Ethanol - are benefits worth the sacrifice?

I was studying how ethanol will benefit India, and many intresting facts came under my notice, I thought it will be benifitial to all VP members, so I am staring this new thered to discuss and understand it better.


Ethanol, also known as ethyl alcohol or drinking alcohol, is a combustible clear liquid. Ethanol shares similar properties to that of petrol, and as such has evolved into a fuel substitute and fuel additive. The amount of ethanol contained in a fuel is usually indicated by the letter E, combined with a number, which signifies its concentration. E10 for instance, is 10 percent alcohol and 90 percent petrol. E85, another common fuel, is 85 percent ethanol. E100 is pure ethanol.

How Ethanol is produced

Ethanol is made from a variety of biomass materials called feedstocks (the raw materials used to make a product). Ethanol is mainly produced from food grains and crops with high starch and sugar content as feedstocks for making ethanol such as corn, sorghum, barley, sugar cane, and sugar beets. Ethanol can also be made from grasses, trees, and agricultural and forestry residues such as corn cobs and stocks, rice straw, sawdust, and wood chips. Ethanol is made from these feedstocks in several ways.

Fermentation is the most common method for producing fuel ethanol

The most common ethanol production processes today use yeast to ferment the starch and sugars in corn, sugar cane, and sugar beets. The starch in it is fermented into sugar, which is then fermented into alcohol.

Sugar cane and sugar beets are the most common feedstocks used to make fuel ethanol. Because alcohol is made by fermenting sugar, sugar crops are the easiest ingredients to convert into alcohol.

Cellulosic ethanol is a large potential source of fuel ethanol

Ethanol can also be produced by breaking down cellulose in plant fibers. This cellulosic ethanol is considered an advanced biofuel and involves a more complicated and costly production process than fermentation. However, there are large potential non-food crop sources of cellulosic feedstocks. Trees, grasses, and agricultural residues are potential feedstocks for cellulosic ethanol production. Trees and grasses require less energy, fertilizers, and water to grow than grains do, and they can also be grown on lands that are not suitable for growing food crops. Scientists have developed fast-growing trees that grow to full size in 10 years. Many grasses can produce two harvests a year for many years without annual replanting. Despite the technical potential for cellulosic ethanol production, economical production has been difficult to achieve.

Octane value of Ethanol

The Octane Number affects the activation energy of the fuel. In simple terms, an increase in the octane number will make the fuel require a higher amount of energy before it starts to combust. So even if the side conditions like pressure, temperature are higher, the increased activation energy will make sure that the fuel will only catch fire because of the spark plug and not because of the surrounding conditions.

In India, the minimum octane rating for fuels as prescribed by Government through Bharat 3 to 6 emission norms is 91 Octane.
Octane value for pure petrol is around 85.

The octane rating of pure ethanol is 100. What’s interesting is that when ethanol is blended with petrol, it performs as if its octane rating is 113, making ethanol a very effective octane booster when used in petrol.

When we mix 10 percent 113 octane ethanol with 85 octane petrol it increases the octane two points to 87 octane. so the higher the ethanol content, the higher the octane. The octane rating for E15 (15% ethanol) is 88 octane, E20 (20% ethanol) is 91 and E85 (85% ethanol) is 108 octane.

Higher octane fuels are often required or recommended for engines that use a higher compression ratio and/or use supercharging or turbocharging to force more air into the engine. Increasing pressure in the cylinder allows an engine to extract more mechanical energy from a given air/fuel mixture but requires higher octane fuel to keep the mixture from pre-detonating. In these engines, high octane fuel will improve performance and fuel economy.

Energy Efficiency of Ethanol

To produce ethanol, we require lots of resources and energy. The majority of energy consumed during the production of ethanol comes from production of the crops, growing and harvesting of crops requires land, water, fertilisers, pesticides, etc. To produce fertilisers and pesticides also requires energy. Other than this cutting, cleaning, transportation, crushing, fermentation and all other processes requires energy.

There are many studies conducted on this to measure energy efficiency of ethanol, but I couldn’t find a clear answer on this, some studies say that is not at all efficient, some studies are saying it is too efficient and rating varies between 0.85 to 1.6.

Considering higher side of efficiency that is 1.6 and ethanol blend of 10% we can overall save mere 4% of fossil fuel, If we use 20% ethanol blend than we can save 8% of fossil fuel.

How much feedstock is required to produce ethanol?

Ethanol yield is directly proportional to the total starch content present in crops, below is an average expected yield of ethanol from different crops
1 ton of sugarcane – 80 L
1 ton of Wheat – 60 L
1 ton of Corn – 70 L

What is the annual production of different crops in India?

