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Hedging Oil Risk with Ethanol: Evaluating India’s E20 Mandate Against Feedstock Constraints and Food-Fuel Trade-offs

Macro & Public Finance

09 October, 2025

Hedging Oil Risk with Ethanol: Evaluating India’s E20 Mandate Against Feedstock Constraints and Food-Fuel Trade-offs

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Anusha Sharma

Dhruv Padam

Garvita Yadav

Shyan Sahdev

Tanika Ray

ABSTRACT:

This paper evaluates India’s E20 ethanol mandate as a tool to hedge against oil import risks by expanding domestic biofuel production. It traces the capacity growth from 450 crore litres in 2014 to over 1,800 crore litres in 2025, driven by sugarcane and grain feedstock shifts. Indeed, Ethanol blending reduces oil dependence, supports rural incomes, and cuts emissions. However, there exists a trade-off between fuel use and food supply, linking ethanol expansion to rising sugar prices and agricultural pressures limiting its sustainability. To overcome this, this essay recommends dynamic feedstock allocation, investment in non-food biomass ethanol, and formal recognition of ethanol in national energy accounting in order to sustain the steady progress.

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Hedging Oil Risk with Ethanol: Evaluating India’s E20 Mandate Against Feedstock Constraints and Food-Fuel Trade-offs

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