Suppliers ready for E85 fuel, but pricing still an issue

"With E85, we could scrap the sale of E20. As long as there are vehicles that can use the fuel, we're ready to sell it," he said.

Chairman of the Thai Ethanol Producers Association Sirivuthi Siamphakdee was also bullish about the fuel. But he said a lot more needed to be done before Thailand would be ready to use it.

First, to ensure a sufficient supply of ethanol, the pricing structure must be changed. The current ethanol price of Bt17 per litre is considered too low. The price of molasses - a key requirement for ethanol production - has become more costly and 42 kilograms are needed to make one litre of ethanol. The cost would work out to be Bt13-Bt14 per litre, excluding the carry-on cost (miscellaneous cost) of Bt5.70 per litre.

Sirivuthi said that tapioca was another ethanol production source. This requires 6.5 kilos of tapioca to produce one litre of ethanol. Including the carry-on cost of Bt6.70 per litre, tapioca-based ethanol would cost Bt19 a litre.

If the ethanol price is increased to reflect the actual cost, he expected all 46 ethanol plants would be able to operate. Then, 12.8 million litres of ethanol would be produced a day.

"The 11 ethanol plants [now in operation] can operate in a cheap ethanol environment because they are producing ethanol from existing stocks of molasses," he said.

He said that if the ethanol price was maintained at the current low level, sugar cane and tapioca prices would also have to be capped.

To ensure a sufficient supply of ethanol, Sirivuthi said that Thailand would need to ban exports of sugar and tapioca. While some output can be reserved for food production, the rest must be used for ethanol production.

According to the Agricultural Economics Department, Thailand exports 70 per cent of the tapioca produced.

"I think the output is sufficient. We have to admit that not all cars would switch to using E85," he said.

Based on Thailand's petrol consumption of 20 million litres a day, if all cars are to be fuelled by E85, then 17 million litres of ethanol would be required.

Sirivuthi also noted that refineries and ethanol producers must work out a new logistics platform. To produce E10 and E20, it is practical to ship ethanol to refineries, but for E85, new refineries

may have to be set up near the ethanol plants.

To promote alternative fuel, which is popular in Brazil where pure ethanol is widely used in vehicles, carmakers must also be ready to supply E85-compatible vehicles and come up with measures to help owners convert their old cars to the new fuel.

"But, E85 would only be successful when the ethanol pricing structure is changed," Sirivuthi said.