E20 is Here, E85 Soon! Biodiesel too!

On 1 January this year E20 was officially made available, and a Ford Focus was the first vehicle to fill up on the latest step on the way to lowering Thailand's reliance on oil. Following the Thai Government reducing the tax on new cars capable of using E20 by 5%, there has been a wave of manufacturers announcing compliance with E20, allowing them to reduce the cost of these vehicles.

The thinking is that this will stimulate growth in the industry this year, after the disappointing drop in 2007. And this might well work. E20 is a big news item at the moment, and they hype is being seized on by manufacturers to promote their vehicles. But what about the consumer? Is E20 really good for us? Yes and ........

... Let's start with "yes"

Right now E20 means that new car prices have dropped. Fuel for those new cars will also be 2 baht per litre cheaper than Gasohol 95 at the pump. So, right now, E20 seems like a perfectly sensible choice to those seeking a new car. But should E20 force your hand?

No

Here is the big issue: If you have a car that can run on Gasohol 95, but not on E20, then you will understand the minor frustration that comes from not being able to take advantage of this new and cheaper fuel. In the same way that these E10 capable cars can not run reliably on E20, these new E20 cars won't seem quite so cool in the coming years, as Thailand is going to continue down the ethanol path.

E85 is the next milestone, the standards of which will be finalised in the next two weeks. Thailand is planing a big test drive of between 30 and 50 imported E85 capable vehicles, the first test of its kind in Asia. Following that, the introduction of E85 is only a matter of ramping up production to a sufficient level, and presto, E20 isn't the latest green fuel anymore, and most importantly it won't be the cheapest, since E85 (85% ethanol, 15% petrol) will be priced below E20.

So what to do?

If you really need a car, then obviously you have to buy one. And if you have to buy a car, and the car you are after can use E20 then it makes sense to select that option. You have the piece of mind that you haven't paid more than you need on tax, and you can take advantage of the lower cost of fuel at the pumps.

If you are currently getting around okay with your current wheels, or can put off purchase for a while, then this is all the better. Having an E85 capable vehicle, or even a fully-fledged flex-fuel vehicle capable of running normal petrol all the way up to E100 (pure ethanol), a year or so from now, is much more desirable than an E20 car now.

I wish that the Thai government had just gone straight to flex-fuel and offered more aggressive tax incentives of vehicles that could utilise any blend of ethanol. This would have given customers a flexible choice, and a long term platform. In that case, there would be no risk of being left behind.

Or go for diesel!

Another option is to go for a oil burner. Diesel engines can be run on biodiesel. The Energy Ministry is not just focused on ethanol for its alternative fuel strategy, and diesel consumption in Thailand is also to be reduced through the use of biodiesel. Plans for B2 and B5 biodiesel are currently in the pipeline (sorry).

Again these seem like unnecessarily small steps, after all, B2 is just 2% biodiesel with the remainder of the blend being pure diesel. But if adoption of this is widespread then a 2% reduction in oil imports is actually a very big deal.

Any steps toward lowering dependence on oil are to be applauded, but the current increments in adoption of ethanol and biodiesel alternatives in Thailand seem to be baby steps. That said, there are big issues at work here. Production of ethanol and biodiesel will have an impact on the agriculture industry, and although this could prove to be a positive boost, it is also going to take time to ramp up production. A gradual approach will probably mean less likelihood of causing major problems with production and supply issues.