02 March 2007 16:55 [Source: ICIS news]
By Matt Kovac
SINGAPORE (ICIS news)--Under pressure to cut carbon emissions and meet Kyoto Protocol targets, Japanese officials are aggressively targeting an increase in annual biofuels output.
A clarion call was made at the end of February by government officials that production should be propelled to 6m kilolitres/year (kl/year) over the next two decades from a paltry 30 kl/year at government pilot plants.
But rather than bureaucrats leading the charge there is clear indication that consumers are influencing policy.
But consumers haven’t forgotten what high prices mean in
“The trend toward less (oil}consumption is likely to continue,” says Junichi Yamaki, Moody’s rating agency senior vice president.
Higher prices and heavy volatility have encouraged the industrial sector to convert from oil to other energy sources, which has shrunk the gasoline market as drivers use less and switch to energy-efficient vehicles, he adds.
Prime Minister Shinzo Abe has been handed a number of initiatives from the agricultural ministry, which is spearheading a biomass strategic committee comprising officials from across the political spectrum to encourage motorists to adopt cleaner burning fuels.
What the Japanese are putting their faith in is biomass, the buzzword of choice among investors from the
Officials want an increase in technologies that produce ethanol from biomass, which would certainly give a fillip to Japan’s beleaguered agricultural sector that has faced cheaper imports.
As part of the initiative, the ethanol fan Abe is considering a plan to build three bioethanol plants by 2012 but this would hardly make a dent in the target of producing 6m kl/year by 2030 domestically.
It would require significantly more capital investment, tax incentives, infrastructure improvement and the right technologies to make biofuels financially attractive.
Adopting biomass production from rice straw and wood chippings has been suggested, a preferred alternative to corn and sugar, used for important sources of food and for cattle feed.
Costs would have to be reduced to ensure that it makes economic sense the agricultural ministry and its partners highlighted in the report.
It costs Y70 ($0.60/€0.45) to Y80 per litre to import ethanol from
The jury is still out as to whether Abe will commit to the 6m kl target. But he may not have a choice since
Four years ago, the government introduced a 3% ethanol, 97% petrol blended gasoline. There have been calls to boost the percentage of the ethanol blend but a review is unlikely before 2020, the Ministry of Trade and Industry has previously announced.
Eying this closely are the Japanese oil refiners who stand to lose a little if oil demand does slow. They seem to agree with Moody’s and have moved with the times by diversifying towards eco-friendlier fuels.
The Petroleum Association of Japan established a group of refiners, among them Nippon Oil, Idemitsu Kosan and Showa Shell Sekiyu, to procure and supply biomass fuels.
The association plans to start sales of ethyl tertiary butyl ether (ETBE), a mix of ethanol and isobutylene, in gasoline from 2010 on a large scale.
A shipment of ETBE from
It’s full steam ahead for
For further information about biofuels log on to Simon Robinson's Big Biofuels blog on ICIS.com.
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