The Future of Liquid Biofuels for APEC Economies 

Energy Working Group 

May 2008 

NREL/TP-6A2-43709.

Posted with permission.
 

Report prepared for the APEC Energy Working Group under EWG 01/2006A by: 

Anelia Milbrandt 

National Renewable Energy Laboratory (NREL) 

Golden, Colorado, USA 

Web site: www.nrel.gov 

Dr. Ralph P. Overend 

NREL Research Fellow (Retired) 

Ottawa, Ontario, Canada 

APEC#208-RE-01.8 
Acknowledgments 

The authors would like to acknowledge and thank the project overseer Mr. Rangsan 

Sarochawikasit (Department of Alternative Energy Development and Efficiency, 

Thailand) for his leadership of this project. We also would like to thank Dr. Helena Chum 

(National Renewable Energy Laboratory, USA) for contributing materials, and providing 

review and feedback; and the chair of APEC Biofuels Task Force, Mr. Jeffrey Skeer, 

(Department of Energy, USA) for his support and guidance. 

The authors also greatly appreciate the time and valuable contributions of the following 

individuals: 

Ms. Naomi Ashurst and Ms. Marie Taylor, Department of Industry, Tourism and 

Resources, Australia 

Ms. Siti Hafsah, Office of the Minister of Energy, Brunei Darussalam 

Mr. Mark Stumborg, Agriculture and Agri-Food, Canada 

Ms. Corissa Petro, National Energy Commission, Chile 

Mr. Song Yanqin and Mr. Zhao Yongqiang, National Development and Reform 

Commission, China 

Mr. K.C. Lo, Electrical and Mechanical Service Department, Hong Kong, China 

Dr. Hom-Ti Lee, Industrial Technology Research Institute, Chinese Taipei 

Mr. Hendi Kariawan, Indonesia Biofuels Team, Indonesia 

Dr. Jeong-Hwan Bae, Korea Energy Economics Institute, Republic of Korea 

Mr. Diego Arjona-Arguelles, Secretariat for Energy (SENER), Mexico 

Mr. Angel Irazola and Mr. Diego de la Puente Consigliere, Agricola Del Chira S.A., 

Peru 

Mr. Alex Ablaev, Russian National Biofuels Association, Russia 

Ms. Judy Oberg, National Renewable Energy Laboratory (NREL), USA 
Abbreviations and Acronyms 

APEC - Asia-Pacific Economic Cooperation 

ASTM - American Society for Testing and Materials 

CEH - Chemical Economics Handbook 

CIS - Commonwealth of Independent States 

CRP - conservation reserve program 

CPO - Crude palm oil 

DME - Dimethyl ether 

ETBE - Ethyl tertiary butyl ether 

EU - European Union 

FAME - Fatty acid methyl esters 

FAPRI - Food and Agricultural Policy Research Institute 

FFV - Flexible fuel vehicles 

FTL - Fischer Tropsch Liquids 

Gasohol - E10 (blend of 10% ethanol and 90% gasoline) 

GHG - Greenhouse gas 

IMF - International Monetary Fund 

ISO - International Organization for Standardization 

LHV - Low heating value 

LUC - land-use change (LUC) 

MTBE - Methyl tertiary butyl ether 

MSW - Municipal solid waste 

NGOs - Non-Government Organizations 

NREL - National Renewable Energy Laboratory (of the U.S. Department of Energy - DOE) 

PNG - Papua New Guinea 

R&D - Research and development 

RFS - renewable fuels standard 

RFTO - renewable transport fuel obligation 

RBD palm oil - Refined, bleached and deodorized 

SVO - Straight vegetable oil 

UNCTAD - United Nations Conference on Trade and Development 

USD - U.S. dollar 

USDA - U.S. Department of Agriculture 
USDOE - U.S. Department of Energy 

Units of Measure 

hm3 - Cubic hectometer (1 hm3 = 106 m3 = 109 liter) 

L - Liter 

Tonne - Metric ton 

GJ - Gigajoule 

Gt - Gigatonne (1015) 

5 
 

 

Foreword 

This project was initiated by the Asia-Pacific Economic Cooperation (APEC) Energy Working 

Group (EWG), which is one of 11 APEC working groups. Its objective is to maximize the energy 

sector’s contribution to the region’s economic and social well-being through activities in five 

areas of strategic importance: energy supply and demand, energy and the environment, energy 

efficiency and conservation, new and renewable energy technologies, and liquid biofuels 

production and development. 

This project was implemented by EGNRET (Expert Group on New and Renewable Energy 

Technologies), which was established by the EWG to promote and facilitate the expanded use of 

new and renewable energy, where it is cost-effective. The Expert Group is implementing a 

program of cooperation involving surveys, seminars, workshops, and projects such as this one on 

biofuels. 

The project’s primary objective is to analyze the state of biofuels in the APEC region and 

discuss factors affecting their further development. An overview of the status of biofuels in the 

APEC region is presented, as well as a brief summary for each of the 21 member economies. 

Topics include biofuels production, feedstock availability, economics, refueling infrastructure, 

use of alternative fuel vehicles, trade, and policies. Each of these topics could be a separate 

study, which would provide a more in-depth analysis. The intent here, however, is to capture the 

primary aspects of the status of biofuels in the APEC region, provide readers with an 

informational base as they analyze the subject further, and help identify the need for future work 

in the field. 

It was not possible to make concrete projections, as the biofuels industry in the region is in its 

early stages and surrounded by uncertainties. While many economies share some issues 

related to biofuels, each has its own bioenergy concerns that need to be analyzed in detail. This 

would require a significant effort and a lot more information than was available for this project. 

With all that in mind, the study provides a discussion of the factors that influence the future 

evolution of liquid biofuels in the APEC economies and leaves further analysis and debate to its 

readers. 

6 
The information provided in this publication has been obtained from various sources, which the 

authors believe to be reliable. These include personal communication with authorities in APEC 

member economies, publicly available and proprietary publications, and media releases. The 

authors make no warranty as to the accuracy or completeness of the information in this 

publication. We encourage readers to contact us with feedback and recommendations. 

7 
Summary 

Continued growth in the demand for transportation fuels and declining oil production within the 

APEC region have led member economies to consider alternative energy options, such as fuels 

made from biomass materials. In addition to energy security, other key drivers include improving 

air quality, tackling climate change, and revitalizing rural development. However, these drivers 

have different weights among the APEC members. 

The biofuels industry in the APEC region consists of two distinct sectors, ethanol and biodiesel. 

Fuel ethanol production within the region in 2007 was estimated at approximately 27,600 million 

liters, mainly produced in the United States; China; Canada; Australia; and Thailand. Biodiesel 

production in 2007 was approximately 4,400 million liters with the United States; Indonesia; 

Malaysia; China; Australia; and Canada as leading producers. 

Ethanol is made from starches and sugars, but advanced conversion technologies under 

development will allow it to be made from more abundant “cellulosic” biomass sources such as 

forest and agricultural residues. Economies such as the United States; China; and Japan are 

heavily investing in the development of this advanced technology. Biodiesel in the region is 

produced from vegetable oils, waste cooking oil, and animal fats. Some economies are 

considering alternative biodiesel feedstock such as jatropha and other nonedible oils. A longterm strategy pursued by few economies is the use of microalgae as a biodiesel feedstock; 

however, a considerable investment in R&D is needed to make it a viable option. 

Although biofuels trade is relatively minor within the APEC region, some member economies 

see substantial opportunities for export. These include Malaysia; Thailand; Indonesia; and the 

Philippines, which would greatly benefit from their proximity to China; Korea; and Japan - the 

latter economies are projected to be significant importers if the biofuels industry develops in the 

region. 

While governments in some economies have provided substantial support for biofuels 

development, enabling it to compete with conventional gasoline and diesel, others have just 

begun to consider policy measures. Some policy instruments applied in the region include 

mandatory blending, fuel tax exemptions, loan guarantees, reduced enterprise taxes and 

subsidies (direct and indirect) for biofuels production, and R&D investments. 

8 
Several factors influence the continued growth of the biofuels industry and the long-term market 

potential for biofuels in the APEC region and around the world; but the fundamental one is 

production economics. The future development of sustainable biofuels also depends on a 

balanced scorecard to evaluate the performance of biofuels against the metrics of energy 

security, greenhouse gas (GHG) reduction, and the energy return on investment (EROI). For 

both first- and second-generation liquid biofuels, resolution of technical, economic, social, 

environmental, and regulatory issues remains critical to further development of biofuels in the 

APEC economies. 

9 
Table of Contents 

Acknowledgments .................................................................................................................3
 

Abbreviations and Acronyms ................................................................................................4 

Units of Measure...................................................................................................................5 

Foreword...............................................................................................................................6 

Summary...............................................................................................................................8 

Table of Contents................................................................................................................10 

List of Figures......................................................................................................................11 

List of Tables.......................................................................................................................11 

Introduction .........................................................................................................................12 

Current Status of Biofuels Development in the APEC Region ............................................17 

Production...........................................................................................................................17 

Feedstock............................................................................................................................20 

Economics...........................................................................................................................23 

Biofuels in Use. ...................................................................................................................26 

Refueling Infrastructure.......................................................................................................27 

Alternative Fuel Vehicles.....................................................................................................29 

Trade...................................................................................................................................30 

Policy...................................................................................................................................32 

The Future of Liquid Biofuels in APEC Economies.............................................................35 

Conclusions.........................................................................................................................45 

References..........................................................................................................................47 

Appendix A: Current Status of Biofuels Development in the APEC Region by Member 

Economy .............................................................................................................................50 

Australia ..............................................................................................................................50 

Brunei Darussalam..............................................................................................................53 

Canada................................................................................................................................54 

Chile....................................................................................................................................58 

China...................................................................................................................................59 

Hong Kong, China...............................................................................................................62 

Indonesia.............................................................................................................................63 

Japan ..................................................................................................................................67 

Republic of Korea................................................................................................................70 

Malaysia..............................................................................................................................72 

Mexico.................................................................................................................................74 

New Zealand.......................................................................................................................77 

Papua New Guinea.............................................................................................................78
 

Peru.....................................................................................................................................79 

The Philippines....................................................................................................................81 

Russia .................................................................................................................................84 

Singapore............................................................................................................................86 

Chinese Taipei ....................................................................................................................87 

Thailand ..............................................................................................................................89 

United States of America ....................................................................................................92 

Viet Nam .............................................................................................................................98 

Appendix B: Projected Export of Major Oilseeds and Products by 2017/18 .....................100 

Appendix C: Gasoline and Diesel Consumption in APEC Economies, 2005....................102 

10 
List of Figures 

Figure 1 Global Ethanol Production ............................................................................................13 

Figure 2 Global Biodiesel Production..........................................................................................14 

Figure 3 Price of Major Vegetable Oils .......................................................................................19
 

Figure 4 Installed Biofuels Production Capacity in APEC Economies, 2006-2007.....................20 

Figure 5 Ethanol Feedstock in APEC Economies.......................................................................21 

Figure 6 Biodiesel Feedstock in APEC Economies ....................................................................21 

Figure 7 Average Ethanol Production per Hectare of Farmland Yield by Crop...........................22 

Figure 8 Average Biodiesel Production per Hectare of Farmland Yield by Crop ........................23 

Figure 9 Illustrative Ethanol Production Costs ............................................................................24 

Figure 10 Illustrative Biodiesel Production Costs........................................................................25 

Figure 11 Historical and Projected Cellulosic Ethanol Costs ......................................................26 

Figure 12 United States E85 Refueling Stations.........................................................................28 

Figure 13 Commodity Price Index - IMF in SDR.........................................................................37 

Figure 14 Food Commodity and Crude Oil Prices Trends ..........................................................38 

Figure 15 CPO and Crude Oil as Energy Prices.........................................................................39 

Figure 16 GHG Emissions Reduction Potential for Select Biofuels ............................................42 

Figure 17 Biofuels Production in Canada ...................................................................................54 

Figure 18 Ethanol Producers and Areas with E10 Consumption in China..................................59 

Figure 19 Planned Ethanol Production Facilities in Indonesia....................................................63 

Figure 20 Planned Biodiesel Production Facilities in Indonesia .................................................64 

Figure 21 Current Biorefineries in Japan ....................................................................................67 

Figure 22 Proposed Fuel Ethanol Refineries and Sugarcane Producing Areas in Mexico.........74 

Figure 23 Suitable Areas for Biodiesel Feedstock Production....................................................75 

Figure 24 Ethanol Production Plants in Thailand........................................................................89 

Figure 25 US Ethanol Biorefineries.............................................................................................92 

Figure 26 US Biodiesel Production Facilities ..............................................................................93 

Figure 27 US E85 Refueling Infrastructure .................................................................................95 

Figure 28 US Biodiesel Refueling Infrastructure.........................................................................96 

Figure 29 Projected Palm Oil Export by 2017/18......................................................................100 

Figure 30 Projected Soybean Export by 2017/18 .....................................................................100 

Figure 31 Projected Soybean Oil Export by 2017/18................................................................101 

Figure 32 Projected Rapeseed Export by 2017/18 ...................................................................101 

Figure 33 Projected Rapeseed Oil Export by 2017/18..............................................................102 

List of Tables 

Table 1 Lower Heating Value (LHV) of various liquid transportation fuels..................................12 

Table 8 Estimated Change in Life Cycle GHG Emissions per km Travelled by Replacing 

Table 9 Estimated Change in Life Cycle GHG Emissions per km Travelled by Replacing Diesel 

Table 2 The Wide World of Liquid Biofuels.................................................................................16 

Table 3 Ethanol Production in APEC Economies .......................................................................18 

Table 4 Biodiesel Production in APEC Economies.....................................................................18 

Table 5 Biofuels Currently Used in the APEC Region ................................................................27 

Table 6 Cost of Adding E85 Equipment to Existing Gasoline Stations .......................................28 

Table 7 Biofuel Mandates and Targets in APEC Economies......................................................34 

Gasoline with Various Ethanol Blends ........................................................................................40 

with B100 ....................................................................................................................................41 

Table 10 Gasoline and Diesel Consumption in APEC Economies, 2005 .................................102 

11 
 

 

 

 

Introduction 

The global production and use of biofuels have increased dramatically in the past few years, 

due to increasing oil prices, national security concerns, environmental considerations, and the 

urge to revitalize rural communities. The question today is no longer whether or not biofuels will 

be a part of the energy mix, but rather what are the economic, social, and environmental 

implications to their large-scale adoption. 

Biofuels refer to transportation fuels derived from biomass material: conventional food crops 

(grains, oilseeds, and sugar crops), dedicated energy crops (grasses, shrubs, and trees), and 

agricultural residues and waste streams. While fossil fuels (petroleum, natural gas, and coal) 

consist entirely of hydrocarbons (carbon and hydrogen), current biofuels contain oxygen as well 

as carbon and hydrogen, which affects their physical and chemical properties during 

combustion. As a result, the biomass-derived oxygenates have a reduced heating value 

compared to hydrocarbons, thus releasing less energy than hydrocarbons during combustion. 

Table 1 compares the typical lower heating value (LHV)1

 of several transportation fuels. 

Table 1 Lower Heating Value (LHV) of various liquid transportation fuels 

Fuels LHV(MJ/kg) 

Petroleum Diesel 45 

Fischer Tropsch (FT) Diesel 44 

Gasoline 43 

Biodiesel 38 

Butanol 36 

MTBE/ETBE2

 35 

Dimethyl ether (DME) 29 

Mixed Alcohols 27 - 36 

Ethanol 27 

Methanol 20 

Source: Iowa State University 

Ethanol and biodiesel are the liquid biofuels most widely used for transport today. Ethanol 

(C2H5OH, ethyl alcohol) is produced by the fermentation of carbohydrate materials. Today, 

ethanol is made from starches and sugars, but an advanced conversion technology allows it to 

be made from more abundant “lignocellulosic” biomass sources such as forest and agricultural 

1

 The lower heating value of a fuel is the energy that can be recovered when the water of combustion is released as a 

vapor. 

2

 MTBE (methyl tertiary butyl ether) is a liquid oxygenate produced from methanol and isobutylene, an oil refining 

product; ETBE (ethyl tertiary butyl ether) is a liquid oxygenate produced from ethanol 

12 
 

 

 

residues. Ethanol is used for production of alcoholic beverages, for industrial purposes (as a 

solvent, disinfectant, or chemical feedstock), and in recent years, as a blending agent with 

gasoline to increase octane and reduce carbon monoxide and other smog-causing emissions. 

