There are a wide variety of industrial activities that cause greenhouse gas emissions. The combustion of natural gas and petroleum products for heating and cooking needs emit carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O). The emissions from natural gas consumption represent around 80% of the direct fossil fuel CO2 emissions from the residential and commercial sectors in 2020. Coal consumption is a minor component of energy used in both of these sectors. According to The Environmental Protection Agency, the transportation sector generates the largest share of greenhouse gas emissions. Greenhouse gas emissions from transportation primarily come from burning fossil fuels of cars, trucks, ships, trains, and planes. Over 90 percent of the fuel used for transportation is petroleum-based, which includes primarily gasoline and diesel. The majority of greenhouse gas emissions from transportation are carbon dioxide (CO2) emissions resulting from the combustion of petroleum-based products, like gasoline, in internal combustion engines. The largest sources of transportation-related greenhouse gas emissions include passenger cars, medium- and heavy-duty trucks, light-duty trucks, sport utility vehicles, pickup trucks, and minivans. These sources account for over half of the emissions from the transportation sector. The remaining greenhouse gas emissions from the transportation sector come from other modes of transportation, including commercial aircraft, ships, boats, and trains, as well as pipelines and lubricants. In terms of the overall trend, from 1990 to 2019, total transportation emissions have increased due to increased demand for travel especially in the developed countries of North America and Europe. The number of vehicle miles traveled (VMT) by light-duty motor vehicles (passenger cars and light-duty trucks) increased by 49% from 1990 to 2020, due to confluence factors such as population growth, economic growth, urban sprawl, and periods of low fuel prices.

U.S. EPA & IndustryARC Analysis

Thus, the development of the latest technologies in the fuel sector used for transportation purposes has seen an increasing requirement over the past years. The governments are adopting biofuels and renewable sources for fuel, refinery process improvements, and energy efficiency norms. These factors for lowering the emission of GHGs in the environment have given rise to the usage of ethanol in petrol or gasoline.

Fuel Basics with Ethanol & Government Mandates

Ethanol is a renewable, domestically produced transportation fuel. Ethanol is a renewable fuel made from various plant materials which are collectively known as biomass. Ethanol has a higher-octane number when compared to gasoline, providing premium blending properties. Minimum octane number requirements for gasoline prevent engine knocking and ensure drivability. Lower-octane gasoline is blended with 10% ethanol to attain the standard 87 octanes. They are either used in low-level blends, such as E10 (10% ethanol, 90% gasoline), E15 (10.5% to 15% ethanol), or E85 (flex-fuel (51% to 83% ethanol, depending on geography and season)) which helps to reduce the emissions. According to the US Department of Energy, more than 98% of U.S. gasoline contains ethanol, typically E10 (10% ethanol, 90% gasoline), oxygenate the fuel, which reduces air pollution. Ethanol is also available as E85 (or flex fuel), which can be used in flexible fuel vehicles, designed to operate on any blend of gasoline and ethanol up to 83%. Another blend, E15, is approved for use in the model year 2001 and newer light-duty vehicles.

Steps involved in making ethanol available as a vehicle fuel:
  • Biomass feedstocks are grown, collected, and transported to an ethanol production facility.

  • Feedstocks are converted to ethanol at a production facility and then transported to a fuel terminal or end-user by truck, barge, or rail.

  • E85 is sourced from a terminal or directly from an ethanol production facility whereas E10 is sourced from fuel terminals. 

  • E15 is available from fuel terminals or through a blender pump dispenser that draws from E10 and E85 tanks at a station.
In March 2020 the UK Department for Transport announced that it has considered the introduction of the E10 petrol standard from 2021, as a measure to help reduce CO2 emissions from petrol vehicles, enable the UK to meet its emissions reductions targets, and support the development of the bio-economy. Currently, in the UK the standard is E5, with 5% ethanol. The USA and a couple of European countries have been using E10 for many years and absolutely all petrol vehicles run safely and efficiently on it, no matter the make, model, or age, and this includes classic cars, motorcycles, jet skis, and gardening equipment. In the USA E10 was approved in the late 1970s, became the standard in 1990, and has for over a decade been the only standard in use for all of its over 250 million petrol vehicles of all types.  The United States is now transitioning to E15. In recent years a dozen EU member states have made E10 their default option and while drivers in some countries can still find the old standard if needed, where the fuel selection is based on cost, convenience, and the brand. The addition of ethanol to petrol allows fuel blenders to reduce the amounts of chemical additives - such as xylene, benzene, and toluene - in the blend.  The use of these chemical additives, known as aromatics, is targeted for reduction in the USA under the Clean Air Act Amendments, which directed the Environmental Protection Agency to lower the amount of dangerous chemical additives in gasoline due to their health risks. In the US, E10 was first introduced as a measure for improving urban air quality and pollution rates.

