The ongoing Iran war has triggered widespread energy disruptions across South and Southeast Asia, prompting governments to fast-track policies that mix transportation fuels with agricultural biofuels. India’s transport ministry recently proposed allowing vehicles to run on blends containing up to 100% ethanol, a direct response to shipping bottlenecks that have constrained crude oil and liquefied petroleum gas imports through the Strait of Hormuz.
The disruptions are already straining household budgets across the subcontinent. In New Delhi, taxi driver Ravi Ranjan said shipping delays have forced him to pay three times his usual rate for cooking fuel. “I used to get a cylinder of LPG for 1,000 rupees ($11), now I pay 3,000 rupees ($31) in the black market,” he said. In Chennai, advertising executive Sushmita Sankar said her daily commute and errands have grown more expensive as gasoline costs rise and ethanol-blended petrol reduces her car’s fuel efficiency. “Fuel expenses are increasing and with only ethanol mixed petrol available, I feel my car’s mileage has reduced in the last year or so,” she said. “Already our days are busy with work and taking care of our child’s school and other needs. Having to now spend a lot of time to fill my car or buy LPG is making things even more hectic.”
India, which imports nearly 90% of its crude oil, has moved to stabilize domestic supply chains. The government recently raised petrol and diesel prices, which sparked panic buying and long fuel queues in Odisha state, and imposed a ban on all sugar exports through September to preserve feedstock for ethanol production. Prime Minister Narendra Modi also asked citizens to make “nationally responsible choices” by increasing carpooling, relying more on public transit, and postponing international travel.
Policymakers are weighing a phased increase in ethanol blending targets. India already achieved a nationwide 20% ethanol blend in 2025, five years ahead of its original schedule, and the Institute for Energy Economics and Financial Analysis said the shift reduced crude oil imports by 2.5% that year. The government is now considering raising the gasoline blend to 27% by 2030. “Moving toward higher ethanol blends reflects the government’s long-term vision for energy security, lower emissions, and reduced dependence on imported crude oil,” said Chandra Kumar Jain, president of the Grain Ethanol Manufacturers Association.
Neighboring countries are pursuing similar strategies to shield their economies. Indonesia launched a program in March under President Prabowo Subianto to increase biodiesel blending from 40% to 50%. Putra Adhiguna of Jakarta’s Energy Shift Institute said the push supports regional “energy sovereignty” and expands domestic markets for globally traded palm oil. Malaysia approved a proposal in April to gradually mix 15% biodiesel into standard diesel, with a 20% blend currently under review.
Energy analysts and environmental experts cautioned that higher blending ratios face significant technical and logistical hurdles. Charith Konda of IEEFA noted that policy uncertainty and confusion among automakers could delay widespread vehicle compatibility. Ahmad Rafdi Endut, a Kuala Lumpur-based energy analyst, said consumers are already wary of reduced mileage, and engineering testing for higher concentrations will require additional time. Shyamasis Das of the Centre for Social and Economic Progress pointed out that ethanol is less energy-dense than conventional gasoline, meaning vehicles consume more volume to cover the same distance.
Expanding crop-based ethanol production raises concerns about food competition and resource depletion. About 70% of India’s ethanol currently derives from sugarcane, corn, and rice. Das said producing a single liter of ethanol can require 3,000 to 10,000 liters of water in a region already experiencing severe groundwater loss. In Southeast Asia, experts warned that scaling palm oil-based biodiesel could accelerate agricultural expansion and deforestation if land-clearing safeguards are not strictly enforced.
Analysts emphasized that biofuels offer a transitional buffer rather than a permanent energy solution. Konda said electric vehicles and a broader industrial shift to renewable energy would deliver greater long-term efficiency. Das noted that biofuels sourced from agricultural residues, municipal waste, or used cooking oils avoid competing with food crops and are classified as truly renewable. “If the biofuel is not sourced from residues or waste, they are not usually treated as renewable,” Das said. It remains unclear when the highest ethanol blends will reach commercial use, as automakers must redesign engines and governments must build new supply chains to support the transition.