Low-level ethanol blends such as E10 (10% ethanol and 90% gasoline) can be used in 

conventional vehicles, while high-level blends, such as E85 (85% ethanol and 15% gasoline) 

can only be used in specially designed vehicles, such as flexible fuel vehicles (FFVs). Global 

ethanol production is estimated at a record 62,000 million liters in 2007 (Figure 1), with the 

United States and Brazil accounting for approximately 70% of the total output. Fuel ethanol 

accounted for about 77% of all ethanol consumed in 2006, and it is likely that it reached 86% in 

2007.3 

Global Ethanol Production, 2000 - 2007 

0 

10,000 

20,000 

30,000 

40,000 

50,000 

60,000 

70,000 

2000 2001 2002 2003 2004 2005 2006 2007 (E) 

Million Liters 

Source: F.O.Licht, 2007; E - estimate 

Figure 1 Global Ethanol Production 

Biodiesel is a liquid fuel made from vegetable oils and animal fats through a chemical process 

(transesterification) that reacts the feedstock with alcohol (usually methanol) to produce 

chemical compounds known as fatty acid methyl esters (FAME). Biodiesel is the name given to 

these esters when they meet specifications such as American Society for Testing and Materials 

(ASTM) D6751 or EN14214 for use as transportation fuel. Biodiesel is used in blends with 

petroleum diesel or in its pure form. B20 (20% biodiesel and 80% diesel) and lower-level blends 

such as B2 (2% biodiesel/98% diesel) and B5 (5% biodiesel/95% diesel) can be used in any 

diesel engine. B100 (pure biodiesel) or other high-level biodiesel blends can be used in some 

engines built since 1994. Biodiesel is also used for space - and water heating in domestic and 

3 F.O. Licht, 2006; Worldwatch Institute, 2007 

13 
 

 

 

commercial boilers. Global biodiesel production has been growing rapidly during the past few 

years, and estimates show that it may have reached 10,000 million liters in 2007 (Figure 2). 

Europe accounts for 73% of the total production, with Germany; France; Italy; and Czech 

Republic leading the way. 

Global Biodiesel Production, 2000 - 2007 

0 

2,000 

4,000 

6,000 

8,000 

10,000 

12,000 

2000 2001 2002 2003 2004 2005 2006 2007(E) 

Million Liters

 Source: F.O.Licht, 2008; E - estimate 

Figure 2 Global Biodiesel Production 

In addition to ethanol and biodiesel, there are other types of biomass-derived fuels under 

development (Table 2). Biofuels production from starches, sugars, and vegetable oils are wellestablished technologies, but sometimes are seen as competition with the food and feed 

industries. There are also environmental concerns, such as unregulated deforestation and 

heavier use of fertilizers; and ethanol from corn is controversial when it comes to the energybalance question (mitigated if biomass is used to supply heat and power). These and other 

issues are driving research for second-generation feedstock, new, or more efficient conversion 

processes and fuels. These technologies have the potential to substantially expand the 

feedstock base for biofuels production in the future (e.g., lignocellulosic biomass, nonedible 

vegetable oils, algae) and alleviate the food vs. fuel debate. However, none of the conversion 

processes using these feedstocks has reached the industrial stage. Although some of these 

processes (e.g., gasification of biomass followed by synthesis to liquid fuels) have been known 

for the past few decades, low petroleum prices have prevented their further development during 

that time. Increasing oil prices and energy security concerns have renewed the interest in 

biofuels in the past few years, thus reviving the R&D in conversion technologies. 

14 
 

 

 

As mentioned above, the advanced conversion technologies outlined in Table 2 are at different 

points in their development - experimental, in a demonstrational stage, or in a very early 

commercialization process. The production of “green” diesel via hydro-treatment is perhaps the 

closest to a commercialization stage. Brazil's state energy company Petrobras has adapted four 

refineries to produce H-Bio diesel fuel using mineral and vegetable oil, but has not started mass 

production due to the high price of soy oil. Neste is constructing an 800 kilotonnes 

hydrogenated oil plant in Singapore (to be operational in 2010) using its NExBTLTM technology. 

The next technology in line for commercialization could be bio-ethanol production from 

lignocellulosic biomass via biochemical4

 or thermo-chemical5 conversion process. Iogen 

Corporation has successfully produced bio-ethanol from wood waste via biochemical conversion 

in its pilot plant in Canada. In the United States, six commercial cellulosic ethanol plants are 

under construction - four of them will use biochemical-conversion technology and two will apply 

the thermo-chemical conversion process. China has several cellulosic ethanol pilot plants (using 

biochemical-conversion technology), and one exists in Japan. Australia is also building a pilot 

plant using this process. Within the next five years, more demonstration plants producing 

gasification-derived biofuels - such as Fischer Tropsh (FT) diesel, bio-methanol, and bioDimethyl Ether (DME) - are expected to come online. Biodiesel produced from algae is among 

the technologies to be developed in the future, perhaps within the next 5-10 years. Before the 

technology is commercially available, significant technical and economic barriers need to be 

overcome to finish the laboratory phase, test the process, and develop it sufficiently. 

4

 Two key steps in biochemical conversion are biomass pretreatment and cellulose hydrolysis. During pretreatment, 

the hemicellulose part of the biomass is broken down into simple sugars and removed for fermentation. During 

cellulose hydrolysis, the cellulose part of the biomass is broken down into the simple sugar glucose. 5

 In thermo-chemical conversion, heat and chemicals are used to break biomass into syngas (a mixture of carbon 

monoxide and hydrogen) and reassemble it into products such as ethanol. 

15 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Table 2 The Wide World of Liquid Biofuels 

Fuel Type 

Ethanol 

Feedstock 

Current Technol

Grains / 

Starches 

Conversion 

Technology 

ogies 

Enzymatic 

fermentation 

Description 

Dry milling process - grains are ground into a 

flour, and the starch is converted into sugar 

with enzymes and fermented to produce 

ethanol. 

Benefits 

Mature technology - many facilities 

already operational and in 

construction. 

Issues/Challenges 

Feedstock availability and production 

is limited, and there is competition 

with food products. Net energy 

Status 

Commercial 

Ethanol Grains / 

Starches 

Separation and 

fermentation 

Wet milling process - grain separated into 

components and starch is yeast fermented and 

distilled 

Mature technology - many facilities 

already operational and in 

construction. 

balance lower than projections for 

cellulosic ethanol. Commercial 

Ethanol Sugars Fermentation 

Sugar crops (like sugarcane) are crushed to 

extract the juice and fermented to produce 

ethanol. 

Mature technology. More efficient 

than conversion of starches. 

Limited feedstock availability in 

temperate climates. Commercial 

Biodiesel 

Vegetable oil 

Animal fat 

Grease 

Transesterification 

The feedstock is reacted with alcohol (usually 

methanol) in the presence of an alkaline 

catalyst to produce chemical compounds 

known as fatty acid methyl esters (FAME) 

Ease of conversion, biodiesel can 

be used in diesel engines without 

adjustments. Significant heating oil 

market. 

Cold climates technical issues. Commercial 

Straight 

vegetable oil 

(SVO) 

Green Diesel 

Vegetable oil 

Animal fat 

Grease 

Future Techno o

Vegetable oil 

Animal fat 

Grease 

Mechanical pressing 

or solvent extraction 

gies 

Hydroprocessing 

Filtering out particles and removing water 

Biomass oils conversion to diesel and other 

hydrocarbons via hydrotreating methods as 

in petroleum refinery 

Viable fuel for tropical regions 

where saturated oils are available. 

Coconut oil can be blended directly 

with diesel and used in unmodified 

engines in tropical regions. 

Low sulfur diesel. Capital and 

operating costs could be 

substantially lower than those for 

transesterification. 

Not suitable for use in regular diesel 

engines (except coconut oil and other 

saturated oils). 

Feedstock availability. 

Commercial (The 

Philippines, Papua 

New Guinea, EU) 

Early stage of 

commercialization in 

Brazil by Petrobras; 

NESTE in Finland is 

constructing a plant 

Bio-ethanol Lignocellulosic 

biomass 

Enzymatic 

hydrolysis and 

fermentation 

Hemicellulose and cellulose converted to 

sugars via enzymatic hydrolysis. Various 

options for hemicellulose conversion 

(pretreatment). Sugars converted to alcohol via 

fermentation. 

Relatively low maintinance costs. 

Potentially very high glucose yield. 

Cellulase costs must be reduced. 

Enzymes are sensitive to poisoning. 

Demonstrational plant 

currently operating in 

Canada; Four 

commercial plants are 

under construction in 

the US; Several pilot 

plants exist in China 

and one in Japan; A 

pilot plant is currently 

under construction in 

Australia 

Bio-ethanol Lignocellulosic 

biomass 

Gasification and 

fermentation 

Gasification to produce syngas (a gaseous 

mixture rich in hydrogen and carbon 

monoxide), which is then conditioned and 

compressed. The compressed gas is 

fermented to ethanol. 

Higher yield of ethanol per ton of 

feedstock than direct fermentation 

of biomass. Feedstock flexibility. 

Gasification requires dried biomass. 

High level of syngas clean-up 

required. 

Two commercial plants 

(Range Fuels and 

Alico) are under 

construction in the US 

Fischer 

Tropsh (FT) 

Diesel 

Lignocellulosic 

biomass 

Gasification and FT 

synthesis 

Gasification to produce syngas, which is then 

cleaned and purified. The clean syngas then 

undergoes a catalytic process to synthesize 

hydrocarbons and their oxygen derivatives by 

the controlled reaction of hydrogen and carbon 

monoxide. The product is separated and 

upgraded. 

FT diesel can substitute directly 

conventional diesel with lower 

emissions. Feedstock flexibility. 

Gasification requires dried biomass. 

High level of syngas clean-up 

required. Catalysts sensitive to 

poisoning and sintering. Requires 

improved yields. 

Demonstrational 

facilities under way in 

Germany, Austria, 

Finland. 

Mixed 

Alcohols 

Lignocellulosic 

biomass 

Gasification and 

thermochemical 

conversion 

Syngas production via biomass gasification, 

followed by catalytic conversion to a mixture of 

products (organic acids, ketones, and 

alcohols). 

Mixed alcohols have higher energy 

content than ethanol. When 

blending, the higher alcohols 

increase compatibility of gasoline 

and ethanol, which increases 

water tolerance and decreases 

evaporative emissions. Higher 

alcohols also perform better in cold 

climates. Feedstock flexibility. 

Gasification requires dried biomass. 

High level of syngas clean-up 

required. Catalysts sensitive to 

deactivation from sintering. Process 

requires improved yeilds. Potential 

groundwater contamination from 

mixed alcohols usage. 

Demonstrational 

facilities planned for 

operation within 5 

years. 

Bio-butanol 

Starches, 

Sugars, 

Lignocellulosic 

biomass 

Traditional ABE 

fermentation

 The anaerobic conversion of carbohydrates by 

strains of Clostridium into acetone, butanol and 

ethanol. 

It can improve the blending of 

ethanol with gasoline. It can be 

transported in existing gasoline 

pipelines and produces more 

power than ethanol. 

High cost, low yield DuPont and BP are 

setting up a pilot plant 

Pyrolysis 

Liquids 

(Bio-oil) 

Lignocellulosic 

biomass Pyrolysis 

Biomass conversion to bio-oil via fast pyrolysis ­

heating biomass in restricted contact with air. 

Vapours emitted from the reactor are collected 

and cooled to yield a liquid, called bio-oil. 

Opportunity for co-processing with fossil fuels in 

petroleum refinery. 

Using refinery technologies 

already in place, ease of adoption 

into current infrastructure 

In early development stages. Refinery 

integration issues. 

Small scale 

demonstration facilities 

are under way in 

Canada, the US, the 

Netherlands 

Renewable 

Diesel 

Vegetable oil 

Animal fat 

Grease 

Hydrothermal 

processing 

Biomass is reacted in water at an elevated 

temperature and pressure to form oils and 

residual solids. 

Low sulfur diesel. Feedstock availability. 

Demonstrational pilot 

plant in the US 

by Changing World 

Technologies (CWT). 

Bio-methanol Lignocellulosic 

biomass 

Gasification and 

Synthesis 

(with catalyst) 

Biomass is gasified first to produce a syngas 

from which the bio-methanol is produced 

Biomethanol can be blended with 

petrol up to 10-20% without any 

infrastructure changes. 

Low vapor pressure and energy 

density. Safety measures need to be 

considered (methanol is poisonous) 

Pilot plants under 

development in 

Germany; R&D in 

China 

Bio-DME 

(Dimethyl 

Ether) 

Lignocellulosic 

biomass 

Gasification and 

DME-synthesis 

Bio-DME is produced from syngas by means of 

oxygenate synthesis. 

Bio-DME can be used as a fuel in 

diesel engines; the process is 

highly efficient and permits a large 

scale production. It doesn't corrode 

metals. 

Bio-DME can't be blended with fossil 

diesel and it has a low energy content 

(half that of diesel). Can affect certain 

plastics and rubbers. 

Pilot plants under 

development in 

Sweden; R&D in China 

Biodiesel 

Green Diesel Algae 

Transesterification 

or catalytic 

hydroprocessing 

Lipids are derived from microalgae and 

biodiesel is produced using conventional 

transesterification technology. Alternatively, the 

oils can be used to produce “green” diesel via 

catalytic hydroprocessing . 

High yield per acre; could be used 

for CO2 capture and reuse. High cost R&D programs in the 

US, Japan, New 

Zealand, South Africa, 

and Western Europe 

HTU (HydroThermal 

Upgrading) 

Diesel 

Lignocellulosic 

biomass (wet) 

Catalytical hydro -deoxigenation (HDO) 

Biomass is converted to a heavy liquid at a high 

temperature and pressure, then the well 

established refinery technology HDO is applied. 

It can be mixed with fossil diesel in 

any percentage without the need 

for engine or infrastructure 

changes. 

Under experiment 

Royal Dutch Shell is 

experimenting with the 

process 

Mixed 

Alcohols 

Lignocellulosic 

biomass 

Anaerobic digestion 

and hydrogenation 

Anaerobic digestion of biomass with 

methanogenic inhibition followed by 

evaporation and fermentation. Produces a 

mixture of products (organic acids, ketones, 

and alcohols). 

Mixed alcohols have higher energy 

content than ethanol. When 

blending, the higher alcohols 

increase compatibility of gasoline 

and ethanol, which increases 

water tolerance and decreases 

evaporative emissions. Higher 

alcohols also perform better in cold 

climates. Feedstock flexibility. 

No commercial partners at this time. 

Potential groundwater contamination 

from mixed alcohols usage. 

Laboratory scale 

research in academic 

laboratories 

Source: U.S. National Renewable Energy Laboratory; Antares Group Inc. 

16 
 

Current Status of Biofuels Development in the APEC Region 

APEC's 21 Member Economies include Australia; Brunei Darussalam; Canada; Chile; People's 

Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; 

New Zealand; Papua New Guinea; Peru; The Republic of the Philippines; The Russian 

Federation; Singapore; Chinese Taipei; Thailand; United States of America; and Viet Nam. 

Together, these economies account for approximately 41% of the world's population, 56% of 

world GDP and 49% of world trade. 

Accounting for about 60% of world energy demand, the APEC region is a net energy importer 

with its annual consumption exceeding domestic production. Energy imports to APEC 

economies are projected to increase by approximately 92% between 2000 and 2020 driven by 

economic growth, industrialization, and urbanization. According to the Asia-Pacific Energy 

Research Center, APEC's transport energy demand will almost double from 2002 to 2030, and 

the transport sector is expected to account for more than 70% of APEC's incremental oildemand growth (APEC Secretariat 2007). Given the steady growth in the demand for 

transportation fuels and declining oil production within the region, the APEC economies are 

experiencing a great concern over supply and are looking for alternative options. APEC 

members have identified biofuels as one option for a progressive transition to renewable 

sources of energy. 

The biofuels industry in the APEC region consists of two distinct sectors, ethanol and biodiesel. 

Biofuels received a lot of attention from the public, academia, industry, and government in 2006 

and 2007, making it an important time for biofuels development in the region. During this period, 

many goals and targets were announced, pilot projects began, and capacity expansion 

commenced. This chapter is an overview of the status of biofuels activities in the region during 

this time frame. 

Production. The APEC region accounted for about 40% of the world fuel ethanol production in 

2006, reaching 20,600 million liters - the majority (90%) was supplied by the United States 

(Table 3). In 2007, it is estimated that this increased by 40% to approximately 27,600 million 

liters of fuel ethanol. This was due to a production increase in economies such as the United 

States; China; Canada; Australia; Thailand; and Indonesia. During the 2008-2009 time frame, 

17 
 

 

 

Table 3 Ethanol Production in APEC Economies 

Economy 2006 Fuel Ethanol 2006 Ethanol (all grades)* 2007 Fuel Ethanol (E) 

Australia 84 149 250 

Brunei Darussalam 0 0 0 

Canada 455 569 800 

Chile 0 N/A 0 

China 1,300 3,550 1,600 

Hong Kong, China 0 N/A 0 

Indonesia 82 170 140 

Japan 0.03 134 N/A 

Korea 0 160 0 

Malaysia 0 N/A 0 

Mexico 0 50 0 

New Zealand 0 15 0 

Papua New Guinea 0 N/A N/A 

Peru 0 16 0 

The Philippines 0 84 0 

Russia 0 560 0 

Singapore 0 30 0 

Chinese Taipei 0 10 0 

Thailand 130 383 200 

United States 18,550 21,000 24,600 

Viet Nam 0 80 0 

APEC Total 20,601 26,960 27,590

 Production in million liters; * Fuel, industrial and potable; N/A - Information not available; E - Estimate 

 Sources: SRI Consulting, 2008; F.O. Licht 2007; DRET Australia; DEDE Thailand; NDRC China 

Table 4 Biodiesel Production in APEC Economies 

Economy 2006 Biodiesel 2007 Biodiesel (E) 

Australia 76 117 

Brunei Darussalam 0 0 

Canada 47 105 

Chile 0 0 

China 35 117 

Hong Kong, China 0 0 

Indonesia 590 1550 

Japan 3 N/A 

Korea 50 94 

Malaysia 141 217 

Mexico 15 N/A 

New Zealand N/A N/A 

Papua New Guinea N/A N/A 

Peru 27 N/A 

The Philippines 70 94 

Russia 0 0 

Singapore 23 35 

Chinese Taipei 2.4 3.8 

Thailand 35 58 

United States 882 2,000 

Viet Nam 0 0 

APEC Total 1,996 4,391

 Production in million liters; E - Estimate; N/A - Information not available 

 Source: SRI Consulting, 2006; F.O. Licht 2008; DEDE Thailand; ITRI Chinese Taipei;

 DRET Australia; NDRC China; KEEI Korea 

18 
fuel ethanol plants are expected to come online in Peru; the Philippines; Chinese Taipei; and 

Viet Nam. 

