per cent in 2027-28 and 5 per cent from 2028-29.
- An administered price of ₹2,110 per million British thermal units (MMBtu) is fixed for at least ten years, alongside capital subsidies and pipeline support.