The developing economies such as Japan, India, and others are also initiating various government programs to support global environmental pollution and promote the elimination of GHGs. For instance, Japan plans to fight global warming and surging oil prices by requiring that all vehicles on the road be able to run on an environment-friendly mix of ethanol and regular gasoline by 2030. The energy demand in emerging economies is increasing due to expanding economy, growing population, increasing urbanization, evolving lifestyles, and rising spending power. Thus, the use of ethanol is trending in these countries. The use of E10 petrol cuts hydrocarbon and carbon monoxide emissions by 20% in both two- and four-wheelers, while the use of E20 petrol cuts carbon mono-oxide emission by 50% in two-wheeler and 20% in four-wheelers. In India, under the Ethanol Blended Petrol (EBP) program, oil companies sold 10% ethanol-based petrol or E10. Indian Oil (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPL) sold 36.72 billion liters of EBP from December 2020 to November 2021. The use of ethanol is also helping the economies and farmers in developing countries. For instance, In India, according to the NITI Aayog and Ministry of Petroleum and Natural Gas, 20% ethanol blending is targeted by 2025. This will potentially reduce the auto fuel import bill by US$4 billion per annum and in addition, it will also provide the farmers to earn extra income as they can grow to produce required for ethanol production.

Table 1: Ethanol Blending Roadmap or Mandates in Numerous Countries


Roadmap / Mandate for ethanol blends


Implementation by

Vehicle Type


The national policy of Brazil continues the mandate for blending 18-27.5% of ethanol in gasoline which was originally started in 2015. This is currently at 27%

National biofuels policy (Dec 2017)

Ministry of mines and energy (MME)

Mainly flex. Motorbikes and other two-wheeler engines use E27

United States

The clean air Act requires EPA to set the Renewable Fuel Standards (RFS) volume requirements annually. EPA updates volume requirements each year based on fuel availability

Renewable fuel standard (RFS) program

Environmental protection agency (EPA)

Primarily normal; Flex for E30 or E85 only

European Union (EU)

EU aims to have 10% of the transport fuel of every EU country come from renewable sources, such as bio-fuels by 2020

Renewable energy directive

European commission

Flex and normal


In September 2017, the Chinese government announced legislation proposing the use of ethanol in fuel for all of China with the target of 10% ethanol blending.

Fuel quality standards

National energy administration

Primarily normal


Alternative Energy Development Plan (ADEP) targets the share of renewable and alternative energy from biofuel to increase from 7% of total fuel energy use in 2015 to 25% in 2036

Alternative Energy Development Plan (ADEP)

Ministry of Energy

Primarily normal

Impact Assessment of Ethanol as a Fuel Blender

Ethanol has the same chemical formula regardless of whether it is produced from starch- or sugar-based feedstocks, such as corn grain, sugar cane, or cellulosic feedstocks (such as wood chips or crop residues). The fundamental shift in policies for environmentally friendly norms is expected to raise the market of ethanol-based fuel in the coming years. For instance, In Europe, ethanol fuel production is expected to grow by 4% and reach around 6 billion liters, while the demand in 2022 is expected to grow by over 10% to reach over 6.5 billion liters. Thus, the transition towards an ethanol-based fuel regime will impact multiple stakeholders in the ecosystem in various ways.

  •  Impact on Environment

The use of ethanol-blended gasoline decreases the emissions of Carbon Monoxide (CO), Hydrocarbons (HC), and Oxides of Nitrogen (NOx) in the environment. The table below represents the impact of various grades of ethanol-based fuel on the environment.