Biodiesel production in the APEC region was close to 2,000 million liters in 2006, supplying 32% 

of the global biodiesel production (Table 4). The major biodiesel producers in the region are the 

United States (44%) and Indonesia (30%). Biodiesel production in the region doubled in 2007 

primarily due to increases in producing economies. It is expected that the region won’t see a 

significant increase in biodiesel production in 2008. Indonesia and Malaysia, in particular, 

announced ambitious biodiesel goals in 2006 considering the availability of abundant feedstock 

(palm oil). However, increasing palm oil prices (vegetable oils, in general) during 2006-2007 

(Figure 3) have altered producers’ margins. Many existing biodiesel production plants run at low 

capacity, and some of those scheduled to come online in 2007 are on hold. Palm oil commodity 

price today sits above 1,000 USD tonne-1, a substantial climb from about 600 USD tonne-1 a 

year ago. Moreover, increasing vegetable oil prices have a negative effect on the biodiesel 

development in economies such as Korea and Singapore, which rely on imported feedstock. 

Although these economies expanded their production in 2007, no significant growth is expected 

in 2008. 

Price of Major Vegetable Oils 

0 

200 

400 

600 

800 

1,000 

1,200 

1,400 

1,600 

1,800 

97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 

Year 

US$ per Tonne 

Palm Oil Sunflower Oil Rapeseed Oil Soybean Oil

 Source: FAPRI, April 2008 

Figure 3 Price of Major Vegetable Oils 

Installed biofuels production capacity in the APEC region was about 44,000 million liters in 

2006-2007. Ethanol accounts for 71% of the total capacity, with the US industry contributing 

19 
28,000 million liters (Figure 4). The United States is followed by China (1,800 million liters); 

Canada (715 million liters); and Thailand (435 million liters). Biodiesel production capacity 

installed in the region is about 12,000 million liters. The United States is a leading economy with 

7,000 million liters, followed by Indonesia (2,000 million liters); Singapore (800 million liters); 

Thailand (655 million liters); and Korea (444 million liters). It is evident from Figure 4 that most 

of the APEC economies have invested in biodiesel production. For some (such as Indonesia 

and Malaysia), it is due to availability of feedstock and opportunities for biodiesel export; for 

others (such as Korea; Thailand; and the Philippines), it is predominately for domestic use 

considering their high petro-diesel consumption (Appendix C). Singapore, while also a dieseldriven economy, is trying to position itself as a major biofuel processing and trading hub in Asia. 

Installed Biofuels Production Capacity in APEC Economies, 2006-2007 

0 

500 

1000 

1500 

2000 

2500 

Australia

Brunei 

Can da

Chile

Ch na 

i ai

ong, C ina 

a

apan

Ko

a 

s

a 

e 

d 

s

a

i

Ch nese T pei 

Hong K

h

Indonesi

J

rea 

Malaysi

Mexico 

New Zealand

PNG 

Peru 

Philippine

Russi

Singapor

Thailan

United State

Viet Nam 

Economy 

million liters 

Fuel Ethanol Biodiesel 

28,000 7,000 

Source: Refer to Appendix A 

Figure 4 Installed Biofuels Production Capacity in APEC Economies, 2006-2007 

Feedstock. Biofuels in the APEC region are produced from a variety of first-generation 

feedstock using well-established conversion technologies. For ethanol production, these 

include: starches from grains (cereals, feed, and grains), tubers (cassava and sweet potatoes), 

sugars from crops (sugar beets, sugarcane, and sweet sorghum), and food-processing 

byproducts (molasses, cheese whey, and beverage waste). First-generation biodiesel 

feedstocks used in the APEC economies include vegetable oil (such as soybean, rapeseed, and 

palm oil), used cooking oil, and animal fat (tallow and cat fish oil). Second-generation 

feedstocks for ethanol production include lignocellulosic material, such as crop and forest 

20 
Figure 5 Ethanol Feedstock in APEC Economies 

Figure 6 Biodiesel Feedstock in APEC Economies 

21 
 

residues, urban residues (municipal solid waste - MSW), and dedicated energy crops 

(herbaceous and tree species). Economies with large-scale agriculture and forestry operations 

such as Canada; the United States; and China have set up demonstration projects using 

lignocellulosic biomass for ethanol production. An advanced biodiesel feedstock includes 

microalgae, and a few companies in the United States and New Zealand have started pilot 

projects to grow algae (Figures 5-6). 

Yield efficiency per land unit for biofuels is an important consideration when choosing 

appropriate feedstock and making decisions for production expansion. APEC economies in the 

tropical biome have the advantage of growing crops with significant solar energy and rainfall 

input, yielding the highest biofuels per land unit compared with those in the temperate biome 

and its seasonal limitations. Tropical crops sugarcane and oil palm for biodiesel are the most 

desirable feedstocks for ethanol and biodiesel, respectively, considering their high yield per 

hectare (Figure 7 and Figure 8). China; Mexico; Thailand; Australia; and Indonesia are wellestablished sugarcane producers and among the top 10 suppliers in the world. Indonesia; 

Malaysia; and Thailand are the world’s largest palm oil producers; the Philippines are the 

world’s largest coconut oil producer; and Russia is the world’s leader in sunflower oil production. 

Given the favorable climate conditions and significant labor availability, Southeast Asian 

economies have announced feedstock production expansion and large-scale biofuels programs. 

Average Ethanol Production per Hectare of Farmland 

0 

1,000 

2,000 

3,000 

4,000 

5,000 

6,000 

7,000 

Sugar cane 

(Brazil) 

Sw eet 

Sorghum 

(China) 

Sugar beet 

(EU) 

Tubers 

(China) 

Corn (USA) Wheat (EU) Barley (EU) 

Crop 

Liters/ha

 Source: Worldwatch Institute, 2007; USDA, GAIN Biofuels Report for China, 2007 

Figure 7 Average Ethanol Production per Hectare of Farmland Yield by Crop 

22 
 

 

Liters/ha

Average Biodiesel Production per Hectare of Farmland 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

0 

Oil Palm Coconut (The Rapeseed (EU) Sunflow er (EU) Jatropha (India) Soybean (USA) 

(Malaysia) Philippines) 

Crop 

 Source: Worldwatch Institute, 2007 

Figure 8 Average Biodiesel Production per Hectare of Farmland Yield by Crop 

Economics. The cost for biofuels production in the APEC region varies widely and depends 

heavily on the cost of feedstock. For ethanol production, feedstock is about 60-75% of total cost; 

and for biodiesel production, it is 80-90%. Figures 9-10 show ethanol and biodiesel production 

costs for a set of APEC economies, compiled from recent publications or provided by authorities 

in APEC economies. These are illustrative estimates because they vary in the years they were 

developed (2006-2007). 

Figures 9-10 illustrate the cost of producing biofuels from traditional or first-generation 

feedstock. Regarding second-generation feedstock, it is expected that a successful 

implementation of the advanced technologies could lead to significant reductions in the cost of 

producing biofuels. The National Renewable Energy Laboratory (NREL) estimates that the cost 

of producing ethanol from lignocellulosic biomass is currently 0.53 - 0.66 USD L-1 and could be 

reduced further with appropriate technical progress as shown in Figure 11. NREL’s estimates 

for biodiesel production from algae, at current algae productivities, are prohibitively high: 1.50­

2.00 USD L-1. An aggressive and perhaps long - term research effort will be necessary to make 

it economically feasible. 

23 
 

 

Illustrative Ethanol Production Cost 

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 

Japan (wheat) 

Japan (molasses) 

Chile (wheat) 

Chile (sugar beet) 

Chile (corn) 

Australia (sugar cane) 

Chinese Taipei (sugar cane) 

US (cellulose) 

Thailand (cassava) 

China (corn) 

Australia (grains) 

US (corn) 

Thailand (molasses) 

China (cassava/sweet potatoes) 

Canada (grains) 

China (sweet sorghum) 

Russia (grains) 

Australia (C-molasses) 

Peru (sugar cane) 

Mexico (cassava) 

Mexico (sugar cane, sugar beet) 

Mexico (corn, wheat) 

Economy (feedstock) 

US$/liter 

Note: The energy density of a liter of fuel ethanol is 70% that of gasoline. Mexico and Canada estimates are for 2006 and all others 

for 2007.6 

Figure 9 Illustrative Ethanol Production Costs 

6

 Source: RIRDC/CSIRO, 2007; USDA, GAIN Russia Biofuels, 2007; DEDE, 2007; NDRC, 2007; Palmas e 

Industrias del Espino, 2008; ITRI, 2007; SENER-BID-GTZ, 2006; CRFA, 2006; UN ECLAC, 2007; Tatsuji 

Koizumi and Keiji Ohga, 2007; NREL, 2007. 

24 
 

 

Illustrative Biodiesel Production Cost 

0 0.5 1 1.5 2 2.5 3 3.5 

Japan (rapeseed) 

Chinese Taipei (soybean) 

Chinese Taipei (used cooking oil) 

Korea (soybean) 

Korea (used cooking oil) 

Thailand (palm oil) 

Canada (canola) 

Mexico (used cooking oil, tallow) 

Thailand (used cooking oil) 

New Zealand (rapeseed) 

Australia (canola) 

Mexico (sunflower) 

Mexico (rapeseed) 

Canada (tallow) 

US (soybean) 

Malaysia (palm oil) 

Korea (rapeseed) 

Mexico (jatropha) 

Canada (used cooking oil) 

Indonesia (jatropha) 

New Zealand (used cooking oil, tallow) 

Indonesia (palm oil) 

China (used cooking oil) 

Australia (tallow) 

US (used cooking oil) 

Australia (used cooking oil) 

Peru (palm oil) 

Economy (feedstock) 

US$/liter

 Note: The energy density of a liter of biodiesel is 90% that of petro diesel. New Zealand estimates are for 2003, Mexico 

and Canada estimates are for 2006, and all others for 2007.7 

Figure 10 Illustrative Biodiesel Production Costs 

7

 Source: RIRDC/CSIRO, 2007; DEDE, 2007; NDRC, 2007; Palmas e Industrias del Espino, 2008; KEEI, 2007; 

ITRI, 2007; SENER-BID-GTZ, 2006; CCGA, 2006; APEC BTF, 2007; Tatsuji Koizumi and Keiji Ohga, 2007; 

EECA, 2003; NREL, 2007. 

25 
 Source: NREL Modeled Cost, 2008 

Figure 11 Historical and Projected Cellulosic Ethanol Costs 

Biofuels in Use. Ethanol and biodiesel in the APEC region are used in various blends with 

gasoline and petro-diesel (Table 5). Low- level blends (below E10 and B5) don’t require 

modifications to the existing vehicle engines and refueling infrastructure, thus they are most 

commonly used. The United States and Australia have been testing the use of E20 in regular 

vehicles. In March 2008, the U.S. State of Minnesota, after a yearlong research effort, 

announced that increasing the amount of ethanol blended into gasoline from 10% (E10) to 20% 

(E20) does not present problems for current vehicles or fuel-dispensing equipment and provides 

similar power and performance. Minnesota and its partners will soon apply to the Environmental 

Protection Agency (EPA) for a waiver to federal rules that will allow E20 to be used in all of the 

state's gasoline. In January 2008, Thailand began sales of E20 for use in E20-compatible 

vehicles. 

26
 

 

 

 

 

Table 5 Biofuels Currently Used in the APEC Region 

Economy Ethanol Biodiesel 

Australia E10 Different blend levels from B2 to B100 

Brunei Darussalam 0 0 

Canada 

E5 (Ontario), E7.5 ( Saskatchewan), and 

E8.5 (Manitoba); limited offer of E85 

B2, B5, B20 

Chile 0 0 

China 

E10 is used in 5 provinces and 27 cities 

N/A 

Hong Kong, China N/A N/A 

Indonesia E5 B2.5, B5 

Japan E3 N/A 

Korea N/A B5, B20 

Malaysia N/A 

Envo Diesel - 95% petroleum diesel 

and 5% processed palm oil (RBD palm 

olein); B5 

Mexico 0 0 

New Zealand E10 at three sites in Auckland N/A 

Papua New Guinea N/A SVO at differend blend levels 

Peru 0 0 

The Philippines E10 B1 

Russia 0 0 

Singapore N/A N/A 

Chinese Taipei E3 B1 to B20 

Thailand E10, E20 B2, B5 

United States E10, E85 B2, B5, B20, B100 

Viet Nam 0 0

 Information current as of April 2008; N/A - Information not available 

Higher-level blends (such as E85 and B100) are used in special vehicles (FFVs or dedicated 

biofuels vehicles), thus their market is relatively small. In the APEC region, E85 is offered 

nationwide only in the United States and in limited volume in Canada. Thailand and Australia 

plan to introduce E85 in the next few years. B100 is offered in the United States and Australia to 

serve professional fleets. 

Refueling Infrastructure. Service stations in many economies are offering low-level ethanol 

and biodiesel blends.8

 However, only the United States in the APEC region has an established 

E85 refueling infrastructure. The number of stations offering E85 increased from around 100 in 

2000 to 1,200 in 2007 (Figure 11). In Canada, two E85 stations were open in 2007, and two 

refueling stations are to come online in Australia. 

8

 See Appendix A for more information on number of stations offering biofuels in each APEC economy. 

27 
 

U.S. E85 Refueling Stations 

0 

200 

400 

600 

800 

1,000 

1,200 

1,400 

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 

Source: NREL, 2008 

Figure 12 United States E85 Refueling Stations 

A recent NREL survey found that adding E85 equipment to existing gasoline stations cost an 

average $71,700 USD for a new tank and $21,000 USD for converting an existing tank (Table 

6). 

Table 6 Cost of Adding E85 Equipment to Existing Gasoline Stations

 Source: NREL, 2008 

The survey noted that the stations with the lowest costs ($3,000 USD) took conversion shortcuts 

that are not recommended because of concerns about safety and materials. These shortcuts 

included failing to clean the tank before filling it with E85, declining to replace equipment 

components that may not be compatible with E85, and excluding signage costs. The U.S 

Energy Information Administration (EIA) estimates that the investment in an E85 pump that 

dispenses one-half the volume of an average unleaded gasoline pump (about 160,000 gallons 

per year) would require an increase in retail prices of 2 to 7 cents per gallon if the costs were to 

28 
 

 

 

 

 

 

be recouped over a 15-year period. The costs would vary, depending on annual pump volumes
 

and the extent of the station retrofit. The installation cost of E85-compatible equipment for a new 

station is nearly identical to the cost of standard gasoline-only equipment (EIA 2007). 

With respect to biodiesel, NREL assesses the cost of adding biodiesel tanks and dispensers in
 

three scenarios: 

Scenario 1: A station replaces petroleum diesel with a B2 to B20 blend. This generally requires 

only signage and new nozzles to alert customers. 

Signage: Average $1,650 USD (Range $444-3,250 USD. Sample size 6)
 

Two nozzles (most stations need two). Average: $290 USD (Range $240-340 USD. Sample
 

size 4) 

Labor: minimal
 

Total: $1,940 USD 

Scenario 2: A station replaces petroleum diesel with B100 or uses an old, dirty diesel tank that
 

needs cleaning. Cost is the same as above, but add tank cleaning to it.
 

Tank Cleaning: Average: $1,960 USD (Range: $1,500-4,355 USD, sample size 12)
 

Total: $3,900 USD for a tank cleaning, signs, and nozzles.
 

Scenario 3: Add a new tank and new dispenser. This includes excavation, piping, wiring, and
 

other labor. The cost varies: $20,000 USD, $30,000 USD, and $45,000 USD based on three
 

stations in the US state of Indiana where biodiesel tanks and dispensers were installed. 

Alternative Fuel Vehicles. E20-compatible vehicles are gaining interest in Thailand due to the 

excise tax on vehicles taking effect January 2008.9

 Ford pioneered E20-compliant vehicles in
 

Thailand more than three years ago. Toyota, the local market leader, will only introduce E20
 

cars, likely sometime in 2008, once it determines that its new E20 engines are efficient. Honda
 

Automobile (Thailand) Co. announced that all of its 2008 car models would be E20-compliant.
 

