Corrected: All not rosy for Asian biodiesel sector

05 June 2006 14:51  [Source: ICIS news]

Correction: In the ICIS news story headlined "All not rosy for Asian biodiesel sector," dated 5 June, 2006, please read in the second paragraph that feedstocks are combined with methanol to produce methyl esters, instead of combined with ethanol.

 

BANGKOK (ICIS news)--The fruits of expanding the Asian biodiesel sector are plentiful but at the same time industry players warned on Monday of pitfalls, critically the competitive cost versus hydrocarbons.

 

Numerous plants are being planned across Asia including in Thailand, the Philippines, India, Malaysia and China but this hectic building programme does not mean that the outlook is clear for the industry. The local sector uses readily available feedstocks such as coconut oil, palm oil or jatropha oil, which are combined with an alcohol like methanol, to produce methyl esters called biodiesel.

 

Biodiesel has a better energy density and fuel efficiency compared to bioethanol and when added to regular diesel also improves the lubrication properties of low sulphur fuels.

 

Using domestic coconut oil for biodiesel production in the Philippines will help save precious foreign exchange in the country, Ramon Villavicencio, chairman of the Independent Philippine Petroleum Companies Association said at the Biofuels Markets Asia conference in Bangkok.

 

Jatropha, the newest feed for biodiesel, can be grown on degraded agricultural land at low cost giving employment opportunity to the very poor without endangering food supplies, said Agus Sari, managing director of Ecosecurity Indonesia.

 

The benefits of making and using biodiesel will be mostly related to such direct costs. But many concerns still remain - the key concern being that per unit cost of production of biodiesel is higher than petrodiesel even at today’s crude prices.

 

Competing land use also raises questions of food versus fuels as in the case of coconut oil. In some countries like Malaysia, competing land uses for palm oil versus rubber plantation poses a challenge when global natural rubber prices are so high. Land availability for new palm oil plantations is limited.

 

On the demand side, the absence of a biodiesel mandate in Asia also means that regional demand will be limited and producers would have to rely on export markets in the United States and Europe. In such cases, the industry leaves itself vulnerable to import tariffs and volatile shipping costs. 

By: Anu Agarwal
+65 6780 4359

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