CNG, LPG, Ethanol and Hydrogen: What They Are and Where They Come From

“Alternative fuel” is a category that hides the most important thing about its members. Some of these are energy sources — you extract them from the ground and they arrive containing energy nobody had to put in. Others are energy carriers — you spend energy to make them, and you get some of it back later.

CNG, LPG and petroleum-derived fuels are sources. Ethanol is close to a source, since the sun does most of the work. Hydrogen and electricity are carriers. Confusing the two categories is behind most of the bad reasoning about energy in public debate, so it is worth holding onto through everything below.

Compressed natural gas is mostly methane — the simplest hydrocarbon, one carbon and four hydrogens — stored at around 200 to 250 bar. It comes either from domestic gas fields or from imported LNG, which is the same methane chilled to liquid for shipping and regasified on arrival.

The supply chain is completely unlike petrol’s: no refinery, no tanker truck, no depot. Gas moves through the national pipeline grid to city gas distribution networks, which feed CNG stations and piped gas into homes. India had connected 250 geographical areas to the network by early 2026, with PNGRB targeting 18,336 CNG stations and 126 million piped connections by 2034.

What CNG gets right is combustion chemistry. One carbon per molecule means less CO₂ per unit of energy than any other hydrocarbon, and far less particulate matter and NOx — which is why Delhi’s commercial fleet was converted to it. What it gets wrong is storage. Methane will not liquefy at room temperature at any pressure, so it must be carried as a compressed gas in heavy cylindrical tanks, and even at 250 bar it holds perhaps a quarter of the energy of petrol per unit of volume. That is why CNG suits fleets that return to a depot and struggle everywhere else.

Liquefied petroleum gas is propane and butane — three and four carbon chains. They sit in exactly the right place on the scale: heavy enough to liquefy under modest pressure at room temperature, light enough to be gaseous the moment you release them. That single property is why LPG comes in a cylinder you can carry rather than a tank you must bolt down.

It arrives two ways: as a light cut from crude distillation, and as a byproduct of natural gas processing. India consumes roughly 32.7 million tonnes a year, overwhelmingly for cooking, and imports a large share of it.

Auto LPG exists and works, but it has been squeezed from both sides — by CNG where the pipeline reached, and by electric where the duty cycle suited. Its more consequential story in India was never automotive. It was replacing biomass cookstoves, which was a genuine public health achievement and remains underrated.

Ethanol is alcohol, made by fermenting sugars from sugarcane juice, molasses, or increasingly surplus grain. It is blended into petrol rather than sold separately, and India reached roughly 20 per cent average blending during the 2024–25 ethanol supply year — about five years ahead of the original E20 target, with more than 1,000 crore litres blended. The roadmap now points at E25, E27 and eventually E30, phased against BIS standards and vehicle compatibility.

The case for it is genuinely strong on the terms it was argued: it displaces imported crude with a domestic crop, and the money goes to sugarcane farmers and distilleries instead of overseas. For a country importing 88 per cent of its oil, that is a real strategic gain.

The honest caveats are three. Ethanol carries about a third less energy per litre than petrol, so E20 costs you a small but measurable amount of mileage — a few per cent, which is real but frequently exaggerated. Older vehicles not designed for E20 can suffer corrosion in fuel system elastomers and metals. And sugarcane is thirsty: growing fuel in water-stressed districts moves a problem rather than solving it.

Biodiesel — fatty acid methyl esters made from vegetable oils or used cooking oil — blends into diesel the way ethanol blends into petrol. India’s programme remains at low single-digit percentages, far behind the ethanol effort, mostly because the feedstock is not there. A country that imports edible oil does not have a surplus to burn.

Compressed biogas made from agricultural and municipal waste is the more interesting adjacent idea, because the feedstock is genuinely waste and the output is methane that can enter the same CNG infrastructure. It is small today and the economics are difficult, but the logic is sound in a way biodiesel’s is not.

Hydrogen is not mined. There are no hydrogen wells. Every kilogram of it in use was manufactured, either by stripping it out of natural gas — which releases CO₂, and accounts for the overwhelming majority of production today — or by splitting water with electricity, which is only as clean as the electricity used.

So hydrogen is a way of moving and storing energy you already had, and every conversion in that chain has a cost. Make hydrogen from electricity at perhaps 60 to 70 per cent efficiency, compress or liquefy it, transport it, then convert it back through a fuel cell at perhaps 50 to 60 per cent, and something in the region of 30 per cent of your original electricity reaches the wheel. Put the same electricity into a battery and roughly 85 per cent does.

That ratio is why hydrogen keeps losing arguments about cars and keeps winning arguments about other things. Where batteries are genuinely poor — steelmaking, fertiliser, refining, long-haul shipping, seasonal storage — hydrogen has a real case, because nothing else works and the alternative is coal. For a vehicle that returns home every night and can be plugged in, it is spending three units of electricity to do one unit’s work.

• •Compare cost per unit of useful work, not per litre or per kilogram. These fuels have wildly different energy densities and are sold in different units. Cost per kilometre for your actual vehicle is the only comparison that means anything.
• •Ask where the energy came from. A fuel is only as clean as its production chain. Hydrogen from natural gas and hydrogen from solar are the same molecule with completely different footprints. So is electricity from a coal plant and from a rooftop.
• •Count the conversions. Every step from source to wheel loses energy. Fewer steps beat cleverer steps, almost always.
• •Check whether the infrastructure exists where you are. CNG is excellent if a station is on your route and irrelevant otherwise. This is a local question, not a national one.
• •Be suspicious of any option that is best at everything. Each of these fuels has a shape it fits. Anyone presenting one as universally superior is selling it.

We sell batteries, so take the following with that in mind — but the reasoning is available for you to check.

For a vehicle that runs a predictable daily distance and parks somewhere it can be plugged in, electric wins on the physics, not on the subsidy: no conversion of heat into motion, no fuel chain, no six-week import lag. That describes almost every e-rickshaw, delivery three-wheeler and commuter two-wheeler in India, and it is why electric took 65 per cent of Indian three-wheeler registrations without anyone needing to be persuaded.

For long-distance heavy freight today, diesel remains hard to beat and CNG is a reasonable intermediate where the corridor has stations. For cooking, LPG and piped gas are not going anywhere soon. For heavy industry, hydrogen has a genuine role that batteries cannot fill.

The useful question is never “which fuel is best”. It is “what does this particular vehicle do all day, and what does that cost per kilometre on each option”. Our calculator answers the second half if you can answer the first, and if the numbers come out against us, that is a useful thing to have found out.