vehicles for E20 compatibility is prohibitive. With the registration limit of gasoline vehicles at 15 years, most vehicles will not be E20 com- patible in 2025, and the role of the E10 protection grade will be signif- icant for a decade or more. Whether or not E20 is fully adopted in 2025, the projected gasoline demand in Figure 3 shows contin- uing growth, with volumes rising 70% through this decade. Even with full E20 utilisation, the volume of conventional gasoline is predicted to rise by 43% in the same period. CAFE norms Phase II The second phase of CAFE norms will further reduce the benchmark emissions for diesel and gasoline vehicles. As other regions have experienced, this change requires a shift to more modern engine tech- nologies such as turbochargers and gasoline direct injection. Due to the higher compression ratio used in these engines, it is likely that the new norms will require large-scale rollout of 95 RON (research octane number) gasoline, a four-point increase from the current stand- ard. This development would bring Indian gasoline specifications in line with EN228, the European standard that aligns gasoline specifications with Euro emissions standards. There is a certain synergy from introducing a 95 RON standard and rolling out E20 in the same period. Adding 20% ethanol to a 91 RON gasoline stock provides a boost of around four octane num- bers, bridging the gap to the new grade. However, around 40% of this benefit is already realised through the current ethanol blending level. There is also a question of where the credit for ethanol octane is taken. If refinery storage and pipeline sys - tems are not compatible with E20, due to the hygroscopic nature of ethanol, can refiners take credit for ethanol blended downstream, with a risk of shortfall in ethanol sup- ply? To ensure a smooth rollout of 95 RON standard, it would be pru- dent to plan for supply of additional octane enhancers. It is also worth noting that an increase in ethanol blending raises the Reid vapour pressure (RVP) of
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Figure 2 Indian transportation fuels prices
Source: Petroleum Planning & Analysis Cell 1
Future gasoline market The GOI recognises that vehicle emissions reduction is required to mitigate the effects of an increas - ing transportation fuels consump- tion as mobility increases. It is widely reported that two signifi - cant changes in gasoline quality and emissions specifications are being implemented to ensure sustainabil- ity and security of fuel supply: • In 2021, the GOI announced a roadmap to achieve 20% ethanol in gasoline (E20) by 2025. 9 • The first phase of Corporate Average Fuel Economy (CAFE) norms requires car makers to cut carbon emissions from new cars to below 130 grams per kilometre by April 2022. In Phase II, imple- mented by 2024, emissions are to be cut to less than 113 grams per kilo- metre. 10
E20 roadmap In the period 2020-21, average eth- anol blending in gasoline hit its highest total of 8.1% 11 albeit against lower overall gasoline demand than the previous two years, due to the pandemic. The target of 20% etha- nol blending, against rising demand for gasoline as shown in Figure 3 , is an ambitious target. The target is unlikely to be met in its entirety due to a range of supply, distri- bution, and demand factors. One primary reason is that the current fleet of vehicles is not compatible with gasoline containing more than 10% ethanol. Under the roadmap, E20 compat- ible cars will not become available until April 2023, and they will be tuned for highest efficiency with E10 fuels. 9 The GOI has also con- cluded that the cost of retrofitting
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Figure 3 Indian gasoline demand projection by component
Source: Government of India 9
16 PTQQ 2 2022
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