Government ambiguity over E85 policy

Energy Minister Poonpirom Liptapanlop earlier said that the government would promote the use of cars able to use E85 fuel, which is a mixture of 85 per cent ethanol and 15 petrol, to help sugar-cane farmers and save on imported oil.

However, the government has been slow to decide the excise tax rate to be imposed on E85 vehicles. Further, the profit-sharing formula between farmers and sugar producers has yet to be finalised.

The delay has resulted in ethanol producers facing high supplies due to low domestic demand. At present, 11 ethanol plants have a combined full capacity of 2.2 million litres per day, which is high when compared to the average monthly demand in July of only 800,000 litres a day. Therefore, some ethanol factories have to reduce production or try to export their output.

The delay has also caused some investors to hesitate on plans to start production of E85 vehicles. After all, the Thai government only announced the plan to support the production of eco-cars in January.

The government's delay has led many to wonder whether the government is thinking twice about whether it will support E85. After all, there were debates on whether E85 would be an effective alternative for Thailand, which is a net oil importer.

As oil prices are set to remain high for the foreseeable future, ethanol could serve as a good alternative for Thailand. It would not only lessen the country's dependency on imported fuel but would also help local farmers.

However, the E85 policy should be well managed. For instance, the government and industry should think of how to ensure a sufficient amount of sugar cane for domestic consumption, as sugar cane is a significant part of the production process for ethanol.

Research and development could help boost yields and find ways to maximise the use of sugar cane. The success in promoting E85 will depend on the cooperation of relevant ministries and industries to ensure a consistent supply of ethanol. Assistance is also needed from those supervising the plantation of sugar cane and tapioca, and their processing, marketing and distribution. A clear-cut policy should be announced to end all the confusion over the government's policy.