Table 2: Ethanol Blends and its Emission Reduction Potential









Carbon Monoxide


20% lower

50% lower

20% lower

30% lower



20% lower

20% lower

20% lower

20% lower

Oxides of Nitrogen


No significant trend

10% higher

No significant trend

10% higher

Higher reductions in Carbon Monoxide emissions were observed with E20 fuel i.e. 50% lower in two-wheelers and 30% lower in four-wheelers. This reduces hydrocarbon emissions by 20% with ethanol blends compared to normal gasoline. Nitrous Oxide emissions do not show a significant trend as they depended on the vehicle/engine type and engine operating conditions. The unregulated carbonyl emissions, such as acetaldehyde emission, however, were higher with E10 and E20 compared to normal gasoline, due to the presence of hydroxyl groups in ethanol. However, these emissions were relatively minor when compared to regulated emissions which are emitted in grams. Overall, ethanol blending can help decrease emissions from both two-wheelers and four-wheelers.

Impact on Consumers

The major concern after the fallout of this change will be its impact on the consumer ground.

 Vehicle Pricing: The cost of E20 compatible vehicles is expected to be higher in the range of US$ 1000 to US$ 2000 for four-wheelers and US$ 500 to US$ 900 for two-wheelers, which is of the overall cost when compared to ordinary vehicles, globally. Currently, E5 vehicles are compatible with E10. However, with the roll-out of E20 fuel, the vehicles and two-wheelers need to be manufactured with rubberized parts, plastic components, and elastomers compatible with E20 and engines which are optimally designed for use in E20 fuel vehicles that are tailored to run at 100% gasoline. 

Fuel Efficiency: The use of E20 fuel has seen a drop in fuel efficiency. For instance, a 6-7% decrease in efficiency for 4 wheelers designed for E0 and calibrated for E10, 3-4% efficiency decrease for two-wheelers which are designed for E0 and are calibrated for E10, and lastly a decrease of 1-2% efficiency for 4 wheelers which are designed for E10 and are calibrated for E20. However, the modifications in engines and tuning of hardware will decrease the loss of efficiency owing to blended fuel in the coming years.

  • Impact on Vehicle and Component Manufacturers

The main change for the vehicle and component manufacturers is the introduction of a new production line and a change in operations and design. The manufacturers will need to provide compatible vehicles with the introduction of E20 fuels. Engines and components will need to be tested and calibrated with E20 as fuel. The vendors will be required to developed new procurement strategies for additional components which are compatible with E20. In addition, all the components required should be made available in the country. There will be changes in the material of piston rings, piston heads, O-rings, seals, fuel pumps, and others. However, the need for assembly lines and structural change for both vehicle and component manufacturers are very minimal.

Fundamental Policy Changes and Raw Material Dilemma

Ethanol plays a key role in policy discussions about energy, agriculture, taxes, and the environment. For instance, In the United States, it is mostly made from corn; in other countries, it is often made from sugar cane. Fuel ethanol is blended in gasoline to reduce emissions, increase octane, and extend gasoline stocks. Recent high oil and gasoline prices have led to growing interest in alternatives to petroleum fuels for all kinds of transportation modes. Further, concerns over climate change have raised interest in developing fuels with lower fuel-cycle greenhouse-gas emissions. Supporters of ethanol argue that this can lead to lower emissions of toxic and ozone-forming pollutants, and greenhouse gases, especially if higher-level blends are used. They further argue that ethanol use displaces petroleum imports, thus promoting energy security.

Some of the major European countries are bringing in fundamental changes in their climatic laws and policies. The EU Commission in July 2021, revised its Renewable Energy Directive II legislation and termed the "Fit for 55 packages" proposal which is aligned with the European Green Deal and the European Climate Law, thereby setting a stern 2030 target with the aim to achieve carbon neutrality by 2050. As countries transpose new legislation on higher biofuel blending rates into national law, ethanol demand is expected to continue to be driven by gradually higher mandates. The launch of E10 fuel in the UK and Sweden in 2021, along with expectations of higher blending rates in Germany and France in 2022, is poised to structurally shift European ethanol supply and demand fundamentals. Similarly, the UK which is the third-largest European ethanol consumption is expected to be the driving force of ethanol demand in 2022 with consumption forecast is to jump by 34% year on year to 924 million liters, from 700 million liters in 2021. Similarly in France, the consumption at 1.210 billion liters, is up by 21% year on year, and to rise by 4% to 1.260 billion liters in 2022. However, the surge in demand amid relatively stable supply following the removal of mobility restrictions in Europe took the market by surprise in both 2020 and 2021, leading to extreme volatility in both price movement and market structure, and highlighted the market's susceptibility to supply bottlenecks.