According to FOASTAT 2019 annual production of different agri crops in India are as follows-
Sugarcane – 4054 Lakh Tonnes
Wheat – 1036 Lakh Tonnes
Rice – 1776 Lakh Tonnes

Environmental Effects

Ethanol is nontoxic and biodegradable

Unlike fossil fuels, pure ethanol is nontoxic and biodegradable, and it quickly breaks down into harmless substances if spilled. Chemical denaturants are added to ethanol to make fuel ethanol, and many of these denaturants are toxic. Similar to petrol, ethanol is a highly flammable liquid and must be transported carefully.

Air Pollution:

Production Emissions

These emissions are sometimes referred to as “indirect” and result from the emissions generated by the production of ethanol fuel, fossil fuels like petrol and diesel are used in trucks, tractors, and warehouses to produce the crops and during fermentation process.

End-Use Emissions

When ethanol combusts, it releases primarily carbon dioxide and water vapor. Despite the fact that a litre of ethanol produces less carbon dioxide than petrol, it still produces greenhouse emissions like carbon dioxide. However, the combustion of ethanol is largely particulate-free, whereas petrol combustion forces many particles into the air. Since a litre of ethanol contains less energy than a litre of petrol, it can require more ethanol than petrol to travel similar distances, which can contribute to more greenhouse gas emissions.

Need for Land

Another debate about producing ethanol concerns the amount of land it takes away from food production. The challenge of growing enough crops to meet the demands of ethanol production is significant and, some say, insurmountable. According to some authorities, producing enough biofuels to enable their widespread adoption could mean converting most of the world’s remaining forests and open spaces to farmland—a sacrifice few people would be willing to make.

To replace 20% of petrol with ethanol, India will require approximately 1000 Cr Lit of ethanol annually. Which in turn requires 1250 Lakh tonnes of sugarcane, to produce 1250 Lakh tonnes of sugarcane will require 10 Lakh hectares of extra land.

Water Consumption

The field crops which are used in ethanol production requires more amount of water than other crops, which also increase burden on our existing sources of potable water, with ground water table going deeper day by day it may be more concern for overall ecology.

To produce 1 Lit of ethanol from sugarcane approximatly 2800 Lit of water is required.

Other long-term environmental effects include less bio-diversity and food scarcity, soil erosion etc.

Further study

A good book to study in depth on bio fuels-

Disclosure - I am not holding any positions in any ethanol, sugar or related company.


While I hold a few spirits shares, my take is that of Charles Munger of Berkshire Hathway.

A short 3m clip with the last 45sec being important from a science POV. (tldr: it’s a stupid idea)

That said, one should not forget “gov incentives” of the first part, which I stress. because that’s what is driving the interest in India. Earlier, the GOI put lots of restrictions on molasses(feedstock for ethanol) use. ethanol wasted. Now it encourages it, now we have too much ethanol and don’t know what to do with it because every spirits firm tries “value addition” and gets only ethanol from it or bagasse?? for internal power generation. Hence this new/old idea for ethanol blending by importing large amounts of petro, growing excess sugarcane, wasting water, fertilizer and getting less ethanol and trying to “save” the environment.

In spite of my rabid views above, I’d invest in ethanol blending till such time wisdom dawns that ethanol blending correlates to increased petro use.


To let a 16 year old interview to define one’s investment philosophy is to underestimate the power of human ingenuity and creativity. For example, in the early 2000s, many used to believe that shale can never compete with conventional crude. But today, many shale producer’s cost of production is less than that of conventional crude.

Recently, a Berkshire subsidiary too bought out an ethanol refinery.

Disclosure: Technical position in Globus Spirits and India Glycols. No trade in last 30 days.


May I humbly suggest that you listen to the interview? Especially the 2nd law of thermodynamics part? which is why I put the interview in this thread. And moreover I clearly stated that I would invest in this “unworkable” idea too; just not it’s scientifically provable to be better on the env side.

For example, in the early 2000s, many used to believe that shale can never compete with conventional crude. But today, many shale producer’s cost of production is less than that of conventional crude.

This is demonstrably false. 2020 saw the largest number of shale producer bankruptcies because oil fell below 47$; Shale producers make profit only when it’s above 50$ or so.

Shale oil production is sensitive to current oil price. In Canada, there were fears of knockon effects to the big 4 banks because of the oil lending exposure!

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Can we replace 100% of petrol with ethanol?

Now, at higher side of energy efficiency of 1.6, one needs to produce 2.5X the actual consumption of petrol! form which 1.5X will go back again to produce ethanol and remaining for actual demand.