E20 cars in Thailand are also available from Mazda, Mitsubishi, and Nissan. 

9

 The cabinet approved an excise tax reduction for car using gasoline containing at least 20% of fuel ethanol, 

proposed by the excise department and effective January 1, 2008. 

29 
FFVs, as mentioned above, are designed to run on straight gasoline or any gasoline-ethanol 

blend up to E85 from a single tank. FFVs are available mainly in the United States (about 6 

million vehicles) and a small number are available in Canada and Australia. The US National 

Highway and Traffic Safety Administration gives vehicle manufacturers corporate average fuel 

economy credits as an incentive for their production. Therefore, FFVs have a tangible economic 

benefit to manufacturers and are offered to consumers at no incremental cost. Vehicle 

manufacturers estimate that the cost of converting a conventional vehicle to an FFV in the 

original manufacturing process is less than $100. FFVs available in the US and Canadian 

markets are from Dodge, Chevrolet, Ford, GM, Daimler-Chrysler, Jeep, Nissan, Pontiac, and 

Saturn. Saab 9-5 2.3t was introduced to Australian customers in 2007. 

Dedicated ethanol vehicles are not available in the APEC region. Volkswagen, Fiat, GM, and 

Ford have been producing these types of vehicles for many years, predominately for the 

Brazilian market. 

Trade. Currently, there is no specific customs classification for fuel ethanol. Ethanol is traded in 

the APEC region and around the world as potable and denatured (unfit for human 

consumption). Ethanol is denatured for fuel and industrial purposes, with, for example, acetone 

and methanol added according to customer specifications. Gasoline is used as denaturant for 

fuel ethanol. Both denatured and potable alcohol can be used for biofuel production. Thus, it is 

difficult to establish from trade flows which share of imported alcohol is used in biofuel 

production. 

World ethanol trade has been relatively stable over the years, less than 4 hm3

 (1.0 hm3 = 106 m3 

= 109

 liter) per year. However, the situation changed in 2005-2006 when the trade volume 

increased to about 5.0 and 7.8 hm3

 respectively (F.O.Licht 2007). The steep increase in ethanol 

trading in 2006 was mostly due to the removal of fuel additive methyl tertiary butyl ether (MTBE) 

in the United States, which led to the import of large volumes of ethanol from Brazil; China; and 

Canada. 

In 2007, APEC economies imported about 3.4 hm3

 of ethanol. This includes extra- and intraregional trade, and it is slightly lower than in 2006. The largest importer in the region and 

worldwide is the United States, which imported close to 2 hm3

 of ethanol in 2007, down from 2.7 

hm3

 in 2006. This reduction is mostly due to increased domestic production in the United States 

30 
a trend seen in other economies such as Thailand; Indonesia; and the Philippines. The second 

largest importer of ethanol in the region in 2006 and 2007 was Japan, about 0.4 hm3

 annually; 

however, statistics suggest that it was used as beverage and industrial alcohol. Canada has 

increased its ethanol import substantially (mostly from the United States) from about 0.1 hm3

 in 

2006 to 0.4 hm3

 in 2007 to supplement domestic fuel ethanol production. Korea is also a large 

importer in the region with approximately 0.25 hm3

 annually; but, as with Japan, it is not for fuel 

purposes. The push for ethanol use as a transportation fuel has led Australia and Chile to 

increase the volume of imported ethanol. Although China reduced ethanol imports in 2007, it 

may become a major importer in the region if E10 is extended across the economy. Local 

production will not be able to meet expected demand, even though China is looking at 

alternative feedstock such as cassava and sweet sorghum. 

Ethanol exports from the APEC region in 2007 were around 1 hm3

, down from 1.3 hm3 in 2006. 

China was the major exporter in the region in 2006, with about 1 hm3

 shipped to the United 

States. However, the economy has reduced its export dramatically, mainly due to concerns over 

meeting domestic biofuels targets. Biofuels targets are also the reason for declining ethanol 

export from Canada; Australia; and New Zealand. On the other hand, economies with no 

concrete biofuels targets (such as Indonesia and Viet Nam) have expanded their ethanol 

exports as additional sources of revenue. Thailand also substantially increased ethanol exports 

in 2007. Although the Thai Government discourages ethanol exports to guarantee sufficient 

domestic supplies, the export is expected to grow as the local production increases. In 2007, the 

largest exporter in the region was the United States with about 0.6 hm3

, predominantly for 

Canada; the United Kingdom (UK); and Mexico. 

Biodiesel trade in the APEC region and around the world is not significant. Because the 

European Union (EU) is the world’s largest producer and consumer of biodiesel, it is the main 

destination of biodiesel produced in the APEC region. There is, however, a small amount of 

biodiesel traded within the region. Malaysia exported about 60,000 m3

 of palm oil-based 

biodiesel to the United States; EU; and Japan in 2006-2007. Chemrez Inc., a company based in 

the Philippines, has exported 500 m3

 of coconut-based biodiesel to Germany and to Asian 

markets including China; Chinese Taipei; South Korea; and Malaysia. Indonesia exported small 

amounts of biodiesel to China; the EU; and the United States. Natural Fuels Australia Ltd 

exported 8,800 m3

 of palm oil biodiesel to the United States and Asia. 

31 
Using vegetable oils as feedstock for biodiesel has increased the demand and has led to 

significant increase in trade of major oilseeds and products. According to the Food and 

Agricultural Policy Research Institute (FAPRI), world trade in vegetable oils is anticipated to 

continue to increase in the next 10 years, with palm and soybean oil accounting for the major 

part of the expansion (Appendix B). Even today, these two crops account for about 85% of 

global oilseeds export (Worldwatch Institute 2007). 

Although most biofuels and feedstocks in the APEC region are produced and consumed in 

domestic markets, there is enormous potential for trade between APEC and non-APEC 

economies (biotrade). Despite valid concerns about the environmental and food security 

implications of biofuels, such trade, if done right, could generate significant economic, 

environmental, and social benefits. For biotrade to be successful there is a need for the 

specifications, testing, and use to be regulated by means of internationally accepted standards. 

Unlike their petroleum counterparts, the biofuels of today are subject to different specifications 

in different jurisdictions. Without harmonization and improvement of these standards, it could 

become a barrier to trade. Brazil; the EU; and the United States formed the Tripartite Task 

Force in 2007 to address these standardization issues. The Task Force recently completed a 

review of existing bioethanol and biodiesel standards, identifying where greater compatibility 

could be achieved in support of the global commoditization of biofuels (Tripartite Task Force 

2007). In 2007, the APEC Energy Working Group initiated a project to establish guidelines for 

development of biodiesel standards in the region (APEC EWG 2008). An APEC Energy Trade 

and Investment Study will identify existing barriers to energy trade and investment in the APEC 

region. An APEC Energy Trade and Investment Roundtable meeting will be held in Cairns, 

Australia, on September 24-25, 2008, to develop a plan addressing these trade and investment 

impediments. 

Policy. There are various levels of government involvement and support for biofuels 

development in the APEC region. While governments in some economies such as Indonesia; 

Mexico; Russia; and Viet Nam have expressed interest and support for the biofuels industry, 

there are no policies in place. On the other hand, the governments of Australia; Canada; China; 

Thailand; and the United States have adopted a range of policy instruments that affect the 

production and consumption of biofuels. 

32 
The most common policy supporting biofuels in the APEC region is the mandate for compulsory 

blending with fossil fuels to a certain percentage (Table 7). Other policy instruments include fuel 

excise-tax exemptions and rebates (full or partial); government fleet requirements to use 

biofuels; tax-exempt bonds for finance (particularly in the United States); subsidized loans and 

loan guarantees; biofuels producer credits; subsidies toward purchase of vehicles and 

infrastructure that can use biofuels; subsidies not normally associated directly with biofuels, 

such as agricultural farm support; environmental legislation mandating certain types of fuel 

additives (typically for fuel oxygenation) related to reducing vehicle exhausts; and governmentsupported research, development, and demonstration funding for current and next-generation 

biofuels and technologies. Greater detail on these and other programs applied in each economy 

is provided in Appendix A. 

33 
Table 7 Biofuel Mandates and Targets in APEC Economies 

34 
The Future of Liquid Biofuels in APEC Economies 

The production and consumption of liquid biofuels in the APEC region has increased 

substantially during the past few years, in response to several factors: energy security, urban air 

quality, climate change, and rural development. These drivers operate with different weights 

within the APEC grouping. Heavily urbanized economies favor urban air quality as well as the 

climate change offset potential with some energy security emphasis. Agricultural economies 

with high levels of food security have favored the rural development and stabilization of 

agriculture that comes from having additional product demands. In the United States, up until 

recently, the primary drivers have been energy security, agricultural development, and urban air 

quality. 

For several economies, which are characterized by high population densities and relatively low 

areas of arable land per capita (Japan; Singapore; Chinese Taipei; Hong Kong, China; and 

Republic of Korea), the prospects of producing a significant amount of biofuels from domestic 

feedstock are very limited. Other than wise use of residues from industries and the urban areas, 

crop-based opportunities are limited; and the options beyond relatively minor use of residues 

are primarily as biofuels importers. However, an opportunity exists for some of these economies 

to import feedstock, process it domestically into biofuels to supplement local production, or 

export it. Singapore, for example, benefits greatly from its proximity to the palm oil industries in 

Malaysia and Indonesia, which (coupled with the fact that it is a diesel-driven economy) drives 

the economy’s biofuels strategy toward biodiesel. 

Several other member economies have the potential not only to satisfy current technically 

feasible levels of first-generation biofuels substitution (i.e., 5-10% of the domestic diesel and 

gasoline demands, respectively) but also to become exporters. These include Indonesia, 

Malaysia, Thailand, Papua New Guinea, the Philippines, Canada, and Russia. The United 

States has such a high internal transportation fuel demand that it will likely continue both as a 

major domestic producer and importer of biofuels. 

Another member economy is taking a different approach. Brunei Darussalam hopes to position 

itself as a major methanol (from natural gas) supplier in the region. It is expected that the 

methanol demand will grow with potential applications such as biodiesel and DME (dimethylether) - the world demand is 36 million tonnes per year, and it has been growing at 3% per year. 

35 
Especially in Asia, where the joint venture Brunei Methanol Company (BMC) aims at exporting 

methanol, a higher demand is forecasted due to the higher economic growth rate than other 

regions (MGC 2007). 

Biofuels production and consumption in the APEC region is projected to grow, but the rate of 

growth will depend on several factors - the primary one is economics of production. 

Economic Drivers for Biofuels. The so-called first-generation (Gen-1) biofuels (ethanol and 

FAME-biodiesel) are produced from sugars derived from sugarcane, sugar beet, and cereals in 

the case of ethanol; and from fats, oils, and greases (FOG) for biodiesel. These first-generation 

biofuels are based on food and animal feed commodities, and the consumption of these for 

biofuel are in competition with agricultural product markets. In retrospect, it was obvious that 

established and well-developed crop production systems would be the first to be used for 

biofuels. The infrastructure, existing capital investment, and human capital were all in place. 

Cereals at more than 2 Gt yr-1 production represent the majority of the solar energy captured by 

agriculture, and have been under continuous development for centuries with particularly rapid 

advances in productivity since the 1950s. Oilseed crops also have had an extraordinary growth 

rate in the past 50 years. Their use for energy is, of course, an economic decision, which was 

assisted by financial subsidy policies in pursuit of one or more of the goals identified above. 

The relationship between crude oil prices and foodstuffs has, in fact, changed during the past 40 

years. Prior to the oil crises of 1973 and 1981, it was a truism that when oil and food were 

compared on the basis of their energy content, the ratio of food price to oil was often > 10:1. 

This started to change in the 1980s, after the second of the world’s oil shocks and a ratio 

decrease of 2 - 4 (except for periods when food commodity prices spiked on adverse weather or 

policy shifts in land set-asides and subsidies). One particular commodity crop, maize, was less 

than double the oil price for much of the 1990s, and the absolute difference of less than 3 $ GJ-1 

was surmounted by the early US gasohol subsidy regime worth around 6 $ GJ-1. With added 

capital incentives and the ability of farmers to sell directly to the local ethanol plant - which offset 

the transportation and logistics costs of getting corn to commodity markets - a financially 

profitable industry was started. However, starting in the early 2000s, the price of corn became 

equal to or less than that of crude oil. Even world sugar prices are close to the price of crude oil 

on an energy basis. This provided an even greater incentive for biofuels production. 

36 
 

This post-2000 change is reflected in the commodity index of the International Monetary Fund 

(IMF) (Figure 13), which highlights the rapid increase in almost all commodities except for 

agricultural raw materials including timber and wood products. The petroleum index overtook 

food at the end of 2005, and this meant, for the first time, that renewable carbon-based energy 

was priced at about the same or less than that of petroleum energy. 

Source: IMF, 2008 

Figure 13 Commodity Price Index - IMF in SDR 

Figure 14 shows the evolution of crude oil prices (in dollars of the year) against that of major 

food commodity crops from the market prices posted in the United Nations Conference on 

Trade and Development (UNCTAD) database. 

37 
 Source: UNCTAD, 2008 

Figure 14 Food Commodity and Crude Oil Prices Trends 

The recent price increases in food and feed are causing concern, especially for the rural and 

urban poor who are not self-sufficient and for whom food already represents most of their 

income. Biofuels policies are being scrutinized as a contributor to demand at a time when 

increasing meat consumption is diverting grains from food to feed; and after a series of crop 

failures due to drought in Australia have decreased the ratio of stocks to consumption to the 

lowest levels in several decades - since 1995, stock levels have declined by 3.5 % yr-1 (IFAD 

2008). However, agriculture is facing stresses without biofuels. While the population has 

increased at a somewhat constant rate of 70 million per year for the past 12 years, the increase 

in cereal production seems only to be keeping pace; in fact, per capita cereal availability has 

been constant at about 340 kg. Meat production, however, has been increasing rapidly with the 

per capita consumption increasing at a constant rate of 550 g per person per year. 

The analysis by the International Fund for Agricultural Development stressed that no single 

factor can be identified as the primary one responsible for these trends - all contribute. So far, 

APEC economy responses have been limited. Some have removed import tariffs on some 

commodities including: maize and sugar in Mexico, wheat and soybeans in Indonesia, and 

reductions on the wheat and maize tariff in Korea. China has introduced export levies on wheat 

and other cereals and increased them on maize and soybeans among others. As noted in 

Appendix A, China has already reduced its goals for maize ethanol and has put a moratorium 

38
on new maize to ethanol plants. Until lignocellulosic ethanol is commercially available, the 

transitional feedstocks are sweet sorghum, sweet potatoes, and cassava. Peru is considering 

subsidizing bread prices to alleviate the stress on the poor. In response to the high prices of 

palm oil (Figure 15), Malaysia (who had started to promote domestic straight vegetable oil and 

biodiesel consumption from palm oil) has recently announced that it will not pass its equivalent 

of a renewable portfolio standard until the price of palm oil has returned to more reasonable 

levels. As can be seen, the recent crude palm oil (CPO) price (on an energy-content basis) has 

soared much more rapidly than that of crude oil since 2006, making biodiesel production very 

uneconomic. 

 Source: UNCTAD, 2007 

Figure 15 CPO and Crude Oil as Energy Prices 

Other factors influencing the future development of sustainable biofuels is the need for a 

balanced scorecard, evaluating the performance of biofuels against the metrics of energy 

security, GHG reduction, and the energy return on investment (EROI). 

Climate Change and GHG Factors. Climate change considerations require that GHG 

emissions be reduced. Early proposals for automobile regulation in the EU required that 

vehicles had maximum levels of carbon dioxide (the principal GHG) of 120 g km-1 by 2012. This 

1995 proposal for voluntary efforts to reach this level was at a time when the average was 186 g 

39 
km-1. The target level will not be reached voluntarily - the average was 163 g km-1 in 2004, and 

as a result, the EU Commission has proposed mandatory levels that are being opposed by large 

luxury car manufacturers. One way of meeting the level is to use renewable carbon biofuels that 

are considered to be carbon-neutral, with the carbon contained in the fuel recently drawn from 

the atmosphere. The actual substitution of fossil carbon by renewable carbon is measured by 

means of life-cycle inventory (LCI), a formalized energy and materials accounting process that 

is part of the life-cycle assessment (LCA) described by ISO (14040). With the full accounting, it 

is possible to trace the fate of different chemicals in the production chain from field or forest to 

the wheel. A subset of LCA is often quoted, describing the energy and materials flow from the 

“Well to Wheels” (WTW), “Well to Tank,” (WTT) and” Tank to Wheels” (TTW). The range of 

estimates for GHG emissions reduction associated with ethanol and biodiesel varies greatly as 

shown in Tables 8-9. 

Table 8 Estimated Change in Life Cycle GHG Emissions per km Travelled by Replacing Gasoline with 

Various Ethanol Blends
 

Source: Worldwatch Institute, 2007; Assumes use of current generation ethanol fuel in conventional vehicles 

40 
Table 9 Estimated Change in Life Cycle GHG Emissions per km Travelled by Replacing Diesel with B100 

Source: Worldwatch Institute, 2007; Assumes use of current generation ethanol fuel in conventional vehicles 

The WTW fossil fuel offset and carbon-emissions reduction of the first-generation biofuels, 

ethanol, and FAME show that the reductions are real for FAME and ethanol from sugarcane. 

