Supporting infrastructure is the missing link in India’s ethanol push

- Lessons from Brazil, a mature ethanol economy, suggest that ethanol blending is not only selling blended fuel, but building a seamless ecosystem to win consumer trust and satisfaction. - In Brazil, industry groups say the country’s current challenge is not ethanol production alone, but moving ethanol from producing regions to distant markets at stable prices while expanding storage and logistics infrastructure. - Similarly, India’s ethanol ambitions will depend as much on logistics, infrastructure and quality control as on production and blending targets. This is the second part in a series comparing India and Brazil’s ethanol transitions. Brazil’s decades-long experience shows that producing ethanol is only half the challenge. This story examines the real test which lies in procurement, storage, transport and quality control, the systems that decide whether ethanol actually reaches the pump reliably. The first part looked at what that difference means for vehicle owners in both countries. At a petrol pump in Bhopal’s Katara Hills, a 40-year-old pump attendant smiles when asked whether customers talk about ethanol-blended petrol. “People come and joke, ‘ganne ka juice bhardo’ (Fill sugarcane juice),” he says, referring to E20 petrol, a blend of 20% ethanol and 80% petrol. In India, sugarcane is one of the main feedstocks used to produce ethanol. The sarcasm reflects the public conversation that has followed the rapid expansion of E20. Videos and posts circulating online have raised questions about the colour and quality of the fuel, its compatibility with older vehicles, and possible changes in mileage or performance. Government agencies and automobile manufacturers have disputed several of these claims. The debate has nevertheless brought attention to how ethanol is transported, stored, blended and tested before fuel reaches a petrol pump. Brazil’s ethanol mission seems to have inspired India to a great extent as the South American country often comes up in India’s ethanol debate, usually as a success story of higher blends. Interactions with people who run Brazil’s ethanol system bring out some crucial lessons for India. For Brazil, where the default petrol now contains 32% ethanol (E30), producing ethanol was not a challenge. The hard part was building everything behind the pump: procurement contracts, depots, storage tanks, trucks, pipelines and quality checks. All of this had to work together so ethanol could reach consumers reliably, at a fair price, as a fuel they could trust. India, on the other hand, has expanded ethanol blending within a relatively shorter period, but has overlooked the infrastructure and supply chain part in the race of numbers and targets. The chain behind the pump Brazil’s national union of fuel and lubricant distribution companies, Sindicom, describes the country’s ethanol supply chain as a system built in phases. The first phase, from 1975 to 2000, was linked to Brazil’s national alcohol programme, Proálcool, which subsidised credit and centralised distribution. During this period, the state-owned Petrobras bought ethanol from mills and blended it with petrol at primary distribution bases, helping create terminal infrastructure, dedicated storage and quality-control systems. The second phase followed market opening and the rise of flex-fuel vehicles from 2003. Ethanol procurement moved from government contracts to bilateral negotiations between distributors and mills. The third phase, from 2018 onwards, brought regulatory maturity through RenovaBio, Brazil’s national biofuels policy. Under RenovaBio, the government sets emissions-reduction targets for the fuel sector and assigns mandatory targets to fuel distributors. Distributors meet these targets by buying CBIOs, or decarbonisation credits, generated by certified biofuel producers. For India, the lesson is that ethanol blending is not only selling blended fuel, but building a seamless ecosystem to win consumer trust and satisfaction. When ethanol is in the wrong place Brazil has been cautiously calculative with targeting higher blends of ethanol. The reason behind this is not the production of ethanol, but the supply and storage infrastructure. According to Sindicom, one of Brazil’s main operational challenges is moving, storing, blending and distributing ethanol from around 360 plants, located mainly in Centre-West and Centre-South, to more than 5,500 municipalities across the country. The BRASILCOM Federation, a Brazilian federation of fuel distributors, told Mongabay-India in a written response that Brazil’s current challenge is affordable and reliable logistics and storage. “The problem has shifted from ‘is there enough ethanol?’ to ‘can we get it where it needs to be, when it needs to be there, and store it until then?’” the federation said. Sugarcane ethanol is concentrated in São Paulo and Minas Gerais in the Centre-South, while maize ethanol is concentrated in Mato Grosso and Goiás in the Centre-West, said BRASILCOM. Both producing regions are far from deficit regions such as the North, Northeast and South of Brazil. Transport costs, according to the federation, can account for 20% to 40% of delivered ethanol cost. “The ethanol is often in the wrong place at the wrong time and requires expensive, scarce infrastructure to reach consumers at a stable price,” BRASILCOM said. Sindicom made a similar point about Brazil’s move to E30. It said E30 increases the ethanol demand by about 11%. Brazil has the productive capacity to absorb this demand, Sindicom told Mongabay-India, but “the great challenge is logistical, not agricultural.” For India, where ethanol production and fuel demand are also spread unevenly across regions, the same question becomes important: how will ethanol move from producer states to distant markets, and who will bear the cost? Brazil’s 1989-90 ethanol supply crisis remains an important warning in the country’s ethanol history. Sindicom said the crisis, when falling oil prices discouraged mills from producing ethanol, damaged the image of the product for nearly a decade. “The main lesson is direct: build the infrastructure before expanding the mandate, not after,” Sindicom said. India’s bottleneck is not only production In India, industry voices say the next phase of ethanol expansion will depend less on adding production capacity and more on using existing capacity well. Athar Shahab, Managing Director of Zuari Industries Limited, said India’s achievement of E20 is a “remarkable public policy success.” Zuari Industries manages multiple businesses including sugar and ethanol. “The question today is no longer