Flexing Fuel

With blended fuel gaining currency, Flex Fuel Vehicles (FFVs) will pave the way going forward. Ammar Master weighs in.

Dec 24, 2021 AMMAR MASTER No Comments Like
PIC : GETTY IMAGES

By :



BANGKOK :

I remember attending several meetings and industry forums prior to the introduction of E10 gasohol (blended fuel containing 90% gasoline and 10% ethanol) in Thailand more than a decade ago. Most of these discussions centered on concerns of the blended fuel’s impact on the engines of the existing vehicle population, in particular plastic, rubber and even aluminum components. 

Today, most vehicles sold in Thailand are capable of running on E20 and E85 blended fuel. Notable examples include Suzuki Swift, Suzuki Ertiga, Honda City, Toyota Innova and Toyota Corolla. 

Now that India’s government is aiming to introduce E20 blended fuel by April 2023, the same concerns may weigh on the minds of various stakeholders. Indeed, Maruti-Suzuki’s Chief Technology Officer, C.V. Raman, noted this in his comments to PTI, saying: “Such engines require certain lead time for development and customer acceptance is also a factor."

In India, E10 is retailed by the oil marketing companies wherever it is available. However, as sufficient quantity of ethanol is not available, only around 50% of gasoline sold is E10 blended while the rest is unblended petrol (E0), according to the ‘Report of the Expert Committee on Road Map for Ethanol Blending in India 2020-2025’ that was jointly prepared by the Ministry of Petroleum & Natural Gas and NITI Aayog. “The current level of average ethanol blending in the country is 5% (Ethanol Supply Year 2019-20),” the report noted. 

For the moment, vehicles made in India since 2008 are material compatible with E10 and fuel-efficient compliant with E5. To use E20 blended fuel, these vehicles will have to be recalibrated and the plastic and rubber materials will have to be adapted to withstand higher corrosion levels. 

We believe OEMs are likely to initially upgrade their vehicles to become E10-compatible across their product range as the government is targeting the availability of E10 fuel across India by April 2022. 

The next step would then be to introduce E20-compatible new models in the market. This is likely to increase the cost by INR 3,000-5,000 for four-wheelers versus those that run purely on gasoline, as per the figures mentioned in the government's ‘Road Map for Ethanol Blending in India 2020-2025’ report. 

In addition, the fuel efficiency of these retuned vehicles is estimated to drop by (a) 6-7% for four-wheelers designed for E0 and calibrated for E10 and (b) 1-2% for those designed for E10 and calibrated for E20, adds the government report. 

A more worrying factor, however, may be the sufficiency of E20 blended fuel. “Despite ambitious targets there has been a lack of fulfilment in India as penalties for non-compliance have been small,” indicates LMC International’s Global Ethanol Outlook report.

Nevertheless, blending rates have increased markedly in recent years, amidst more concerted promotion efforts, reaching 7.56% for the 2020-21 blend year as of May 2021, it notes. 

As has been the practice in other markets such as Thailand, the government will have to first make E10 available across India to accommodate the existing vehicle population although certain plastic and rubber components of very old vehicles will have to be replaced. 

In addition to the availability of both E20-compatible vehicles and E20 blended fuel, buyers will have to be enticed to use E20 fuel at the pumps.

In Thailand, for instance, the consumption of E20 fuel was bolstered in part through a subsidy provided by the State Oil Fund, which makes gasohol 20-40% cheaper than regular gasoline. A further benefit for higher blends is the lower excise and municipal taxes which are only levied on the fossil portion of the fuel.

In addition, the government recently increased the marketing subsidies to gasoline stations to persuade them to increase sales of E85. Thailand also offers a 3% reduction in excise tax to produce flex-fuel cars which use E85.

A similar approach can be adopted in India to ensure that future targets are adequately met. This is important since higher usage of E20 blended fuel will inevitably help reduce India’s huge import of gasoline. 

Simultaneously, the Indian government is encouraging OEMs to start offering flex-fuel vehicles. An important positive step has been to incentivize the production of flex-fuel engine (capable to run on up to E85) as well as the ECU, heated fuel rail, heating element and heating control units for flex-fuel vehicles under the Production Linked Incentive (PLI) Scheme for Automobile and Auto Component Industry. This should encourage OEMs to bring such vehicles to market faster and at lower costs. 

In any case, it is not very difficult for OEMs to start offering flex-fuel vehicles in India since they have already been developed in other markets. Moreover, flex-fuel four-wheelers are estimated to be costlier by a mere INR 17,000-25,000 according to SIAM (Society of Indian Automobile Manufacturers). All this means is that we could see flex-fuel vehicles in the Indian market soon.

Ammar Master, Senior Manager, Asia Pacific Vehicle Forecasts, LMC Automotive.

 

 


Leave a Reply