They also show that carbon dioxide reductions of 50-80% are possible, even when considering 

other GHG emissions associated with the agricultural cycle such as NOx from fertilizer use. 

However, for one pathway, the one from maize (in the United States, Zea mays is called corn), 

the results have been controversial and the subject of heated scientific and political debate. The 

first analyses showed that the energy return on investment (EROI), defined as the ratio of the 

energy delivered to the tank (e.g., in a liter of product to the amount of fossil fuel required) was 

close to unity. If the driver was energy security, this did not matter because most of the fossil 

fuel was coal or gas - and gasoline would be replaced by domestic energy sources. From the 

perspective of carbon offset, however, the situation was not at all promising. With more than two 

decades of process improvement and optimization, the current EROI is > 1.6, and the carbon 

offset can be greater than 19%. Ethanol derived from sugarcane and lignocellulosic materials, 

using biomass as an energy source in the conversion process, have even greater carbon offsets 

(Figure 16). 

41 
Figure 16 GHG Emissions Reduction Potential for Select Biofuels 

Current biofuels legislation targets the EROI and carbon offset, explicitly. The 2007 Energy Act 

allocates the US renewable fuels standard (RFS) based on the carbon performance of the 

biofuel. The UK’s renewable transport fuel obligation (RFTO) enacts a reporting framework that 

will reward biofuels based on their carbon savings, and also in accordance with sustainability 

standards. 

The 2007 US RFS, embodied in the Energy Independence and Security Act of 2007 (Sec. 201), 

recognizes the climate change aspect of biofuels by stating that conventional biofuels such as 

ethanol from corn starch have to reach at least 20% reduction of GHG, while advanced biofuels 

derived from renewable biomass have to achieve a 50% reduction in GHG. A separate category 

is created for cellulosic biofuels achieving a 60% reduction. In the RFS, there is a schedule that 

limits the amounts of each class of biofuels eligible for renewable fuels credits, as well as 

investments in the development of advanced biofuels that could offer an 80% GHG reduction. 

Rural Development. The rural development perspective has also changed during the past 

three decades. In the 1980s, the challenge for developed country agriculture, mainly in the EU 

and United States, was in the generation of considerable food surpluses that were subsidized 

by the central governments. To regulate this, the governments were, in effect, buyers of last 

resort with stockpiles of commodity crops that were either sold cheaply for industrial use, or 

supplied as food aid to developing countries. This was in addition to requiring the area to be 

planted to specific commodity crops. Although food shortages were avoided with this system, 

42 
 

small farmers were driven from the land and replaced by ever-growing agribusiness, which with 

economies of scale seemed to satisfy the consumers’ need for cheaper food. In developing 

countries, the imports reduced the value of local foodstuffs causing a cycle of reduced incomes 

and loss of employment in rural agriculture, as well as enhancing the shift of population from 

rural to urban areas. In both the EU and the United States, the development of commodity 

product-based biofuels offered a new and initially unregulated market - which with local 

conversion plants could also offset the transportation costs to commodity market centers. The 

GHG challenge resulted in biofuels subsidies, which provided further incentives to this 

deregulated agriculture. 

Sustainability and Biotrade. The question of sustainability encompasses all of the above 

factors and also considers the indirect effects of biofuels demand on other resources. The initial 

response of agricultural economies to increasing prices for commodities is to increase 

production. Inevitably, the immediate response is through extension of the land area planted, 

either by reclaiming land set-asides such as the conservation reserve program (CRP) of the US 

Department of Agriculture (USDA), or though land-use change (LUC). Additional arable land for 

crops has to come from the conversion of either grasslands or forest. LUC has implications for a 

range of sustainable development issues including social development, urban development, and 

environmental impact. As already mentioned above meeting biofuels targets will depend on the 

development of international trade in biomass (Biotrade) raw materials or processed biofuels. 

Biotrade will not only be function of climate and energy policy and economics; it also will impact 

and be impacted by food, agriculture and forestry policy. 

Consumers and NGOs such as FOE and WWF10 have raised concerns about biofuels with 

particular concern about the rapid increase in the use of palm oil for biodiesel, and have argued 

that it is a major factor in deforestation, and loss of biodiversity in Indonesia as well as in other 

parts of the world. This has resulted in consumers in Europe and elsewhere starting to require 

certification of the sustainable origins of biofuels that they purchase. One scheme that is almost 

in place is the principles and criteria of the Round Table on Sustainable Palm Oil 

(www.rspo.org). While participation is voluntary, the certification of suppliers is underway due to 

the consumer demand, and during late 2008 RSPO certified oil will be on the market. A similar 

scheme is under development for soybean which is likely to be the other major biodiesel source 

involved in biotrade. 

10 FOE – Friends of the Earth, http://www.foe.org/ ; WWF – World Wildlife Fund, http://www.wwf.org/ 

43 
While rapid growth in biofuels in the APEC region may be financially curtailed for Gen-1 biofuels 

due to the commodity price increases, the basic programs and intent to use renewable 

resources to offset GHG will remain with increasing emphasis on sustainability criteria, 

especially for the parties engaged in biotrade. 

Next Generation Biofuels. The USA; China; and Japan are investing in the development of 

biofuels based on lignocellulosic resources such as wood and straw. These materials are 

structural plant components, rather than being an energy storage medium such as a seed. As 

can be seen in Figure 13, the commodity price index for agricultural raw materials, which 

includes timber have not seen the same type of increase in cost. 

Second generation (Gen-2) biofuels are something of a misnomer, in that the term is applied 

indiscriminately to both resources and end use fuels. From the resource side, the Gen-2 

potential is in non-food crops - in the immediate future from non-edible oils for diesel 

replacement and lignocellulosics (wood and straw) for both gasoline and diesel replacement. 

However, up to date the suggested biofuel products are distinctly Gen-1 with large R&D 

programs in new oil crops such as Jatropha for biodiesel, and ethanol from the carbohydrate 

portion of lignocellulosics for gasoline replacement. Gen-2 biofuels would more likely be much 

more fungible with the hydrocarbon economy. For example renewable diesel a hydrogenated 

lipid or fatty acid has much better temperature compatibility and miscibility criteria with regular 

diesel. Fischer Tropsch Liquids (FTL) produced from renewable resources would be 

indistinguishable from their fossil counterparts in end use applications. Other suggested Gen-2 

biofuels include butanol, and various oxygenates derived from aldehydes and acids that can be 

produced from biomass carbohydrates or aromatics from the lignin component of 

lignocellulosics. 

There are as yet no Gen-2 demonstration plants operating with lignocellulosic feedstocks. 

Several are either in the late planning or construction stage. The needed investment in Gen-2 is 

projected to be far higher per annual unit of production than sugarcane ethanol or starch based 

ethanol with energy efficiencies that will likely be a lower EROI against sugarcane ethanol, but 

with equal or better GHG offsets. 

44 
Conclusions 

Biofuels received extensive attention in the APEC economies during the past few years, and 

their production and consumption has increased remarkably in response to major concerns 

about energy security, urban air quality, rural economic development, and most recently 

greenhouse gas offsets. The continuing growth of biofuels in the APEC economies is subject to 

a number of risk factors. For example, increasing biofuels production at a time of generally 

increasing commodity prices since 2000 has brought biofuels in general into controversy, 

illustrated by newspaper headlines on “fuel vs. food”. Especially in the early part of 2008 when 

food prices started to rise rapidly and some equated the climate change policy as being in 

opposition to food security if it is based on the first generation biofuels derived from food and 

feed commodities. The increase in the price of food commodities has already caused delays in 

the implementation of previously announced RFS programs in for example Malaysia. In the EU 

and UK the already announced RFS programs have undertaken public consultation on the 

sustainability criteria that they will mandate for both domestic biofuels production and biotrade. 

All of these factors collected together show that the biofuels future has to address several risks. 

For Gen-1 biofuels there are few technology risks related to their production. While there is little 

risk with the accepted levels of fossil fuel substitution by biofuels, the current levels of 5% for 

biodiesel and generally 10% for ethanol in gasoline are insufficient to make a major contribution 

to offsetting GHG. Moving beyond these levels of fuel substitution without vehicle and engine 

modification cannot be undertaken without extensive evaluation according to the economy 

specific climate and fuel distribution systems. Of course the FFV for ethanol up to 85% 

substitution is accepted as proven, though only for a limited number of light duty models that 

have been modified to accept variable ethanol to gasoline ratios. 

The non-technical biofuels risks that have emerged in this study are cost of production for Gen1 biofuels, indirect biomass supply risks from other commodity markets using the same 

feedstocks, social impacts, environmental impacts of land use change, and biodiversity. Each 

one of these may also be felt through changes of policy and regulation in the renewable fuel 

standards for each economy. One, which will have an effect in the short term, will be 

sustainability criteria that will implicitly address food security, and may well dictate the rate of 

expansion of biofuels even if the current high prices of oil and food commodities are not 

maintained. Indeed the biomass supply risk may be exacerbated by more than one aspect of 

45 
policy and regulation in the food sector, if for example export controls and tariffs (export or 

import) overlap with the biofuels sector. 

Gen-2 biofuels still have considerable technology risks. Few have been proven even at the 

demonstration scale. Considerable technology and cost risks are associated with the candidate 

technologies that will use lignocellulosics as feedstock, though the forest and straw based 

feedstocks will mostly avoid indirect biomass supply risk from commodity competition, except 

perhaps with forest products in some economies. Even then there will still be a range of social 

and environmental impacts in land use change and biodiversity which will have to be 

accommodated. 

Some of the end use biofuels in Gen-2 are much more fungible with the existing hydrocarbon 

fuels and will have less risk in being used in variable fractions of the fuel supplied to the vehicle 

which may be a benefit in their introduction. These newer fuels, however, will have significant 

risk with respect to policy and regulation. 

The analysis we have undertaken has also demonstrated that expansion of biofuels in the 

APEC region will also involve biotrade between resource rich economies and the highly 

urbanized, with limited arable land economies. Biotrade is already significant for the US as an 

importer, mainly from non-APEC economies even though its internal production capacity is 

increasing rapidly. In addition to the risk factors identified above, there are also challenges with 

respect to standards and regulations for biofuels. Trade will require that the harmonization of the 

standards between exporters and importers be undertaken, especially for Gen-2 fuels other 

than ethanol. 

Ultimately it may be that region wide collaboration on biofuels standards and regulations 

including sustainability criteria will be the best means of ensuring a balance of opportunity 

between biofuel producers and consumers while meeting climate, food, and economic 

development goals. There are also technology collaboration opportunities that could do much to 

address technology risk especially for Gen-2 fuels, and cooperatively accelerate their 

implementation. 

46 
 

 

 

 

 

 

 

 

 

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49 
Appendix A: Current Status of Biofuels Development in the APEC Region 

by Member Economy 

Australia 

Australia’s biofuels industry is in its early stage of development, with both ethanol and biodiesel 

making up its portfolio. The Australian Government has set a biofuels target of 350 million liters 

(ML) by 2010, however, this equates to less than one per cent of Australia’s total transport fuel 

demand and at this level it will remain a niche industry with limited prospects (Wright, 2007). 

The biofuels industry offers great opportunities for Australia’s agriculture sector, but also some 

risks related to additional inputs (water, fertilizers, and pesticides), low crop production due to 

sustained drought conditions, and impact on other industries, such as livestock. A detailed riskbenefit assessment is needed if biofuels are going to play a stronger role in Australia’s future 

transportation fuel mix. 

Production. Ethanol production in Australia doubled in the past two years, from 40.3 ML in 

2005/06 to 83.6 ML in 2006/07. Biodiesel experienced a stronger growth during that period, 

from 21.2 ML to 76.3 ML. There were four operating ethanol plants as of November 2007 with a 

total capacity of 245.8 ML per year. Current biodiesel production capacity is 246 ML among the 

five existing plants. Additionally, Australian Renewable Fuels has two biodiesel plants with total 

capacity of 90 ML and Australian Biodiesel Group also has two plants with 200 ML capacity. 

However, these facilities are in care and maintenance mode as of November 2007. 

Australia’s Ethtec (Ethanol Technologies Limited), 51% owned by Willmott Ltd., recently began 

work on an A$20 million (US$18 million) pilot cellulosic ethanol plant in New South Wales. The 

plant will use wood residues (including pine), bagasse and other lignocellulosic materials as 

feedstock and will convert it to ethanol via biochemical conversion process. 

Feedstock. Ethanol in Australia is produced mainly from sorghum, wheat and sugar cane. 

Feedstock supply regions are the grain belt (primarily the South and Southeast) and the East 

coast, where the sugar cane is grown. Animal fats, used cooking oil and canola are used for 

biodiesel production in Australia. Alternative oilseed crops, such as pongam, jatropha, and 

Indian mustard have also been considered, particularly as candidates for marginal lands. 

Major concerns for local ethanol producers are the rising cost of feedstock and irregular supply 

(due to persistent drought conditions). Drought has adversely affected grain and oilseed 

production in Australia for a second year in succession. Wheat production in 2007/08 is 

estimated at around 12.7 million tonnes, and canola production at 931 000 tonnes. Although 

these production levels are significantly higher than production in 2006-07, they are well below 

average. The total area planted to grain sorghum is forecast to be 795 000 hectares in 2007-08, 

74 per cent more than the area sown last year. This is due to average and above average 

rainfall in the fall (ABARE, 2007). 

Economics. 

Ethanol US$/liter 

From grains 0.51 

From C-molasses 0.35 

50 
 

 

 

From sugar cane 0.71 

Source: RIRDC/CSIRO, 2007 

Biodiesel US$/liter 

From used cooking oil 0.31 

From canola 0.63 

From tallow 0.39 

Source: RIRDC/CSIRO, 2007 

Biofuels in use. Ethanol and biodiesel are the two types of biofuels with commercial prospects 

in Australia. The bulk of biodiesel production is sold in blends with petroleum diesel; these 

blends range from B2 to B100. The bulk of ethanol production in Australia is sold in blends with 

petroleum containing up to 10% ethanol. 

Infrastructure and Vehicles. Australia has over 800 biofuel refueling stations. The majority of 

these sell E10 with some stations selling biodiesel blends typically B2, B5 and B20. United 

Petroleum intends to sell E85 from two sites one in Melbourne and another in Sydney. 

The Saab 9-5 2.3t was made available to Australian consumers in 2007. Accurate data on how 

many of these vehicles are now on road is not available; however an estimated 336 vehicles 

were sold as of June 2007. 

Trade. Statistics on the trade of fuel ethanol are not available. However, small volumes of 

ethanol (all types - fuel, industrial, and beverage) were reported as been exported in 2006 to the 

Philippines; Japan; Malaysia; and Thailand. 

Natural Fuels Australia Ltd. reported in August 2007 that made the economy’s first export 

shipment of biodiesel for Asia and the US. The company produced 8.8 million liters of palm oil 

biodiesel annually. 

Policy. The Australian Government promotes alternative fuels as a means of diversifying 

Australia’s fuel mix and has in place a suite of measures to support alternative fuels and their 

use. 

In total, the Government has committed over $200 million to the development of Australian 

sources of biofuels. Relevant measures include: 

•	 An election commitment in November 2007 to a $15 million grant program into R&D for 

second generation biofuel technologies; 

•	 A biofuels target of at least 350 million litres by 2010. The measures to achieve this target 

include the Biofuels Action Plan, which indicate that biofuels will grow from a base of 

28 million litres in 2005 to exceed the 350 million litre target by 2010; 

•	 Initiatives to improve consumer confidence in ethanol including actively encouraging users 

of Commonwealth vehicles to purchase E10 (a blend of 10 per cent ethanol with petrol); 

undertaking vehicle testing of E5 (a blend of five per cent ethanol with petrol) and E10 

blends; commissioning a study on the health impact of ethanol under Australian conditions; 

and labelling new Australian-made vehicles to advise of their suitability to use ethanolblended fuels; 

•	 $37.6 million for the Biofuels Capital Grants Program to support new or expanded biofuel 

production capacity; 

51 
 

 

 

 

 

 

 

 

•	 The Ethanol Production Grant Program and the Cleaner Fuels Grant Program of 

38.143 cents per litre paid to domestic ethanol and biodiesel producers respectively; 

•	 Ensuring that alternative fuels remain effectively excise free until 2011, after which they will 

receive a 50 per cent discount on the rate of excise compared to other fuels with the same 

energy content; 

•	 Funding of $7.72 million committed under the National Collaborative Research Infrastructure 

Strategy to construct two pilot scale facilities for development of novel biofuel production 

technologies and to enhance related laboratory infrastructure at three universities; 

•	 Funding of more than $7.5 million for innovative renewable fuel projects under the 

Renewable Energy Development Initiative; and 

•	 $17.2 million for the Ethanol Distribution Program to support the uptake of ethanol by 

encouraging petrol stations to install new, or convert existing pumps, to sell E10 blended 

fuel. 

