High oil price sets e85 gasohol up for an early launch

Previously, E85 - in which ethanol accounts for 85 per cent with the rest of the fuel being gasoline - was not expected to be available any time soon.

However, the unrelenting rise of oil prices has led to a sudden policy shift for E85 to hit the market possibly in the third quarter or by the year's end.

As a result, different infrastructure and production platform will be required.

Sirivuthi Siamphakdee, chairman of the Thai Ethanol Producers Association, welcomed the move, saying it would encourage ethanol producers to start up operations.

But a clear roadmap must be in place, with participation from the Energy Ministry, ethanol producers, refineries, auto-makers and consumers.

"First, to ensure a sufficient supply of ethanol, the pricing structure must be changed or producers won't be interested in investing in ethanol plants," he said.

The current ethanol price of Bt17 per litre is not attractive. As the world is gearing towards using ethanol as an alternative fuel, molasses - its most common feedstock - is expected to become more costly, rising to US$110 (Bt3,540) per tonne. Since 42 kilograms of molasses is needed to make one litre of ethanol, the cost would work out to be Bt13-Bt14 per litre, excluding the carry-on cost of Bt5.70 per litre.

This explains why - out of the country's 46 ethanol plants with combined capacity of 12.8 million litres per day - only 11 are still active. They now yield 1.575 million litres, but only half of that is consumed domestically.

Refineries and ethanol producers must also work out a new logistics platform, Sirivuthi said. To produce E10 and E20, it is practical to ship ethanol to refineries, but for E85, new refineries may need to be set up near the ethanol plants.

Carmakers must also be ready to supply E85-compatible vehicles and come up with measures to help owners convert their old cars to the fuel.

"I don't see any problem in the supply of cars, as many such cars are sold in Brazil, where pure ethanol is used in vehicles," he said. "If existing cars can be modified, auto-makers would also enjoy a windfall."

However, not all car companies are convinced.

While executives of BMW, Volvo and Ford are meeting Energy Minister Poonpirom Liptapanlop today to discuss the import of E85 vehicles, several Japanese auto-makers that dominate the market here are reluctant to follow suit.

Mitsuhiro Sonoda, president of Toyota Motor Thailand, said his company had E85 technology that is already being applied in Brazil, but he was concerned about market variables here, primarily the supply of ethanol.

He is not worried some companies are ready to start selling as E85 vehicles carry higher sticker prices than E20 vehicles. This would also not threaten the company's ecocar investment project, as Toyota has no plan to import E85 vehicles for sale here.