Using ethanol blend as fuel a good idea? ?

GRAY PICTURE: Many motorists are unaware or do not care that the gasoline they use for their motor vehicles is mixed with ethyl alcohol — provided the fuel is safe and reasonably priced.

Ethanol (CH3CH2OH) is used as a fuel additive in compliance with the Biofuels Law of 2006 (RA 9367) on the premise that adding it in gasoline will lower the price.

Aside from lowering prices, the law also envisions less dependence on imported fuel, countryside development, shielding of the environment from toxic and greenhouse gases emitted by vehicles, and protection of food reserves and biodiversity.

Looking at how un/successful the Biofuels Law has been in attaining its objectives, I see a grayish picture.

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CHEAPER IMPORT: How can the mandated addition of 10-percent ethanol lower the pump price of gasoline when the local supply of ethanol is insufficient for the normal needs of oil companies?

At work is the immutable law on supply and demand and the inevitable market manipulation of greedy merchants.

Based on 2012 averages, locally produced ethanol was priced at P47 per liter, while imported ethanol cost only P30 per liter, or a huge 56-percent difference.

With that pricing factor, the first impulse of a fuel producer is to import cheaper ethanol, although that would require the usual foreign currency.

The United States and Brazil are the biggest users and sellers of ethyl alcohol for motor vehicles. They account for 87.1 percent of the world’s production.

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ETHANOL RATIO: The Biofuels Law took effect Feb. 6, 2007, mandating that within two years, gasoline sold must contain at least 5 percent ethanol by volume, and that all ethanol blended gasoline contain a minimum of 5 percent ethanol.

On Feb. 6, 2009, the rule for 5 percent ethanol blend in gasoline by volume was implemented.

Then on Aug. 6, 2011, the Department of Energy ordered that all gasoline fuels should have a 10 percent ethanol blend, except for regular gasoline (Research Octane No. 81 and 87) and premium gasoline (RON 97 and above). 

The energy department is reportedly finalizing a circular mandating that all gasoline grades should be blended with 10-percent ethanol by this month (April).

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DEVELOPMENT?: With domestic ethanol priced 56 percent higher than the imported variety, and with ethanol being 10 percent of motor fuel, the locally sourced additive might pad the pump price instead of lowering it.

One need not be a cynic to start wondering if that provision for an ethanol mix was not inserted in the Biofuel Law upon the instance of local producers of ethyl alcohol.

Ethanol is made from agricultural feedstock and other biomass. Raw materials include sugar cane, potato and corn, hence the fear that its massive production for fuel purposes might take away arable land from crops for food.

The same law envisions the use of ethanol spurring countryside development. After six years, is there already a study measuring the anticipated development? If so, what does it show?

Is there an attempt to balance the area planted to food crops and that for raising raw materials for ethyl alcohol? Or are hectarage priorities left to the planters to decide?

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POLLUTION: Talking of balancing options, the US Energy Information Administration says that the energy produced by ethanol is only 2/3 of the energy produced by gasoline.

In short, gasoline takes a motorist farther than ethanol would — at less expense. If priced similarly, and all other factors minimized, pure gasoline appears to be a more efficient fuel.

But there are other considerations, such as pollution, that make ethanol or its blend an improved or preferred fuel.

To date, however, no study has been conducted by Philippine government agencies to determine if ethanol’s use has improved air quality four years after the Biofuel Law took effect.

Studies abroad show that the higher volatility of ethanol translates to higher evaporative emissions that are smog precursors. The National Research and Environmental Laboratory of the US has found that ethanol-blended gasoline produces aldehyde, a toxic air pollutant.

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POOR FARMERS: Despite a government mandate for oil companies to consume all the local supply before importing ethanol, the incentives, and a six-year lead time, local producers have not been able to keep up with the demand.

There have been minimal investments in the production of ethyl alcohol. There are only four ethanol-producing facilities in the country, supplying 10-15 percent of total demand.

And has the BioFuels Law improved the lives of farmers and spurred countryside economic activity? At the current prices of local ethanol at P45-P50 per liter, farmers reportedly earn less than 50 centavos per liter!

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LIMITED SUPPLY: At the current 10 percent blend for high-octane fuel, oil companies are importing 85-90 percent of their ethanol needs. When blending is also required of low-octane fuel, more foreign currency will be needed.

It appears that the Biofuel Law is working for traders and producers, and not for farmers. Has the setup only replaced crude oil and finished gasoline with another imported product (ethanol)?

There have been shortages in local ethanol production. In the first quarter of this year, the oil industry reported difficulty in importing ethanol due to a tight supply situation in the region.

Easing up of the supply problem is not in sight. Ethanol-producing countries have been increasing their own use of ethanol. Brazil has gone up to a 25-percent ethanol blend.

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