Thailand is making big plans, in particular for the next ten years, to boost agrofuel production particularly through expansion of oil palm plantations. However, the plans are not going anywhere yet due to the price volatility of agrofuel feedstock like palm oil and sugar as well as growing environmental concerns.
Thailand has two types of agrofuels: gasohol (mixture of gasoline and ethanol) and biodiesel. Gasohol made by mixing gasoline with 10% ethanol is called E10 (Gonsalves 2006).
Close to 90% of ethanol in Thailand comes from molasses (a fermented by-product of sugar manufacture) and the remaining from
cassava. In 2007, Thailand’s ethanol production was 192.8 million liters (APEC 2008).
However, the production cost of sugarcane is high and the volume diverted for ethanol is low since sugarcane is mainly for sugar production. Thus Thailand, Asia’s largest producer of cassava with an average cassava root production of 20 million tons a year, is increasingly looking to cassava as the raw material for ethanol production (Artachinda, Gonsalves 2006).
Biodiesel is produced by the “transesterification” of vegetable oil by an alcohol, usually methanol, and then blended with diesel. The most commonly used vegetable oil in Thailand is palm (soybean, canola or rapeseed, sunflower and peanut can also be used). B2 is 2% biodiesel with 98% diesel; a 10% blend with diesel is called B10 (Gonsalves 2006). In 2007, Thailand’s biodiesel production was 58 million liters. At present, Thailand has nine biodiesel plants with a total production capacity of 655 million liters annually (APEC 2008).
Palm oil is the main raw material for biodiesel in Thailand. One hectare of palm oil can produce 4 to 5 tons of crude palm oil which is 5 to 10 times more than the yield of any commercially grown oil crop (Gonsalves 2006).
Thailand’s palm oil economy is third in the world after Indonesia and Malaysia. The current area of oil palm is 320,000 hectares in Thailand (IPS, 2008b) of which more than 40 percent is in the southern provinces especially Krabi followed by Surat Thani and Chumphon. The northeastern region (Isaan) has about 2,362 ha mainly in Kalasin and Nakhon Ratchasima provinces (Nok Sayamol, pers. comm.)
Annual crude palm oil output totals 1.3 million tonnes with about 800,000 tonnes going to the food sector. Of the 500,000 tonnes remaining for non-food businesses, 420,000 tonnes will be needed to make B2. For B5, at least 600,000 tonnes would be required.
The government has set up a working group in the Ministry of Agriculture and Cooperatives and the Ministry of Energy, called
“Committee on Biofuel Development and Promotion” (CBDP, Preechajarn et al. 2008). The committee has targeted, in the five years starting from 2008, the expansion of oil palm cultivation area by 2.5 million rai (400,000 ha) (APEC 2008).
For developing biodiesel, the Thai government has announced the “Strategic Plan on Biodiesel Promotion and Development” in
January 2005. The plan aims to replace 10% of diesel consumption by increasing palm oil cultivation, and promoting community-based and commercial biodiesel production in 2012. Moreover, the government introduced a B2 mandate in February 2008 to require the production of approximately 420,000 tonnes of biodiesel per year (APEC 2008).
The government’s biodiesel strategy is to develop oil palm and jatropha plantations with a total estimated investment of 70 billion Baht ($1.75 billion) (Gonsalves 2006, IPS 2008a). In particular for the southern provinces, an area also designated as a special Board of Investment (BOI) zone, the government has budgeted US$50 million for palm oil cultivation (Griggers 2004).
Thailand’s long-term plans for agrofuel plantations:
1. Expansion of domestic oil palm plantations covering a total area of 4 million rai (0.67 m ha) to provide 4.8 m litre/day of biodiesel
2. Establish oil palm plantations covering a total area of 1 million rai in a neighboring country to yield an additional 1.2 m litre/day of biodiesel.
3. Establish combined jatropha and oil palm plantations to produce a further 2.5 m liters/day. It is expected that jatropha plantations with an area of 1 million rai and oil palm plantations of about 1.2 million rai will provide 2.5 million liters/day of biodiesel (Gonsalves 2006).
However, the expansion of the oil palm areas has not taken place as planned. According to an US Department of Agriculture (USDA) report, “increasing palm plantings to meet demand has been challenging. In 2006, increased palm acreage was only 48,000 hectares, 40 percent below the annual target” (Preechajarn et al. p. 5). The failure is attributed to rubber giving more attractive returns plus the relative lack of incentives for the palm crop. The government has thus decided to promote oil palm plantations in the non-rubber areas in the north and northeast regions of Thailand (Gonsalves 2006).
Whether the government’s agrofuel expansion policy takes place as planned depends on the economic competitiveness of agrofuels, in particular, the price of ethanol, since cheaper ethanol relative to gasoline is crucial to the Thai government’s plan to substitute ethanol in gasoline octane 95.
An economic analysis study states, “the largest portion of the total ethanol production costs heavily depends on feedstock prices, which is generally highly volatile and are subject to the demand and supply of foodstuffs in the world markets, and the seasonal local supply variations” (p. 78, Yoosin and Sorapipatana 2007).
Feedstock availability like sugar and palm oil varies from season to season and with geographic locations as well as future anticipated demand. For instance, an anticipated increase in demand for crude palm oil recently pushed up domestic prices for fresh palm. Domestic prices for fresh palm fruit increased sharply in late 2007, reaching a record high of 6-6.3 Baht/ kg ($190-$206/ton) in January 2008 (Preechajarn et al. 2008).
This has already affected nearly all of Thailand’s existing agrofuel plants that faced supply surpluses as well as increased input prices by mid-2008; nearly all ethanol plants were running at only 70 percent of their production capacity while some either suspended production or switched to non-ethanol products (Preechajarn et al. 2008).
Environmental concerns about toxic pollution of soil and water surround Thailand’s agrofuel plantations: the herbicides Paraquat and Glyphosate are used on the soil in the oil palm plantations; the insecticide Furadan is applied in the oil palm nursery (Pleanjai et al. 2004). Furadan is the brand name of the pesticide Carbofuran that has faced controversy since the 1980s after the US Environmental Protection Agency (EPA) Special Review estimated that over a million birds were killed each year by the granular formulation. Subsequently, the granular formation was cancelled in the US in 1994, but the liquid form remains in the global market.
By Amraapali, N. a writer based in the Mekong region. Email: Amraapali@gmail.com
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