E20 fuel left a lot of car owners angry in 2025, given that the government fast-tracked its decision by 5 years without clarification or notification to either car owners or fuel operators in the country. As the dust settles on the issue, a new report from Autocar India states that the sugar lobby might further push for adaptation of E22 fuel across the country.
What is E22 fuel? Basically, a mix of 22 percent Ethanol with petrol.
According to the report, this push comes due to high ethanol production and low demand. The report mentions that ethanol capacity in India has grown rapidly since the government incentivised its production, however, the pace of production is much higher than what oil companies currently need to make E20 petrol.
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For the sugar lobby, this is just about solving the surplus problem. For the aam aadmi, it is a potential disaster. Per the Autocar India report, the Indian Sugar & Bio-energy Manufacturers Association (ISMA) has warned that surplus ethanol capacity could lead to financial stress for producers if blending levels do not increase. India, however, did not produce E20-compliant cars until 2023. Cars manufactured before that would face maintenance and performance issues in the long run even with E20 fuel. This, because more ethanol means more corrosion and a lower calorific value. So, cars will not only use more fuel to run, their filters and pipes may even choke due to corrosion or dryness given the higher ethanol mix.
Pushing E22 fuel over it will only make the problem worse, since many people online have been reporting issues with their cars like a drop in efficiency or corrosion in parts like fuel injectors. The shift to E22 fuel will also require a lot from the car manufacturers in the country. For example, there needs to be compatibility upgrades across a range of products from manufacturers in the country. There needs to be new testing and certification processes. All of that needs to happen with clear timelines for automakers to prepare better. This would mean that any move to E22 fuel will involve close coordination between fuel producers, oil companies, and car manufacturers.
Now, why does the sugar surplus matter? So the Autocar report explains that the ethanol plants were built basis strong policy signals and incentives. However, now oil companies are not demanding ethanol fast enough, and the production capacity continues to rise. This mismatch has led to an overcapacity pressure, where industry stakeholders say that this could impact investments and profitability if blending remains unchanged.
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It remains to be seen what the government’s response and next move will be. Is the surplus in ethanol plants that can lead to bad investments a bigger problem than a whole market of cars that isn’t compliant to run on higher ethanol blends? We’re watching closely.
(With inputs from Autocar India)
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