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Informist, Thursday, Jul. 3, 2025

NEW DELHI – Global ethanol demand is likely to slow down in coming years amid the rising shift towards electric vehicles, said Daphne Tan, agriculture specialist, S&P Global. "Ethanol will see a downward slide come 2030, driven by the displacement of gasoline-run vehicles by EVs (electric vehicles), particularly in regions like Europe, the US, and China," Tan said at S&P Global's New Delhi market briefing. 

However, in the short term, India stands out as the fastest-growing ethanol market globally, with demand projected to rise steadily till 2026. Despite the global trend of rising adoption of electric vehicles, India has been increasing its ethanol production amid rising demand for biofuel production. 

India achieved 18.8% ethanol blending with petrol during Nov-May, almost nearing its 20% blending target by 2025-26 (Nov-Oct). This rapid progress in ethanol production comes amid a shift in the feedstock basket. In the last two years, more ethanol has been sourced from grain-based feedstocks instead of sugarcane, she said. "We see more and more ethanol coming from corn-based feedstocks (for biofuel production), due to shortage of feedstocks and need for sugarcane to go into other uses of ethanol, like industrial-grade ethanol," Tan said. The government has been implementing the ethanol blending programme to reduce dependence on crude oil and promote green mobility.

Meanwhile, India is also gearing up to implement a 1% sustainable aviation fuel blending mandate by 2027 for international flights. This move could increase the diversion of ethanol usage from land transport fuels to aviation fuel, particularly through the alcohol-to-jet pathway, she said. For the 1% sustainable aviation fuel blending requirement, India would require about 130 million litres of sustainable aviation fuel, which could double to 270 million litres when the mandate rises to 2% by 2028, she added. Sustainable aviation fuel is made from non-petroleum feedstock such as sugarcane, agricultural residue, and plant oil, which reduces emissions. It can be blended at different levels with jet fuel. 

Sustainable aviation fuel produced from sugarcane ethanol is costlier, it carries a significantly lower carbon intensity compared to corn-based ethanol, making it more attractive in the carbon market, she said. A carbon market enables the buying, selling, transfer, and exchange of carbon credits. Companies can purchase carbon credits to offset their carbon emissions. 

Unlike the road transport and maritime sectors, which have multiple decarbonisation pathways such as electric vehicles, liquified natural gas, and biodiesel, the aviation industry has limited alternatives. "SAF is probably the one single alternative fuel available...it's the first and last resort for the airline industry," Tan said. She added that aviation is expected to drive double-digit growth in sustainable aviation fuel demand through the next decade, unlike ethanol for road transport, which will likely plateau with rising electric mobility. End

Reported by Afra Abubacker

Edited by Akul Nishant Akhoury

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