Table 3: Ethanol-based Price Trends, by Country 


Price in USD per liter (as of February 2021)









Globally, three major factors that drive the production of ethanol and its usage in the transportation sector, are:

  • Demand Enrichment: Mandates by the government for blending a minimum percentage (%) of ethanol with gasoline fuel & production of ethanol compatible vehicles.

  • Supply Enrichment: Schemes for ethanol production from different feedstocks and encouragement to augment bio-refineries and their capacities.

  • Incentives: Promoting the use of higher ethanol blends through price incentives (tax relief at the retail level) and tax incentives for vehicles compatible with E20 and E85.

Covid-19 impact on Oil & Gas Industry

COVID 19 had thrown the entire ecosystem to a halt, putting a halt to the production and sale of new autos around the world. OEMs waited for the lockdowns to be released before they could resume production, which harmed their operations. As a result, refiners had to modify their manufacturing volumes. The oil and gas sector is a high-capital-intensive industry that requires periodic funding to stay afloat. As a result, the production halt and lower demand during the outbreak had an extraordinary impact on refiners and oil plants and wells, which has impacted the adoption rate of modern technology systems such as artificial intelligence and the internet of things.

According to the Renewable Fuels Association, COVID-19 resulted in a dramatic reduction in the consumption of motor gasoline and ethanol in the spring of 2020. In April 2020, ethanol production and consumption fell more than 40% when compared to 2019. The demand reduction also sharply affected the market prices of ethanol and coproducts of ethanol production, which saw a decrease of around 40%. This has reduced the revenues by over US$3.4 billion in 2020. Thus, the sudden spread of the severe acute respiratory syndrome coronavirus has triggered a medical emergency in all countries worldwide. Several countries placed substantial limitations on the space of a highly dangerous virus. Administrative measures such as national lockdowns and social distancing programs have brought the situation to a halt. For instance, the International Energy Agency (IEA) reported in April 2020 that worldwide energy demand fell by -3.8 percent in the first quarter of 2020. According to International Energy Agency, the Covid-19 crisis will have a longer-term impact on natural gas markets because the main medium-term drivers are highly uncertain.

However, new products and infrastructure projects are anticipated to come online while growth trends fall short of projections, bolstering the likelihood of overcapacity and low prices. This throws a pall over future investments, which will be required to maintain the adoption of newer technologies by the major oil and gas industry players in the market during the long run.


The usage of fuel with the presence of ethanol has increased in the past decades due to major environmental concerns. The manufacturers are opting for efficient ways to reduce pollution amid the policies and laws of the governments. Ethanol or ethyl alcohol is a clear colorless liquid, that is biodegradable, low in toxicity, and causes minimal environmental pollution which burns to produce carbon dioxide and water. Ethanol is a high-octane fuel and has replaced lead as an octane enhancer in petrol. By blending ethanol with gasoline, the vehicles can oxygenate the fuel mixture so that it burns completely and reduces the polluting emissions. The introduction of bioethanol has also increased the interest of the manufacturers and governments.  Bioethanol fuel is mainly produced by the sugar fermentation process, although it can also be manufactured by the chemical process of reacting ethylene with steam. The main sources of sugar required to produce ethanol come from fuel or energy crops. These crops are grown specifically for energy use and include corn, maize, and wheat crops, reed canary grass, Jerusalem artichoke, sawdust, willow and trees, miscanthus, cord grasses, sorghum plants, and waste straw. The octane number of ethanol is higher than that for petrol; hence ethanol has better antiknock characteristics. Thus, the better quality of the fuel can be exploited if the compression ratio of the engines is adjusted, which results in an increase in fuel efficiency in the engines. The oxygen content of ethanol leads to a higher efficiency, which results in a cleaner combustion process at relatively low temperatures. Thus, the need for cleaner environments is the major driving force towards the development and need of ethanol-based fuel by numerous governments and various manufacturers across the globe.

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