whether India can produce enough ethanol. The question is whether the ecosystem can scale further in a manner that is economically efficient, environmentally responsible and fair to all stakeholders,” Shahab said. For ethanol supply year 2025-26, he said, oil marketing companies invited bids for around 10.5 billion (1,050 crore) litres of ethanol, while the industry reportedly offered substantially more than that. Ethanol supply year is the November-to-October cycle used to track ethanol supply and blending. “The immediate challenge is utilisation of existing capacity, predictable procurement, efficient logistics and policy certainty,” Shahab said. According to him, infrastructure is another bottleneck. “Ethanol is produced across multiple states, but blending takes place at oil company depots spread across the country. Higher blends require investments in storage tanks, transportation networks, dedicated handling systems, quality assurance mechanisms and depot-level blending infrastructure,” Shahab said. “A litre of ethanol produced but not lifted by an oil company contributes neither to energy security nor to decarbonisation,” he said. Shahab also said commercial certainty is important because the industry has invested in response to national policy objectives. Long-term investments, he said, require stable procurement mechanisms, predictable pricing frameworks and greater visibility on future blending targets. Akshay Modi, Managing Director of Modi Biotech Pvt Ltd., said grain-based ethanol production in India has matured, but scaling it brings operational challenges, particularly in feedstock procurement, storage and quality. “Feedstock procurement is perhaps the most complex. Maize, unlike sugarcane, doesn’t have a single dedicated supply chain. Producers are competing with the starch and animal feed industries for the same grain, which creates price volatility that is difficult to hedge against, especially during off-season,” Modi whose company manufactures grain-based ethanol, said. He added that “there is ample, or even surplus grain available for all uses.” Modi also pointed out that unlike sugarcane, grains can be stored for year-round ethanol production. However, it requires proper storage infrastructure to maintain quality. “Too much moisture in maize is detrimental for storage and processing. Farming practices need to improve such that farmers dry the maize immediately after harvesting to prevent pests, fungus and toxin development,” he said. Quality becomes part of trust As ethanol volumes grow, Brazil’s experience shows that quality control becomes central to consumer trust. Sindicom said distributors face the challenge of ensuring that blends meet specifications. It also warned that operational and tax fraud, including adulteration with methanol, water and solvents, require strong state inspection. To reduce such risks, distributors use laboratory tests at terminal entry and exit points. These tests check alcohol content, electrical conductivity, pH and contaminants, with traceable reports under specifications by ANP, Brazil’s National Agency of Petroleum, Natural Gas and Biofuels. According to Sindicom, the bottlenecks in Brazil include storage expansion, especially in the North and Northeast of the country, cabotage (transportation through international routes) for regions far from production centres, and regulatory clarity for investment planning. It said any increase in blend level should happen with predictability. For India, where higher ethanol blends would require more storage, blending and transport nodes, Brazil’s experience suggests that fuel-quality regulation is not a technical side issue. It is part of consumer trust. A fuel transition that reaches the pump without visible consumer choice must also carry confidence in what is being dispensed. BRASILCOM said regional distributors in the country face different pressures from large integrated companies. Large companies can use long-term contracts, rail terminals, storage and logistics networks. Regional distributors often depend on spot purchases, third-party trucks and shared storage. They operate on thin margins and are more exposed to freight spikes and storage bottlenecks. Oil security and sequencing One of India’s strongest arguments for ethanol is oil-import reduction. The government claims that since ethanol supply year 2014-15, India has saved over ₹1 trillion by cutting down the oil import of about 95 million metric tonnes. However, this is not off-set by the payments made for ethanol purchase. Luiz Augusto Horta Nogueira, a Brazilian bioenergy expert and former director at Brazil’s oil agency, linked ethanol directly to energy security. “Every litre of fuel that you are replacing by ethanol, doesn’t need to be imported if ethanol is locally produced,” he said. Horta connected this to India’s exposure to geo-political situations as a crude-oil importer. “These days, the oil should pass through the Strait of Hormuz,” he said. He recalled how Brazil used this situation as an advertising punchline: “Your ethanol didn’t pass in this strait.” Nicola Pamplona, a Brazil-based energy journalist and vehicle user, said ethanol has meaningfully reduced dependence on petrol in Brazil. “Today, ethanol accounts for about half of the fuel consumed by Brazil’s petrol vehicle fleet,” he said. This includes ethanol sold directly at stations and ethanol blended into petrol. He added that Brazil’s dependence on petrol imports has fallen to less than 10% of the market. Evandro Herrera Gussi, who heads UNICA, Brazil’s sugarcane and bioenergy industry association, argued that demand can help create domestic supply. Brazil, he said, once imported about 5% of ethanol from the United States, but the sector argued against reducing the blending mandate. According to him, stable demand helped Brazil develop new domestic ethanol pathways, including maize ethanol. Brazil shows that an ethanol programme cannot depend only on production capacity or blending targets. Sindicom said Brazil’s leadership in ethanol was built over decades through consistent policies, technological innovation, regulatory maturity and private logistics capacity. It said none of these pillars was built in isolation or immediately. “The distributor has a central role in this process, because it is the distributor who transforms the blending mandate into safe, regular and quality supply for the final consumer,” Sindicom said. Banner image: A security personnel watches as a worker seals the lid of a tanker filled with ethanol at a factory, in Meerut, Uttar Pradesh. (AP Photo/Altaf Qadri) Read more: What India’s ethanol push can learn from Brazil’s long ethanol journey