Sources: 

1. ABARE (Australian Bureau of Agricultural and Resource Economics), Report of the 

Biofuels Task Force to the Prime Minister, August 2005 

http://www.grainscouncil.com/Policy/Biofuels/05_Sept_13_PM_Biofuel_Report.pdf 

2. Biodiesel Association of Australia, http://www.biodiesel.org.au/ 

3. CSIRO, Biofuels in Australia - issues and prospects, May 2007, http://www.csiro.au/ 

4. Department of Resources, Energy and Tourism, http://www.directory.gov.au/index.php 

5. Renewable Fuels Australia, http://www.renewablefuels.com.au/frameset.htm 

6. Rural Industries Research and Development Corporation (RIRDC) and Commonwealth 

Scientific and Industrial Research Organization (CSIRO), Biofuels in Australia — issues 

and prospects, May 2007, http://www.rirdc.gov.au/reports/EFM/07-071.pdf 

7. USDA Foreign Agricultural Service, GAIN Report - Australia Biofuels Annual 2006, June 

2006, http://www.fas.usda.gov/gainfiles/200608/146208723.pdf 

8. Wright, J., Biofuels in Australia - How Prospective?, ATSE Focus, Volume 146, 

September 2007, Energy 

52 
 

 

 

Brunei Darussalam 

Despite being a significant regional producer of oil and natural gas, Brunei Darussalam is 

looking into diversifying its energy portfolio and follows the global trend in search of alternative 

energy sources. At the 12th ASEAN Summit, held in Cebu, the Philippines, Brunei signed the 

energy pact “Cebu Declaration on East Asian Energy Security” which aims to reduce 

dependence on conventional fuels and accelerate the development of biofuels and other 

alternative energy. 

A step forward in the outlined direction is the Memorandum of Understanding signed between 

Brunei Economic Development Board (BEDB) and HDZ Biodiesel Corporation Sdn Bhd (HDZ) 

in April 2007 to establish a biodiesel project in Brunei Darussalam. The agreement commits the 

BEDB and HDZ to jointly collaborate in the implementation of the Biodiesel Project in Brunei 

Darussalam. The project will involve the establishment of two biodiesel and glycerin production 

facilities with capacities of 100,000 tonnes per annum in Phase 1 and 400,000 tonnes per 

annum in Phase 2. The total investment by HDZ for the integrated biodiesel project is US$263 

million. HDZ is a Malaysian company established for the purpose of this project in Brunei 

Darussalam. 

Currently, Brunei National Petroleum Company, or in short PetroleumBRUNEI, is in discussion 

with the Philippines National Oil Company-Alternative Fuels Corporation (PNOC-AFC) regarding 

a joint biodiesel project in the Philippines using jatropha as feedstock. 

Sources: 

1. Office of the Minister of Energy at the Prime Minister's Office, Energy Division, 

International Affairs Unit 

2. The Brunei Economic Development Board (BEDB), 

www.bedb.com.bn/documents/PR-MOU_Biodiesel_12-01-07.pdf 

53 
Canada 

Unlike some other economies, energy security is not a factor driving the biofuels development in 

Canada. Canada has the world’s second largest proven oil reserves (estimated at 178,000 

million barrels) and is one of the top ten oil-exporting countries in the world. However, Canada is 

committed to diversifying its energy portfolio with cleaner, renewable fuels such as ethanol and 

biodiesel. 

Production. Ethanol production in Canada (all grades) was estimated at 569 million liters in 

2006, with the potential to grow to 1,000 million liters in 2007 after new biorefineries come 

online. It is unknown what percentage of this production was dedicated to fuel use. However, 

previous studies estimated that fuel ethanol accounted for 2/3 of total ethanol production in 

2005. The Canadian Renewable Fuels Association (CRFA) reports that there are ten existing 

ethanol plants (715 million liters total capacity) and six are under construction (880 million liters). 

The province of Ontario accounts for about half of Canada’s ethanol production. 

 Source: Canadian Renewable Fuels Association 

Figure 17 Biofuels Production in Canada 

The company Iogen Corp. maintains a demonstration plant for producing ethanol from cellulose 

in Ottawa, but this plant produces demonstration, not commercial, quantities of cellulose 

ethanol. 

54 
 

Production of biodiesel in Canada was estimated at about 47 million liters in 2006. There are 

three existing production facilities with a total capacity of 96 million liters per year. Biodiesel 

Magazine reports one additional plant under construction in Arborg, Manitoba with 4 million 

liters capacity. 

Feedstock. In Canada, ethanol is produced almost entirely from cereals (corn and wheat). Corn 

accounted for 77% of all ethanol feedstock in 2006. This percentage is expected to lower due to 

more wheat based plants planned to come online in coming years (USDA). Corn production was 

about 9 million tonnes in 2006, 7% of which was used for ethanol production. The majority of 

domestically produced and imported corn is used by the livestock industry. 

Wheat production in Canada is much higher, more than 20 million tonnes annually. Being the 

world’s second largest exporter of wheat, after the USA, the majority of this production goes for 

export (about 17 million tonnes annually). Less than 1% was used for ethanol production in 

2006. 

With its vast forest and agricultural resources, Canada has a great potential for cellulosic 

ethanol production. In the agricultural sector, prairie grain crops produce an estimated 32 million 

tonnes of straw residue per year. If 85% of that straw must be put back into the soil to maintain 

fertility, approximately 5 million tonnes would be available to make biofuel. Canada has millions 

of hectares of managed forests and much of the forest residue is not used and is sent to a 

landfill or is incinerated. 

Biodiesel in Canada is produced from animal fats, recycled cooking oils, and canola. The 

Canadian rendering industry produces about 400,000 tonnes of animal and yellow grease 

annually for the oleochemical and animal feed industry. Canola is Canada's dominant vegetable 

oil (grown annually on approximately 13 million acres) and the sheer size of the annual crop 

makes it easy to supply the biofuel market. Currently, about 80 per cent of Canada's annual 

canola production is exported. About 1 million tonnes of canola would be needed to meet the 

2% biodiesel target set by the government. Last year alone the industry's carry-over or unsold 

volumes that stayed in storage bins was 1.5 million tonnes. However, rising feedstock prices are 

of concern for the biodiesel industry. Canola is priced high being oil for human consumption, 

while yellow grease and animal fats are priced as residual oils for feed and industrial use. 

Estimates by the Canadian Canola Growers Association show a potential of 500 million liters of 

biodiesel in the 2007 - 2010 time frame. This potential is broken down as follow: 160 million 

liters from tallow, 80 million liters from yellow grease, 220 million liters from canola, and 40 

million liters from soybeans11. 

Economics. 

Ethanol CAN$/liter 

From grains 0.36 - 0.46 

Source: Canadian Renewable Fuels Association, 2006 

Biodiesel CAN$/liter 

From yellow grease 0.48 

From tallow 0.61 

11 Biodiesel density: 0.85 - 0.88 gr/cm3 

55 
From canola oil 0.81 

Source: Canadian Canola Growers Association, 2006 

Biofuels in use. E5 is sold in Ontario, E7.5 in Saskatchewan, and E8.5 in Manitoba. E85 is 

mostly used by the fleets of Natural Resources Canada (NRC). 

Biodiesel in low blends (B2 and B5) has been used by government and private fleets all across 

Canada. B20 is used by Terminal Systems Inc., the largest container terminal operator in 

Canada, in all equipment and vehicles with diesel engines. 

Infrastructure and Vehicles. In Canada, there are currently about 1,000 service stations 

offering ethanol blended gasoline at blends varying from 5 to 10 percent ethanol, depending on 

the retailer and provincial requirements. 

UPI Energy opened the first E85 retail pumps in Canada in 2007, one in Guelph, Ontario, and 

another in Chatham, Ontario. NRC has one of the few private E85 refueling stations feeding a 

fleet of departmental cars. 

No statistics are available on the number of Flexible Fuel Vehicles (FFVs) on the roads in 

Canada. 

Trade. There is no official data available for either fuel ethanol or biodiesel trade. However, 

statistics show that Canada imported about 100 million liters of ethanol (all grades - potable 

and denatured) in 2006, exclusively from the US. Several Canadian companies import biodiesel 

from the US as well. 

Under NAFTA there is a free trade of renewable fuels between United States; Mexico; and 

Canada. However, Canada does have a tariff on ethanol imported from Brazil (CAN$0.05 per 

liter). 

Policy. In July 2007, the Canadian government announced that it would provide up to 

CAN$1,500 million in the form of incentives over nine years to producers of renewable 

alternatives to gasoline and diesel fuel. The incentives are primarily for producers, to “bridge 

the gap” between the current production level and the 3,000 million tonnes/year that will be 

needed to meet the 2012 targets set by the government in December 2006 when it announced 

a new energy policy. Essential elements of the new policy include: 

•	 Reaching an average of 5% renewable content in gasoline by 2010 and 2% 

renewable content in diesel fuel and heating oil by 2012. 

•	 Federal incentives are currently provided through excise tax exemptions amounting 

to $0.10 per liter for ethanol and $0.04 per liter for biodiesel. 

•	 National Biomass Expansion Program provides for $140 million in contingent loan 

guarantees to encourage financing for new plants that produce ethanol from 

biomass material such as crop residues. 

Government Programs: 

The eco Agriculture Biofuels Capital Initiative (ecoABC) is a federal $200 million four-year 

capital grant program that provides funding for the construction or expansion of transportation 

biofuel production facilities. It appears funding is focused on cellulosic ethanol. 

56 
 

 

 

 

 

 

 

 

 

 

On July 5, 2007, Prime Minister Stephen Harper announced the ecoENERGY for Biofuels 

Initiative, which will invest up to CAN$1,500 million over 9 years to boost Canada's production 

of biofuels. 

The ecoAUTO Rebate Program encourages Canadians to buy fuel-efficient vehicles, including 

FFVs. It offers rebates from $1000 to $2000, to people who, beginning March 20, 2007, buy or 

enter a long-term lease (12 months or more) for a fuel-efficient vehicle. 

Several Canadian provinces have additional policies and incentives: 

•	 Ontario's regulation requires an average of 5% ethanol in gasoline and went into 

effect in January 2007; Ontario announced in June 2006 that it was phasing out its 

road tax exemption and replacing it with the Ethanol Growth Fund intended to 

provide ethanol production incentives of $520 million over 12 years. 

•	 Saskatchewan's 7.5% ethanol requirement in gasoline took effect in October 2006; 

Saskatchewan also offers a distributor tax credit for ethanol of up to $0.15 per liter, 

provided that ethanol is produced and consumed in the province. 

•	 Manitoba has passed legislation requiring 10% ethanol content in 85% of the 

province's fuel, but has not yet set a date for entry into force; Manitoba offers a 

provincial tax credit of $0.25 per liter for fuels containing at least 10% ethanol 

(provided the fuel is produced and consumed in Manitoba), as well as a $0.115 per 

liter tax exemption for biodiesel. 

•	 Quebec has set a goal of 5% ethanol in gasoline by 2012 and expects that target to 

be met by next-generation cellulosic ethanol; Quebec provides an income tax credit 

for ethanol producers that both produce and sell in Quebec. Quebec also offers 

reimbursement of fuel taxes paid on the purchase of biodiesel. 

•	 British Columbia has road tax exemptions for ethanol and biodiesel of $0.145 and 

$0.150 per liter respectively. The BC Energy Plan, announced in August 2007, will 

implement a five per cent average renewable fuel standard for diesel by 2010 and 

will increase the ethanol content of gasoline to five per cent by 2010. 

•	 Alberta announced a Bio-Energy Program in October 2006 that replaced its 

provincial ethanol road tax exemption and allocates $209 million over four years to 

renewable fuels and $30 million for commercialization support. It includes a BioEnergy Producer Credit program, a Bio-Refining Commercialization and Market 

Development Program, and the Bio-energy Infrastructure Development Program. 

Sources: 

1. Natural Resources Canada, http://www.nrcan.gc.ca/com/index-eng.php 

2. Canadian Canola Growers Association, http://www.ccga.ca/ 

3. Canadian Renewable Fuels Association, http://www.greenfuels.org/ 

4. Canola Council of Canada, http://www.canola-council.org/ 

5. Biodiesel Association of Canada, http://www.biodiesel-canada.org/ 

6. Transport Canada, http://www.tc.gc.ca 

7. The Office of Energy Efficiency (OEE), http://oee.nrcan.gc.ca/ 

8. Biodiesel Magazine, http://www.biodieselmagazine.com/ 

9. Ethanol Producer Magazine, http://www.ethanolproducer.com/ 

10. USDA, GAIN Report 2007, http://www.fas.usda.gov/gainfiles/200708/146292128.pdf 

57 
 

 

 

Chile 

Biofuels are receiving increasing attention in Chile driven primarily by the desire to reduce 

dependence on imported fossil fuels. At present, Chile imports 72 percent of its fuel as oil, gas 

and coal. Chile also hopes to alleviate serious air pollution problems in the capital and promote 

agricultural development through alternative fuels. 

Currently, there is no production or consumption of biofuels in Chile. According to the 

government's preliminary estimates, there are 170,000 hectares in Chile that could be farmed to 

produce the raw materials for biodiesel and ethanol. An introduction of E10 in Chile would 

require 142,000 ha of arable land and 616,000 ha for B10 (ECLAC, 2007). 

Chile produces corn, wheat, and sugar beet, all of which are potential feedstock for ethanol. 

However, given the limited land available in Chile and the current need to import significant 

quantities of food, second generation biofuels, particularly from forestry resources, appear to be 

more promising. Rapeseed is the likely candidate for biodiesel production. Today, Chile has 

approximately 40,000 ha of land dedicated to rapeseed production, enough to cover a supply for 

B2 (ECLAC, 2007). Jatropha, algae, and animal fat are also mentioned as possible biodiesel 

feedstock. The University of Tarapaca has planted 1,500 ha of jatropha as a pilot project. 

Given the economics for ethanol production (ECLAC, 2007) from corn - US$0.80/liter, from 

sugar beet - US$0.90/liter, and from wheat - US$0.92/liter, it is unclear whether or not Chile 

would be better off importing biofuels from its neighbors and if the domestic production of 

biofuels should be subsidized. 

The Chilean government seems determined to develop a biofuels industry. The Ministry of 

Agriculture recently devoted $1 million to study the optimal feedstock for a biofuels industry. 

This effort has not yet yielded definitive conclusions, but it is the first significant sign of 

government interest. The Ministry of Agriculture and the Ministry of Mines and Energy have 

joined forces to assess the potential for a sustainable industry. In addition, the Chilean 

government passed a Renewable Law, but it will require considerable elaboration before it can 

become a viable blueprint for development of the industry (IADB). The government plans to 

introduce voluntary E5 and B5 in 2008 as part of a trail program. The blending will occur at 

refineries, such as ENAP - the National Oil Company of Chile or at point of distribution, such as 

Copec, which holds 50% of the market (ECLAC). 

Sources: 

1. Inter-American Development Bank (IADB), A Blueprint for Green Energy in the 

Americas, 2007, http://www.iadb.org/biofuels/
 

2. Natural Resources and Infrastructure Division, United Nations Economic Commission for 

Latin America and the Caribbean (UN ECLAC), 2007 

http://www.fia.gob.cl/difus/Manlio_Coviello.pdf 

58 
 

China 

China’s economic growth in the 1990s resulted in a rapid increase of petroleum consumption 

and led to serious air pollution problems. To deal with fuel shortage, energy security and air 

quality issues, the Chinese government began promoting biofuels in 2000. However, concerns 

about feeding the world's most populous nation could limit the growth of China's biofuels 

industry. China has long been concerned about its food security, thus the top priority for land 

use is and most likely will remain food crops. 

Production. China is the world’s third largest producer of ethanol, but most of it is consumed by 

the pharmaceutical and beverage industries. In 2006, there were four operating ethanol 

biorefineries (Figure 18) running at maximum capacity, about 1.02 million tonnes. Though 

Beijing has stopped approving new fuel ethanol projects since December 2006, four more plants 

in the provinces of Guangxi (110,000 tonnes), Hebei (300,000 tonnes), Liaoning (300,000 

tonnes), and Hubei (200,000 tonnes) were scheduled to be completed in 200712. 

 Source: Institute for Energy Economics, Chew Chong Siang 

Figure 18 Ethanol Producers and Areas with E10 Consumption in China 

China National Cereals, Oils and Foodstuffs Corp. (COFCO) is investing 50 million Yuan 

(US$6.5 million) in building a cellulosic ethanol pilot plant. The plant in Zhaodong in the 

12 Ethanol density: 0.79 gr/cm3 

59 
 

 

northeastern province of Heilongjiang will have an annual capacity of 5,000 tonnes. Another 

cellulosic ethanol pilot plant with a production capacity of 10,000 tonnes is being planned in 

Yucheng area of Shandong. 

