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Why India’s E20 petrol could make car insurance costlier | News | Eco-Business


India’s rapid shift to a fuel known as E20 – in which petrol is blended with 20 per cent ethanol – has worried drivers who say the new mix is cutting mileage and putting strain on their engines.

Biofuels such as ethanol, which is made from crops like sugarcane and ma, are promoted as cleaner substitutes for petrol that can cut costly oil imports and climate-heating emissions.

But India’s rapid rollout shows those benefits may have trade-offs, and drivers now worry their warranties and insurance will not cover damage from the new fuel.

The government has said that E20 fuel does not void vehicle warranties or insurance coverage and that no major engine damage has been found.

Most cars and two-wheelers sold over the past 15 years were built for lower ethanol blends, leaving millions of owners anxious about breakdowns and legal disputes over insurance and warranty coverage.

Why is India’s ethanol drive controversial?

Biofuels are central to India’s climate actions and energy security.

In just 11 years, the share of ethanol in fuel has risen to 20 per cent from 1.5 per cent, which the government says has saved 1.06 trillion rupees (US$12.02 billion) in crude oil imports and avoided 54.4 million tonnes of carbon emissions over the decade.

To achieve this, India is diverting record amounts of sugarcane, maize and rice to make fuel, reducing the availability of grain for people and cattle and shifting agricultural land away from food crops.

Farming and processing these crops to make ethanol may generate more emissions than fuel, according to a 2022 study funded by the US Department of Agriculture and a review published in a 2020 Royal Society journal.

Who pays for potential E20 damage?

The rollout of E20 fuel set off an outcry online in early September, as worried drivers took to social media to say the new blend might harm older vehicles.

An industry panel including Maruti Suzuki, Toyota, Tata Motors and Hyundai told the government that warranties on cars they sold would remain valid for drivers using E20 fuel.

But several of the manufacturers clarified that only vehicles made since April 2023, when India mandated sales of E20-complaint models, are officially certified for the fuel.

Only two out of every 10 petrol vehicles sold in India over the past 15 years are E20-compliant, leaving more than 230 million cars and two-wheelers built for lower percentages of ethanol, analysis of government and industry data shows.

Some automobile brands state in manuals that warranty cover only applies if recommended fuel was used, raising doubts about whether service centres or insurers might reject claims linked to E20 use.

Will insurers honour E20 claims?

Insurers have not given a definitive answer. Standard insurance policies in India cover only accidents and physical damage, while engine wear from fuel use falls under manufacturer warranties, according to Acko, an Indian insurer.

Most say damage will be covered if owners follow manufacturers’ instructions, but if a company argues a model is incompatible with E20, claims could legally be denied, Acko said on X, though that post was later deleted.

The grey area has left drivers unsure who pays if E20 causes breakdowns, spurring complaints and closer scrutiny of warranty fine print.

What has the government said?

The government maintains that E20 is safe for vehicles designed to use it.

Despite initial concerns from automakers about older vehicles, most have since retracted objections and support the government’s line.

Many drivers have demanded choice at the pump. An August survey of 36,000 vehicle owners by polling firm LocalCircles found 66 per cent opposed the rollout, with 44 per cent calling for withdrawal and 22 per cent asking for more fuel options.

This story was published with permission from Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women’s rights, trafficking and property rights. Visit https://www.context.news/.



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