The current consumption of petrol in India is around 4000 Cr Lit.

Now, the other question is, will it benefit us then?

There’s no scenario without externalities where it benefits. The only way it works out is,

Engines that can take ethanol blended petrol
infrastructure for storage, transport of ethanol
ability of companies to manage seasonality of ethanol generation via sugar crop

All the 3 above demand subsidies initially, hence an externality. Once this is in place, everytime there is a bumper crop of sugar, your petrol price might be cheaper by about 2 rs or so.

I liken this to Germany’s renewables push; so much subsidy that it distorted the electricity generation market where renewables were cheaper than the coal plant. They closed them and the only nuclear plant and now the unintended side effect is, Germany eleccy prices are the highest in EU and they have blackouts now to shortage and need spot buying. And they’re destroying old pristine forests to make sure they have the base load at least.

In so far as ethanol in India is concerned, I suspect, we’d have higher sugar subsidy which would have a knockon political impact as farmers rush in to get the MSP cash.

We know it in tomatoes, potato crops don’t we? Boom and bust cycles. :slight_smile:

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Excellent report on Ethanol Blending


I read in the past that it is damaging to the car engine maybe in the long run… More so if the blend is more than 15%

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Ethanol has 30% less energy than petrol, that means 30% more ethanol is required to travel same distance. Now if the base petrol price (removing all taxes) is Rs. 40/lit then ethanol price should be less than Rs. 30/lit to make any difference, will it be better to lower the taxes than to subsidise ethanol?

Currently ethanol price is ranging in between Rs. 55 to 60 per lit ex-mill.

Unlike petrol, ethanol is corrosive in nature, in long run metal parts of engine can corrode, which can lead to engine breakdown. Other thn this to use higher than E20 engine should be turbocharged to take more oxygen inside to burn ethanol completely, otherwise it will produce unwanted air pollutants like carbon-monoxides.

Some, automakers already started to modify their engines to run on ethanol.


From Iowa’s farm fields to Washington’s corridors of power, and from the algae-choked surface of the Great Lakes to the poisoned depths of the Gulf of Mexico, “The Ethanol Effect” investigates the human, environmental and political costs of growing and refining corn for ethanol in America.

The assumption is that sugar will continue to form much of the feedstock for ethanol production? There are companies such as Fortum (Assam Bio Refinery) that are producing 2G ethanol using bamboo as feedstock and tech is continuously evolving in this field.

For eg: and i’m thinking very far fetched here but with lab based fermentation technology is already in place today - if the opportunity size is huge - what stops biotech companies from growing feedstock in the factory and then converting it into ethanol?

Considering the end use dumping of traditional renewables like solar etc, we may even see balancing the EV and biofuels push. Far fetched as of now ofcourse.

D: Invested in Laurus (Fermentation), Globus Spirits & Uttam Sugar.

Agreed, there are technological advances but it’s a question of scale. Bamboo growth speed and use(it’s still wood) versus sugar +ethanol options along with MSP support is no brainer why cane is preferred. Corn, sugar beet are other sources of sugar and related stuff. Point is, the tech is known, why has it not scaled in decades of research?

Algae related fermentation is tried and directly into petroleum feedstock but the yields are too low requiring large cauldrons/vats that are nowhere close to demand. we are talking 110 mbd(million barrels per day) usage per day equivalent; there’s not enough fermantation vats to scale to that level to meet demand.

See, there’s feel good environmentalism versus hard numbers to meet the fairy tale in terms of acreage for solar panels needed, windblades and area needed and water needed for cane.

Classic case from the EV thread; current cars have 10kg or so of copper; EV cars needs 160kg or so(so buy copper companies engaged in EV work). That will certainly rape the planet in copper extraction eco impact when you’re talking about 100million cars to EV. Sure, your cities look cleaner now but the countryside is gone. Sure there will be advances for cheaper substitutes which will essentially bankrupt that material too.

anyway, enough of my tangential rants.



key points
must read for investors having interest in sugar related companies and for investors of automobile companies

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Can we use same engines or new engines to support 20% blending?

Same engines but the efficiency would be somewhat lower. MoRTH has asked auto OEMs to come up with flexi engines that’ll maintain the efficiency with higher blending %.

I am recommending everyone to watch this short video to understand how inefficient ethanol is to fulfil our energy requirements.


2022 championship will use E10 FUEL


The question need to broaden up as alternate fuel for vehicles

  1. Electricity - Electric Vehicles
  2. Ethanol - Blended with petrol/diesel
  3. Hydrogen fuel

Which will impact the most ?


More than the Sugar Cane based ethanol, Govt is promoting extraction from FCI rice.

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