In November 1975, two years after the first global oil shock courtesy of the Arab-Israeli ‘Yom Kippur’ War, Brazil launched a Proálcool programme, aimed at reducing the country’s dependence on imported oil.Proálcool mandated all petrol sold in Brazil to contain a minimum 11% anhydrous alcohol or ethanol. In 1979, when the second oil crisis came with the Islamic Revolution in Iran, Brazil introduced cars that could run on 100% hydrous alcohol (this has 5-6% water as against less than 1% for ethanol).By 1985, when domestic ethanol production reached nearly 1,200 crore litres, Brazilian fuel stations had two types of pumps, one for ethanol-blended petrol (Gasoline C, as it is called) vehicles and the other for 100% hydrous alcohol (E100) vehicles.In 2003, the first commercial flex-fuel vehicles were launched in Brazil, with engines capable of running on both Gasoline C and E100 fuel. The vehicles had electronic sensors to detect the particular ethanol-gasoline blend in the tank and adjust the fuel injection volume and spark timing automatically.The minimum ethanol blend in petrol was hiked to 25% by 2014 and to 27% from March 16, 2015. Since August 1, 2015, the ethanol content in Gasoline C has been set at 30%.In 2024, Brazil’s total fuel alcohol consumption was 3,492.4 crore litres: 2,289.6 crore litres of E100 and 1,202.8 crore litres of ethanol in Gasoline C. While the ethanol blend rate in Gasoline C was 27% (now 30%), the overall mix for fuel used in the country’s light-duty vehicles fleet stood at 51.8%. Thus, alcohol constitutes more than half of the fuel powering Brazil’s cars and two-wheelers.Replicating BrazilSpeaking in Parliament on the West Asia war on Monday, Prime Minister Narendra Modi said ramped-up efforts on ethanol blending had helped India cut oil imports.Story continues below this adSince 1979, the world has seen at least three oil shocks — in 2008, when Brent crude prices surged to a record $147.5 per barrel on July 11, and in 2022 after Russia’s invasion of Ukraine, when they reached $139.13 on March 7.The latest shock — from the ongoing US-Israel versus Iran war — should be a wake-up call for India and to replicate the Brazil model, said CK Jain, president of the Delhi-based Grain Ethanol Manufacturers Association.“The government must work with the auto industry and oil marketing companies (OMCs) to gradually increase the ethanol blending mandate from 20% to 30% and incentivise the production of flex-fuel vehicles that can run on 100% hydrous alcohol. Our stations, too, should have separate dispensing units for E30 and E100 fuels, with consumers choosing either depending on the price parity between the two,” he said.An aggressive ethanol use strategy would require a relook at taxation as well.Story continues below this adCurrently, ethanol is covered under the goods and services tax (GST) regime. The ethanol used for blending with petrol attracts 5% GST. But petrol remains outside GST, attracting both the Central excise duty and State value added tax. And both ethanol-blended petrol and pure petrol are treated as identical for taxation purposes.“We need to bring all fuels blended with ethanol – whether E20, E30 or E100 – under GST,” added Jain.The progress so farIndia, as the accompanying chart shows, has achieved significant rise in both the quantity of ethanol supplied by distilleries to OMCs and the average blending ratio in petrol — from a mere 38 crore litres (1.6%) in 2013-14 to 1,039 crore litres (19.2%) in 2024-25.Till 2017-18, ethanol was produced by distilleries attached to sugar mills only from so-called C-heavy molasses, a dark brown liquid byproduct of cane processing.Story continues below this adFrom 2018-19, mills began making ethanol from an earlier ‘B-heavy’ stage molasses (having higher sucrose content available for fermentation) and also directly from whole sugarcane juice or syrup. They were encouraged to do so by the Modi government’s decision to pay mills more for ethanol manufactured from the B-heavy and direct cane juice/syrup routes, in order to compensate them for the revenues foregone from lower/nil recovery and sale of sugar.From 2018-19, the Centre also fixed separate ex-distillery prices for ethanol derived from rice, maize and damaged foodgrains.Ethanol production involves fermentation of sugar by yeasts. In molasses or cane juice, sugar is present as sucrose. Cereal grains contain starch, a complex carbohydrate that has to first be extracted and broken down into simple sugars before further fermentation, distillation and dehydration to ethanol with 99.99% alcohol concentration.Out of the 1,039 crore litres of ethanol supplied to OMCs in 2024-25, as much as 718 crore litres or over 69% was from grains, mainly maize and rice. The latter included surplus rice from the Food Corporation of India’s (FCI) stocks and broken/damaged grain sourced from the open market.For the current supply year (November-October), the OMCs have so far contracted 1,058 crore litres — 766 crore litres from grains and 292 crore litres from sugarcane-based feedstocks (see table). The ex-distillery price has been fixed at Rs 57.97 per litre for ethanol produced from C-heavy molasses, while at Rs 60.73, Rs 65.61, Rs 60.32, Rs 64 and Rs 71.86 for that from B-heavy molasses, sugarcane juice/syrup, FCI rice, damaged grain and maize respectively.The road aheadStory continues below this adThe latest oil shock presents an opportunity for India to “revisit and review” its existing ethanol blending programme, Tarun Sawhney, vice chairman and managing director of Triveni Engineering & Industries Ltd, pointed out.“We need to first understand that India does not have enough crude oil and imports 90% of its requirement. Second, the internal combustion engine isn’t going anywhere and there are limits to how much electric vehicles can replace it. Third, we are surplus in sugarcane, rice and maize and can increase their production much more for E-30 and E-100 fuels,” Sawhney, whose company has a capacity to crush 70,500 tonnes of cane and produce 860,000 litres of alcohol per day, told The Indian Express.The constraint today, he claimed, is not in ethanol production (India already has a capacity in excess of 1,800 crore litres per annum) or retailing. What the country needs is a policy push for all new vehicles being manufactured to be flex-fuel based. The government should also nudge companies to provide conversion kits to modify existing vehicles.