High time to develop more renewable energy

Michael Richardson, Singapore

As Indonesia raises fuel prices and makes other painful adjustments to reflect high world oil prices and its own shift to being a net oil importer, greater attention is being paid to using other home-grown fuel sources.

One is natural gas. Indonesia is the leading exporter of liquified natural gas, or LNG. But in future, more of its abundant gas reserves are expected to be piped for domestic use. Last week, for example, the U.S. Trade and Development Agency gave a grant of nearly US$490,000 to the state gas company PT Perusahaan Gas Negara (PGN) for a study to evaluate the viability of using small- and medium-sized compressed natural gas and LNG systems in Indonesia.

The study will also determine the best transportation methods for the gas to enable it to reach areas of the country that are not currently served by pipelines. PGN intends to use the study to demonstrate the benefits of using cleaner-burning natural gas as a substitute for commonly used oil-based fuels.

In this quest, Indonesia could also consider using some of the output from its palm oil and coconut industries to make biofuels. With oil prices well above $60 per barrel and expected to stay high, many Asian and Pacific economies have decided to promote biofuels made from plant products to ease their dependence on oil, boost rural incomes and cut air pollution.

Australia, a major agricultural producer, announced recently that it would promote ethanol and other biofuels because they offered significant air quality and environmental benefits as well as boosting demand for farm products.

China, the world's third biggest biofuel producer, has made use of gasohol -- a mix of petrol with ethanol -- mandatory in some of its main farming provinces. They grow the wheat, corn, sugarcane and potatoes that produce the ethanol, a type of alcohol.

Ethanol can be made from a wide variety of plant-based feedstocks, most commonly grain or sugar crops. It is then mixed with petrol. In the United States and Europe, gasohol is in widespread use to help cut harmful emissions and improve fuel efficiency. Modern petrol-driven engines accept the blended fuel, normally containing 5 percent or 10 percent ethanol, without the need for adjustment.

Biodiesel, another biofuel, can be made from palm or coconut oil, soya beans, rapeseed and other vegetable oils. In Germany, for example, biodiesel powers trains and plants that generate electricity.

Malaysia and Indonesia, the top two palm oil exporters, announced in August that they planned to expand output to meet rising global demand for biofuels. According to the Malaysian Prime Minister Abdullah Badawi, worldwide demand for 'green' fuels was 2.5 million tonnes in 2004 -- a figure he expects to rise 25 percent a year.

Some Malaysian firms, such as IOI Corp and Kuok Oil & Grains, have already started building refineries in Europe to process the additional palm oil expected to land in that market for biofuel manufacturing purposes. Rapeseed oil now accounts for up to 85 percent of the biodiesel produced in the European Union. But rapeseed prices have risen sharply because of green fuel demand, creating an opening for palm oil.

The Philippine President Gloria Macapagal Arroyo suggested recently that ASEAN should seek joint investments with its foreign dialogue partners in plants that could convert sugarcane to ethanol and coconuts to biodiesel to ease the region's reliance on imported oil.

Yusof Basiron, head of the government-run Malaysian Palm Oil Board, said last month that Malaysia first biofuel plant would be completed within the next year at a cost of $11 million. It will process 60,000 metric tons of refined palm olein to produce a biodiesal blend of 5 percent palm oil and 95 percent diesel.

Yusof said at least five more biodiesal plants were likely to become operational in the next two years. Malaysia's annual diesel imports are estimated at 10 million tons. By adding 5 percent olein at its pumps, the country could save about 500,000 tons of diesel imports a year, he added.

Two years after its commercial launch, gasohol now accounts for a quarter of premium petrol consumption in Thailand. A government tax waiver makes it 6 percent cheaper than petrol.

But Asia has a long way to go to catch Brazil, the world leader in biofuel production and use. Since the mid-1970s, it has been substituting petrol refined from imported oil with ethanol distilled from locally grown sugarcane. Today, ethanol accounts for 40 percent of the fuel sold in Brazil.

The U.S. is rapidly catching Brazil as an ethanol producer. The Senate Energy Committee voted in April to require U.S. output of ethanol to reach at least eight billion gallons a year by 2012, double the current output of the petrol additive. About 12 percent of the U.S. corn crop is expected to be used for ethanol this year.

China's major wheat and corn provinces, including Heilongjiang, Jilin, Liaoning, Anhui and Henan, produced nearly one billion gallons of ethanol in 2004. India made 500 million gallons of fuel additive using sugar cane.

Ethanol's popularity is growing and high oil prices are making it more competitive. But the fuel is relatively expensive to produce and only made viable by state subsidies in many countries. Another controversial issue is the amount of food and energy used to produce ethanol. In China, for example, it takes about 3.3 tons of grain to make one ton of alcohol.

The Earth Policy Institute in Washington says that growing, transporting and distilling corn to make a gallon of ethanol uses almost as much energy as is contained in the ethanol itself. Sugar beets used in Europe are a better source, producing nearly two units of energy for every unit used in the distilling process.

However, researchers say that sugarcane is by far the most efficient of the current feedstocks -- yielding eight times as much energy as is needed to produce the ethanol. It therefore makes more sense to make the alcohol from sugar crops than from grains.

Scientists say that if ethanol is to become a major part of world fuel supply without displacing food and forests, its primary source will not be grains or even sugar crops; it will be other materials rich in cellulose that don't demand extra arable land. These include harvest leftovers like corn stalks, wheat straw and rice stalks. They also include forest residues, grasses and fast-growing plantation trees.

Promising new technologies are being developed in the U.S. and elsewhere that use enzymes to break down cellulose and release the sugars in these materials for fermentation into ethanol. A demonstration plant opened in Canada last year and large-scale production is expected to become commercially viable within ten years.

The writer is a visiting senior research fellow at the Institute of South East Asian Studies. This is a personal comment.