Biodiesel is in its early development stage in China. In 2006 biodiesel production was 30,000 

tonnes from a dozen of small-scale production facilities. Principal biodiesel producers are Fujian 

Zuoyue New Energy Co.Ltd, Sichuan Gusan Biodiesel Co. Ltd, and Hainan Zhenghe Biodiesel 

Co.Ltd. Since 2006 biodiesel plants have opened in Shanghai, Fujian, Jiangsu, Anhui, 

Chongqing, Xinjiang and Guizhou, among other places, in the form of private, state-owned and 

even foreign-owned enterprises. New plants are much larger than the existing ones, some 

reaching 600,000 - 750,000 tonnes/year. Dozens of biodiesel projects are under construction or 

in planning with cumulative capacity of more than 3 million tonnes/year. 

Feedstock. Nearly 80% of the fuel ethanol in China is made from corn. Three of the existing 

facilities (Heilongjiang, Jilin, and Anhui) use the grain as feedstock. The biorefinery in Henan 

uses wheat. Concerns about food supply and high prices led the industry to look at other, nongrain feedstock, such as cassava, sweet sorghum and sweet potato, viewed as transitional 

feedstock in a long term. The crops could be grown on China’s 116 million hectares of marginal 

land unsuitable for producing grains. Ultimately, China plans to transition to ethanol production 

from lignocellulosic biomass, particularly crop residues, which are of sufficient supply. Estimates 

show that the economy generates approximately 1,500 million tonnes/year of agricultural and 

forest residues, which is sufficient to produce 370 million tonnes of ethanol. Currently, there are 

several pilot plants producing ethanol from lignocellulosic biomass via biochemical conversion 

process. 

Feedstock supply is a key factor in limiting biodiesel development in China. Vegetable oils are 

main feedstock for plants elsewhere. However, it is not economical for China to import them to 

make biodiesel since it already imports significant amounts for food consumption. The existing 

feedstock is used cooking oil, acid oil and animal fat. A lot of waste oil and grease are produced 

from food processing industry due to cooking habits. It is estimated that about 3 million tonnes 

of waste oil and grease are produced in China annually. For a long term development of 

biodiesel China is considering non-edible feedstock, such as Barbados nut (Jatropha Curcas), 

Chinese pistachio (Pistacia Chinensis), Chinese tallow tree (Sapium Sebiferum), etc. Jatropha 

is abundant in Southwest China (Sichuan, Yunnan, Guizhou, etc.) with potential for planting in 

large scale and good economic and social benefits. However, this area also contains 

ecologically sensitive and biodiverse forest area, thus careful considerations should be made in 

policy decisions. 

Economics. 

Ethanol RMB/tonne 

From corn 5,000 

From sweet sorghum 4,000 

From cassava/sweet potato 4,500 

Source: NDRC, 2007 

Biodiesel RMB/tonne 

From used cooking oil 4,000 

Source: NDRC, 2007 

60 
 

 

 

 

Biofuels in use. E10 is used in five provinces: Helongjiang, Jilin, Liaoning, Henan, Anhui, and 

27 cities: 9 in Hubei, 7 in Shandong, 6 in Hebei, and 5 in Jiangsu (Figure 18). Gasohol 

consumption in 2005 accounted for nearly 20% of national gasoline consumption. 

According to a USDA report, biodiesel currently produced in China is of low quality, and it is not 

suitable for fuel use. It has been used as a solvent or as an additive to coal in thermal power 

plants or industrial cooking facilities in rural areas. 

Infrastructure and Vehicles. There are 75,000-85,000 refueling stations in China, with 

approximately 20,000 offering E10. 

Trade. China exports mostly potable ethanol, particularly towards Japan; Korea; and Singapore 

where it is used for alcohol production. In 2006 China hit a record volume of export, about 

500,000 tonnes. This was mostly due to higher demand in the US (phasing out MTBE) which 

increased the price of alcohol. 

Official statistics on biodiesel trade is not available, but estimates show that total exports were 

approximately 10,000 tonnes in 2006 (USDA). Some attempts were made to import palm oil 

from Indonesia and Malaysia, but they have been suspended due to rising prices of this 

feedstock. 

Policy. In 2001 State Council launched a Fuel Ethanol Program, which led to the establishment 

of the four ethanol plants and distribution of E10 in 9 provinces. Polices, such as free income 

tax, VAT refunding, and fiscal subsidies were made available to the ethanol producers. In 2006 

each ton of ethanol received a 1,373 Yuan subsidy. Beijing has committed 1,100 million Yuan 

(US$143 million) to help develop vehicles that run on biofuels. In comparison, policy measures 

for the biodiesel industry are not developed. Technical standards, distribution channels, 

production techniques, equipment, environmental evaluations, etc. are yet to be finalized. 

Under the revised National Plan fuel ethanol production is to rise to 3 million tonnes/year by 

2010 and to 10 million tonnes/year by 2020. Biodiesel is to grow to 300,000 tonnes/year in 2010 

and 2 million tonnes/year in 2020. According to the Plan, E10 sales are to expand in more 

provinces in 2010, and possibly introducing E20 and E85, as well as B5 or B10 in 2020. 

The Chinese government overall policy in respect to biofuels is to move this technology forward 

in a way that it doesn’t compete with arable land, grain is not used as feedstock, and it doesn’t 

destroy the environment. No new corn based ethanol plant is to be approved. It considers giving 

subsidies and tax breaks to demonstration projects: plants using non-grain feedstock and 

plantations growing non-food crops. 

Sources: 

1. The National Development and Reform Commission (NDRC), http://en.ndrc.gov.cn/ 

2. US Department of Agriculture, GAIN Report 2007, 

http://www.fas.usda.gov/gainfiles/200706/146291348.pdf 

3. Institute for Energy Economics, Japan, http://eneken.ieej.or.jp/en/ 

61 
 

 

 

Hong Kong, China 

Rapid urbanization in the past two decades had led to serious air pollution problems, with motor 

vehicle emissions being one of the most pressing one. To cope with the situation, the 

Government of Hong Kong has adopted many programs and measures focused on improving 

the fuel quality and efficiency, such as Liquefied Petroleum Gas (LPG) taxis and minibus 

programs, installation of particulate trap and oxidation catalytic converter, and introduction of 

ultra low sulfur diesel. To relief existing pollution, biofuels, and biodiesel in particular, have also 

being considered in recent years. 

Biodiesel feedstocks available in Hong Kong are waste cooking oil and animal fats. About 

10,000 liters of used cooking oil are produced everyday in Hong Kong, which translates roughly 

into 3.5 million liters of biodiesel per year. There is one existing biodiesel production plant in 

Hong Kong, with a small output primarily for domestic consumption (annual capacity of 4.3 

million liters). A second plant is to be build by the ASB Biodiesel, a joint venture company, near 

the Tseung Kwan O industrial area of Hong Kong. The plant will have a capacity of about 114 

million liters (100,000 tonnes) per year and it will utilize waste products including used cooking 

oil, waste animal fat and grease trap waste (restaurant sewage). The biodiesel produced will be 

for domestic consumption and export to Europe. 

Hong Kong based companies have invested in ethanol production projects in other parts of the 

world, such as Noble Group Ltd. in Brazil and Rapid Grow Investments in Fiji. 

The Government of Hong Kong encourages the use of biodiesel and plans to introduce a dutyfree policy on its use. The Environmental Protection Department is drawing up specifications for 

biodiesel to ensure fuel quality, boost user’s confidence and help control the impact on 

environment. The Government will further propose a mandatory labeling requirement for 

biodiesel blends above 5% to ensure their proper use in vehicles and increase awareness of 

some possible corrosion problems associated with higher blends. 

Sources: 

1. Electrical and Mechanical Service Department (EMSD), The Government of the 

Hong Kong Special Administrative Region; http://www.emsd.gov.hk 

2. Koo, B.C.P. and Leung, D.Y.C., Emission Testing on a Biodiesel Produced from 

Waste Animal Fats, Proceedings of the Third Asia-Pacific Conference on 

Sustainable Energy and Environmental Technologies, 2000 

62 
 

 

Indonesia 

Indonesia sees biofuels as one of the key instruments to accelerate economic growth, alleviate 

poverty, and create employment opportunities while at the same time under the Kyoto Protocol 

mitigate greenhouse gas emissions. The government had set up goals of reaching 2% biofuels 

in the energy mix by 2010 (5.29 million kiloliters), growing to 3% by 2015 (9.84 million kiloliters) 

and 5% by 2025 (22.26 million kiloliters). Major challenge to achieving these goals is financing 

and the government has provided a set of incentives to attract domestic and foreign investors. 

The government prohibits rainforest deforestation for biofuels purposes. 

Production. Ethanol production in Indonesia was about 140 million liters in 2007 and the 

economy plans to reach 3,770 million liters in 2010 (Figure 19). Biodiesel production in 2007 

was about 1,550 million liters and it is estimated to reach 5,570 million liters in 2010 (Figure 20).

 Source: Indonesia National Biofuels Team, 2008 

Figure 19 Planned Ethanol Production Facilities in Indonesia 

63 
 

 Source: Indonesia National Biofuels Team, 2008 

Figure 20 Planned Biodiesel Production Facilities in Indonesia 

Feedstock. The main biodiesel feedstock in Indonesia is crude palm oil (CPO) due to the well 

established CPO industry and potential for the increase in production. Indonesia surpassed 

Malaysia in palm oil production in 2007 and is now the world leader. Together, Indonesia and 

Malaysia provide 87% of the world’s palm oil. Indonesia's CPO output is estimated to be 17.4 

million tonnes in 2007, up from 15.9 million tonnes in 2006. There are 6 million ha of oil-palm 

plantations. The government established laws and regulations guiding their expansions in order 

to prevent deforestation. 

Other potential biodiesel feedstocks in Indonesia include coconut oil and jatropha. In 2006 

Indonesia's coconut oil production was around 880,000 tonnes, with between 450,000 and 

550,000 used for export purposes. Jatropha is still in the very early stage of development and 

there are concerns that it is not feasible for large-scale production. At least two companies are 

making serious preparations to use jatropha as a feedstock. Though using jatropha would 

remove the conflict between food and fuel, jatropha is more labor-intensive and produces less 

oil than oil palm. At this time, Indonesian government efforts appear to be focused on using 

jatropha in villages where electricity is not cost-effective (USDA). The government plans to 

provide them with processing machineries. 

Currently, fuel ethanol in Indonesia is produced from sugarcane molasses. Indonesia has about 

5.5 million acres dedicated to sugarcane production, and several companies want to expand 

their plantations. Indonesia is among top 10 sugarcane producers in the world with about 30 

million tonnes per year. Indonesia is also looking at cassava as feedstock for ethanol. There 

were 52,195 ha planted with cassava in 2007 and it is expected to increase to 782,000 ha. In 

64
Indonesia, 1 ton of molasses yields about 250 liters of ethanol and 1 ton of cassava yields about 

155 liters (USDA). 

Due to abundant biomass resources, such as palm fruit shells, rice husk, sugarcane bagasse, 

and other crop and forest residues, Indonesia is very interested in cellulosic ethanol production 

and actively supports R&D in the area. 

Economics. 

Biodiesel US$/liter 

From palm oil 0.41 

From jatropha 0.48 

Source: APEC Biofuels Task Force, 2007 

Biofuels in use. B5 (Bio-solar) and E5 (Bio-pertamax) are available through the state-owned oil 

firm Pertamina. In January 2008, Pertamina reduced the percentage of biofuels in its Biosolar 

and Biopertamax products from 5% to 2.5% due to rising palm oil prices and lack of incentives. 

Infrastructure and Vehicles. B5 is offered at 228 gas stations in Jakarta, Surabaya, and Bali. 

Since December 2006, E5 is offered at 14 stations in Jakarta, 7 in Surabaya, 4 gas in Malang, 

and 11 in Bali. Bio-premium (E5 using Premium blend) is offered at 1 station in Malang. 

Trade. While Indonesia exports small amounts of biodiesel to China; EU; and the United States, 

CPO remains the main trading commodity. The Indonesian Palm Oil Producers 

Association estimates that Indonesia's palm oil exports were slowing down in 2007, mainly 

because of the growth in domestic biodiesel consumption. Exports reached 12.1 million tonnes 

in 2006, and it is estimated at 13.1 to 13.2 million tonnes in 2007. If palm oil production in 

Indonesia reaches more than 18 million tonnes in 2008, exports may be around 14 million 

tonnes, but it will also depend on the growth of the biodiesel industry (Pacific Biofuel). 

The main export market for Indonesian ethanol is Japan. The future of ethanol export is 

uncertain, considering the growth of domestic fuel ethanol demand. 

Policy. 

•	 Presidential Instruction No.1/2006 to 13 central and regional government institutions on 

supply and utilization of biofuels as alternative energy (January, 2006) 

•	 Presidential Decree No.5/2006 on National Energy Policy, calling for 5% biofuels in the 

energy mix by 2025 (January, 2006) 

•	 Presidential Decree No.10/2006 established the National Team for Biofuels 

Development to coordinate the industry expansion (July, 2006) 

While the Indonesian government had expressed strong interest in the biofuels development, it 

has been moving slowly and cautiously in implementing supporting policy. The government 

subsidizes biodiesel, bio-premium, and bio-pertamax at the same level as fossil fuels, leaving 

Pertamina to cover the difference when biodiesel production costs exceed fossil fuel costs. The 

government is considering providing various incentives, including value-added tax (VAT) 

reductions for business players, and excise duty cuts for biofuels users. In 2007 the government 

announced interest rate subsidy of Rp 1 trillion for farmers growing biofuels crops including 

jatropha, oil palm, cassava and sugar cane. 

65 
 

 

 

 

 

Sources: 

1. Indonesia National Biofuels Team, April 2008, 

http://www.biofuelindonesia.com/index.html 

2. Ministry of Energy and Mineral Resources (MEMR), presentation given at the USDA 

Global Conference on Agricultural Biofuels Research and Economic, Minneapolis, 

Minnesota, August 2007, 

http://www.ars.usda.gov/meetings/Biofuel2007/presentations/IP-B/Kussuryani.pdf 

3. Pacific Biofuel, August 2007, http://pacbiofuel.blogspot.com/2007/08/pbn-indonesiasees-slower-palm-oil.html 

4. US Department of Agriculture, GAIN Report, 2007, 

http://www.fas.usda.gov/gainfiles/200706/146291372.pdf 

5. APEC Biofuels Task Force (BTF) Report to the Eight Energy Ministers, 2007 

http://www.ewg.apec.org/assets/documents/apecinternet/Biofuelsreport%5FEMM820 

071011104537%2Epdf 

66 
 

Japan 

Rising oil prices and global warming prevention are the key drivers in Japan’s biofuels 

campaign. Biofuels are also seen as an opportunity for business development and vitalization of 

rural and farming communities. The government strongly supports the development of 

innovative technologies for low-cost fuel ethanol. 

Production and Feedstock. Japanese fuel ethanol production is in an experimental stage, and 

the current production level is 30,000 liters (April 2006). Figure 21 depicts the location of the 

existing biorefineries. Sugarcane molasses (Okinawa), wheat and corn unsuitable for food 

(Hokkaido), sorghum (Yamagata), and wood residues (Okayama and Osaka) are the raw 

materials currently used for ethanol production. To further promote domestic ethanol production, 

the government hopes to utilize abandoned arable land (Koizumi and Ohga, 2007). It will also 

rely on technological breakthrough in cellulosic ethanol in the near future, which would allow the 

use of waste material such as crop and wood residues. 

Source: Koizumi and Ohga, 2007 

Figure 21 Current Biorefineries in Japan 

Biodiesel doesn’t receive as much attention as ethanol in Japan. Current annual production 

from used cooking oil is estimated at nearly 3 million liters. In 2006, Nippon Oil Corporation and 

Toyota Motor Corporation announced development of a palm oil-based biodiesel that performs 

comparably to petroleum diesel. They claim to have removed the oxygen from the palm oil, 

which would normally cause the fuel to degrade. Nippon Oil aims to develop a commercially 

viable biodiesel by 2010 (USDA). 

67 
 

 

Economics. 

Ethanol US$/liter 

From sugarcane molasses 1.20 

From wheat 1.26 

Biodiesel US$/liter 

From rapeseed 2.9 

Source: Koizumi and Ohga, 2007 

Biofuels in use. Japan began testing E3 and ETBE in 2007. 

Infrastructure and Vehicles. Japan started to offer E3 at two gasoline stations, one in Sakai 

City and the other in Daito City, in October 2007. E3 is also offered in Osaka but is limited to 

about 100 cars registered in advance with the local government. The number of E3 supplying 

gas stations will be increased gradually and will begin selling the product to the general public in 

2008.There are about 50 stations in the Tokyo metropolitan area offering ETBE blended 

gasoline. Their number is expected to reach 100 during 2008, increasing to 1,000 nationwide in 

2009 (Asia Times, 2007). 

Trade. Japan imports ethanol (mostly from Brazil and China) to supply its beverage, chemical 

and pharmaceutical industries. Brazil has the world’s largest ethanol export potential and it is 

seen by Japan as its major source of the alternative fuel. Last year, the governments of Japan 

and Brazil set up a study group on trading in the fuel. It is expected that large amounts of fuel 

ethanol will be imported from Brazil in the coming years (Ohmy News International). 

