India Could Realize Substantial Savings through Coal-Based DME Adoption: Report Estimates ₹34,200 Crore in Annual Benefits

India Can Save Up to USD 4.04 Billion in Forex Annually by Blending DME with LPG

A recent report by EY-Parthenon and New Era Cleantech Solution Ltd suggests that blending 20 per cent dimethyl ether (DME) produced from coal gasification with Liquefied Petroleum Gas (LPG) can reduce LPG imports by about 6.3 million tonnes annually. This reduction could lead to a saving of up to USD 4.04 billion (around Rs 34,200 crore) in foreign exchange per year.

The report highlights the potential of DME as a clean-burning fuel that can serve as a homegrown substitute for imported LPG. Coal gasification converts coal into syngas, which is then transformed into DME. This process can help India overcome LPG supply constraints, which have been exacerbated by the war in West Asia.

According to the report, titled 'Coal gasification for energy and chemical security', DME can partially substitute LPG imports. The Bureau of Indian Standards (BIS) has already notified standards permitting up to 20 per cent DMG-LPG blending in India. This development is expected to unlock investments and scale up domestic DME production.

India currently has limited pilot-scale domestic DME production. However, countries with large coal reserves, such as India, can produce DME domestically through coal gasification technologies. DME combustion produces significantly lower emissions compared with conventional hydrocarbon fuels.

Global DME Production

| Source | Global DME Production Capacity | | --- | --- | | Coal-based routes | Overwhelming majority | | Natural gas or methane based pathways | Smaller share | | Bio DME | Minimal fraction | | China | Nearly 90% of global DME production capacity |

China accounts for nearly 90 per cent of global DME production capacity, primarily due to its large-scale coal-to-chemicals industry. Global DME production is dominated by coal-based routes, while bio DME contributes only a minimal fraction. With the right policies in place, India can unlock investments and scale up domestic DME production, reducing its reliance on imported LPG and saving precious foreign exchange.