Policy. In 2002, the Biomass Nippon Strategy was published, which recognized the need to halt 

global warming, encourage recycling in Japanese society, and foster alternative energy 

industries. As a signer to the Kyoto Protocol, Japan has pledged to reduce CO2 emissions by 

60% from 1990 levels by the year 2010. To reach that goal, the Japanese government plans is 

to replace fossil fuels with 500,000 kiloliters with ethanol for the transportation sector by 2010. In 

addition, the new National Energy Strategy, compiled in 2007 by the Ministry of Economy, Trade 

and Industry (METI), set a goal of reducing the nation's reliance on oil for transport to 80% from 

the current 100% by 2030. 

A preferential tax system for gasoline blended with ethanol is expected to be introduced in 2008, 

when tariffs may also be lifted on imports of ETBE. Under the planned tax system, biofuels 

mixed with gasoline will be exempted from the gasoline tax - currently 53.8 yen (US$0.48) per 

liter - in proportion to the amount of biofuels included. For example, E3 will be taxed 1.61 yen 

less per liter than pure gasoline. At present, there is no tax break for gasoline mixed with 

biofuels, regardless of the ratios involved. The government is also expected to make imports of 

ETBE tariff-free, removing the current 3.1% import tax (Asia Times, 2007). 

Sources: 

1. Tatsuji Koizumi, Keiji Ohga, Biofuel Programs in China, Malaysia, and Japan, 2007, 

http://www.usda.gov/oce///forum/2007%20Speeches/PDF%20speeches/OhgaK.pdf 

2. US Department of Agriculture, GAIN report, 2006, 

http://www.fas.usda.gov/gainfiles/200605/146197881.pdf 

68 
 

 

 

3. New and Renewable Energy Division, Agency for Natural Resources and Energy, 

Ministry of Economy, Trade and Industry (METI). February 2007, 

http://www.nedo.go.jp/kokusai/kouhou/190201/1-1t.pdf 

4. Asia Times, Japan steps up its biofuel drive, December 2007, 

http://www.atimes.com/atimes/Japan/IL13Dh01.html 

5. Ohmy News International, The goal of saving 500,000 kiloliters of crude oil by 2010 

is not easy to reach, May 2007, http://english.ohmynews.com/index.asp 

69 
 

 

Republic of Korea 

Korea is very interested in adding biofuels to its energy matrix, driven primarily by the desire to 

reduce air pollution and oil dependency. Biodiesel is the primary choice given the fact that 

Korea consumes large amounts of diesel (twice the amount of gasoline) and it has the option of 

producing feedstock domestically. 

Production. Biodiesel production in Korea was 50 million liters in 2006. There are fifteen 

operating biodiesel plants with a total capacity of 625 million liters/year. 

There is no fuel ethanol production in Korea. Only a small amount of ethanol is produced by 

Changhae Ethanol Co., Ltd as an experiment. 

Feedstock. Nearly 70-80% of biodiesel in Korea is produced from imported soybean oil and 20­

30% from used cooking oil. Several biodiesel plants have the capability of using palm oil 

(USDA). Due to rising soybean and palm oil prices, biodiesel producers are considering 

alternative feedstock such as jatropha oil, produced in the Southeast Asia region, the 

Philippines and Thailand for example. 

Options for producing biodiesel feedstock domestically are currently explored in Korea. It is 

estimated that 300,000 - 500,000 ha of coastal land could be available for winter canola with 

potential output of 450,000 - 750,000 tonnes of canola oil per year. Three demonstration sites in 

the Southern part of Korea have been selected for cultivation (KIER, 2007). 

Economics. 

Biodiesel US$/liter 

From used cooking oil 0.90 

From rapeseed 0.53 (with subsidy) - 1.37 

From soybeans 1.06 

Source: KEEI, November 2007 

Biofuels in use 

B5 and B20 are available nationwide. 

Infrastructure and Vehicles. Korea has supplied B5 through all of its gas stations since July 

2006. There are about 200 stations offering B20 operating for fleets only. Korea is also testing 

E3 and E5 stations. 

Trade. Korea imports soybean oil mainly from Argentina (86%) and the United States (14%). 

The domestic soybean oil industry estimated that of the 260,000 tonnes of soy oil imported in 

2006, less than 25% was used for biodiesel production. Korea may import 1 million tonnes of 

soybeans by September 2008, the US Department of Agriculture forecasted recently. 

Policy. The government of Korea supports the development of biofuels and it aims to develop 

energy policy that considers both economic growth and environmental protection. 

The Ministry of the Environment (MOE) began testing biodiesel and biodiesel fuel blends in 

early 2002. As a result of these emission tests, MOE recommended biodiesel as a renewable 

fuel to the Ministry of Commerce, Industry and Energy (MOCIE). MOCIE is responsible for 

setting standards for petroleum and petroleum substitutes and MOE is responsible for regulating 

70 
 

 

 

 

air pollution. In late 2002, 73 gas stations in the Seoul metropolitan area and Chonbuk Province 

were designated as demonstration stations and began carrying B20. By January 2006, the 

number of stations testing B20 reached 200. In 2003, Korea began preparing official biodiesel 

standards and the biodiesel demonstration was extended to June 2006. The final standards, 

drafted in September 2004 by MOCIE, were adopted in January 2006 and are very similar to 

EN14214, the European biodiesel standards (USDA, 2007). 

Korea plans to mandate nationwide B3 by 2012 and will extend the current tax incentives on 

production of biodiesel to 2010. 

Sources: 

1. Korea Energy Economics Institute (KEEI), http://www.keei.re.kr 

2. Bioenergy Research Center, Korea Institute of Energy Research (KIER), 2007 

http://www.kier.re.kr/ 

3. US Department of Agriculture, GAIN Report, 2007, 

http://www.fas.usda.gov/gainfiles/200708/146292125.pdf 

71 
Malaysia 

The development of biofuels in Malaysia has been identified as a new source of growth for the 

plantation commodities industry. The concentration is on biodiesel from palm oil due to the large 

domestic production of this feedstock. There is an opportunity for ethanol production from the oil 

palm biomass (part of it left unutilized), but this technology is yet to be commercialized. 

Meanwhile, the economy is focused on creating a successful industry with what exists, and that 

is palm biodiesel. The main concern for expanding biodiesel production in Malaysia is land 

availability and associated sustainability and biodiversity issues. 

Production. Biodiesel production in Malaysia was 120,000 tonnes in 2006. There were five 

operating plants as of December 2006 with a total capacity of 258,000 tonnes per year. The 

government has approved licenses for the establishment of eighty four biodiesel plants with a 

potential annual capacity of 9.26 million tonnes. However, it is expected the pace of 

commercialization to slow down due to rapidly rising cost of palm oil. 

Feedstock. The primary feedstock for biodiesel production in Malaysia is palm oil. Until 

recently, Malaysia was the world’s largest palm oil producer; however Indonesia surpassed 

Malaysia in 2007. Together, these economies produce about 90% of the world’s palm oil. In 

Malaysia, 11 percent of the total land area (about 62 percent of the economy's agricultural land) 

is devoted to palm oil. The production more than doubled during the past 10-11 years, from 7.81 

million tonnes in 1995 to 16.5 million tonnes in 2006. Malaysian government policy currently 

allows only 6.0 million tonnes of palm oil to be converted into biodiesel. 

Economics. A study by Tatsuji Koizumi and Keiji Ohga indicates that the cost of producing 

biodiesel from crude palm oil (CPO) was roughly US$0.54 per liter in 2006. The raw material is 

about 80 percent of the total cost. Due to the increased price of palm oil in 2007 the production 

cost of biodiesel from palm oil in Malaysia today is probably double that in 2006. 

Biofuels in use. Malaysia introduced a type of biodiesel known as Envo Diesel, which is a 

mixture of 95% petroleum diesel and 5% processed palm oil (RBD palm olein). Envo Diesel is 

different from the biodiesel blend B5 used in Europe (it used straight palm oil, not a methyl 

ester) and it is intended for local use. For export markets, and local use only if necessary, the 

industry produces biodiesel (methyl ester) from palm oil and methanol. 

Infrastructure and Vehicles. A small number of government-owned vehicles currently use 

biodiesel, comprising mainly palm oil, but commercial sales have yet to start. 

Trade. According to the Malaysian Timber Industry Board (MTIB), from August 2006 until 

February 2007, 52,654 tonnes of biodiesel had been exported to the United States; EU; and 

Japan, generating RM132 million in revenue. Malaysia may export biodiesel to European 

markets at the range of 300-350 thousand tonnes by 2010. 

Policy. The National Biofuel Policy was implemented in March 2006 to encourage the 

production of biofuels, particularly biodiesel from palm oil, for local use and for export. The 

Ministry formulated the Malaysian Biofuel Industry Act which will introduce a B-5 mandate, 

equivalent to a biodiesel demand of 500,000 tonnes, from 2008. However, the implementation 

of the Act has been delayed due to soaring palm oil prices. The government will wait until prices 

for RBD (refined, bleached and deodorized) palm oil fall to MYR2,000 ($1=MYR3.49511) per 

tonne or below before it decides on the exact date of the introduction of the biodiesel mandate. 

72 
 

 

Sources: 

1. Ministry of Plantation Industries & Commodities (MPIC), http://www.kppk.gov.my/ 

2. US Department of Agriculture, GAIN Report 2007, 

http://www.fas.usda.gov/gainfiles/200704/146280889.pdf
 

3. Tatsuji Koizumi, Keiji Ohga, Biofuels Polices in Asia: Trade effects on World Agricultural 

and Biofuels Trade, Presentation at the 2007 Agricultural Forum, Arlington, VA, March 

2007, http://www.usda.gov/agency/oce/forum/2007%20Speeches 

73 
 

 

Mexico 

Mexico sees biofuels as an opportunity to diversify its energy portfolio (more than 80% of the 

domestic energy supply comes from fossil fuels) and promote the development of rural 

communities. However, no specific policy is in place to stimulate the biofuels industry. 

Production. Currently, Mexico does not produce fuel ethanol. However, ethyl alcohol has been 

produced for the chemical, alcoholic beverage and pharmaceutical industries for many years. 

There are about thirty sugarcane mills in Mexico that have attached distilleries, but very few are 

operating, producing 60-80 million liters per year. At full capacity and efficiency, it is estimated 

that total production capacity for ethanol is currently at 170 million liters per year (USDA, 2007). 

Biodiesel production in Mexico is limited to few small-scale plants with a total production of 

approximately 13,000 tonnes per year (CEH, 2006). 

Feedstock. There are various crops grown in Mexico that could be used as feedstock for 

ethanol production, including sorghum (grain), corn, wheat, cassava, sugarcane, and sugar 

beet. However, sugarcane is considered the most feasible feedstock due to the opportunity for 

co-locating ethanol refineries with existing sugar mills. Figure 22 illustrates proposed location for 

fuel ethanol plants and sugarcane producing areas.

 Source: SENER, 2007 

Figure 22 Proposed Fuel Ethanol Refineries and Sugarcane Producing Areas in Mexico 

74 
 

 

Sugarcane and sugar beets would need less than 1 million ha to reach the production required 

to displace 10% of gasoline consumption. This seems to be within the possibilities today, 

because agriculture uses only 21.8 million ha out of the 30 million ha “available” area for 

cultivation (2003 statistics). Additionally, pasture land (27.7 million ha) in some regions (SouthSoutheast) could be partially used to grow these crops. Corn would also be in this range, while 

cassava and sorghum would require much larger areas (SENER-BID-GTZ, 2006). 

Biodiesel in Mexico is produced from animal fat and used cooking oil. Other feedstock 

considered by the industry includes palm oil, sunflower, safflower, canola, and soybean. Figure 

23 shows areas suitable for growing these crops. Mexico has also expressed interest in 

jatropha, but has not developed any action plan. Estimates by SENER show that there are more 

than 2 million ha available for palm oil production (currently 15,000 ha), and approximately 1 

million ha available for jatropha cultivation. 

Source: SENER, 2007 

Figure 23 Suitable Areas for Biodiesel Feedstock Production 

Economics. 

Ethanol US$/liter 

From sorghum 0.15 

From corn/wheat 0.17 

From sugarcane/sugar beet 0.20 

From cassava 0.25 

Source: Potenciales y Viabilidad del Uso de Bioetanol y Biodiesel para el Transporte en México, SENER-BID-GTZ, 2006 

75 
 

 

Biodiesel US$/liter 

From jatropha 0.53 

From canola 0.61 

From sunflower 0.63 

From used cooking oil/tallow 0.73 

Source: Potenciales y Viabilidad del Uso de Bioetanol y Biodiesel para el Transporte en México, SENER-BID-GTZ, 2006 

Biofuels in use 

Currently, biofuels are not used by the transportation sector in Mexico. 

Infrastructure and Vehicles. PEMEX, the national oil company, would be the sole buyer of 

biofuel products, thus it would be the responsibility of PEMEX to make necessary upgrades to 

its own refining, storage, and distribution systems (USDA, 2007). It would cost $77-120M to 

convert Mexico’s existing gasoline storage and distribution terminals to allow for the blending of 

ethanol (F.O. Licht, 2007) 

Trade. Mexico exports crude oil, but imports some gasoline and MTBE. Thus, if economically 

competitive, ethanol could save imports and stretch gasoline resources, and postpone the need 

to invest in additional refining capacity to produce gasoline for the domestic market. An 

alternative approach would be to produce ethanol for export, especially to USA where Mexico is 

favorably placed, geographically and trade wise, as a member of NAFTA (SENER-BID-GTZ, 

2006). 

Policy. The Biofuels Promotion and Development Law was approved by the Mexican Congress 

on April 26, 2007. Although the law does not contain any mandates or specific goals, it is seen 

as a “first step” toward developing a biofuels industry in the economy. It also had a broad 

support from the agricultural community. However, few months later, the bill was vetoed by the 

President Felipe Calderón on the grounds that it gives too much emphasis to corn and 

sugarcane production. According to Calderón, the law doesn't give enough attention to new 

technologies like algae and cellulosic biomass that could be more sustainable sources of 

biofuels. A new bill that includes the President’s recommendations is in a development stage. 

Sources: 

1. Potenciales y Viabilidad del Uso de Bioetanol y Biodiesel para el Transporte en México 

(SENER-BID-GTZ), 2006, 

http://www.sener.gob.mx/webSener/res/169/Biocombustibles_en_Mexixo_Estudio_Com 

pleto.pdf 

2. US Department of Agriculture, GAIN Report, 2007, 

http://www.fas.usda.gov/gainfiles/200706/146291366.pdf 

3. Secretaria de Energia (SENER), September 2007 

4. Biofuels Digest, http://www.biofuelsdigest.com; 1 February, 2008 

5. F.O. Licht World Ethanol and Biofuels Report, 8 August, 2007 

6. Chemical Economics Handbook (CEH) Marketing Research Report - Biodiesel, SRI 

Consulting, November 2006 

76 
 

 

New Zealand 

Beginning in July 2008, New Zealand's fuel companies are expected to start offering biofuels as 

part of the Government's plan to tackle climate change and reduce dependence on fossil fuels. 

According to the Biofuels Bill announced in February 2007, biofuels will have to account for 

0.53% of total fuels sold in New Zealand in 2008 and increase to 3.4% by the year 2012. 

Considering that the biofuels industry in New Zealand is in its very first stage of development, oil 

companies will likely initially satisfy their sales obligations with imported biofuels. 

In response to the growing biofuels demand in New Zealand and to address the challenges 

facing the industry, seven prospect producers formed the Biofuels Manufacturers Association 

(NZBMA). Initial members of the group are Argent Energy New Zealand, Biodiesel New 

Zealand, Biodiesel Oils NZ, Ecodiesel, Biodiesel Australasia, Flo-Dry Engineering and Aquaflow 

Bionomic. In an interview with the media in March 2008, a NZBMA’s spokesman pointed out 

three main concerns facing the biofuels industry in New Zealand: import of cheap biofuels from 

the United States, lack of biofuels standards, and the proposed fuel duty differential between 

ethanol and biodiesel. The Association believes that with ethanol not subject to fuel duty and 

biodiesel taxed through the road user charge, oil companies would be encouraged to import 

sugar cane ethanol from Brazil for economic advantage at taxpayers' expense (The New 

Zealand Herald, 2008). 

New Zealand lacks the large-scale grain industries that are providing raw materials in other 

parts of the world. Thus, ethanol production relies on whey, a byproduct of the dairy industry, or 

second generation technology as it becomes commercially available. There is one ethanol plant 

in New Zealand, operated by the leading dairy producer Fonterra, using whey as feedstock. 

Fonterra’s Edgecumbe plant produces 30,000 liters of ethanol a day and over 5 million liters in a 

dairy season. Fonterra also produces ethanol at other plants, including Reporoa and Tirau, for 

use by the alcohol beverage, chemical and pharmaceutical industries (Biopact, 2007). 

There are three biodiesel production plants in New Zealand. Two, BioDiesel Oils NZ Ltd and 

Ecodiesel Limited, are using tallow (a by-product of the meat industry) as feedstock and have 

an annual capacity of 60 million liters and 20 million liters respectively. Both companies are 

expecting to expand in the next few years, and few others have announced their plans for 

building biodiesel facilities using tallow. New Zealand produces 130,000 tonnes of tallow 

annually surplus to its domestic requirements, which translates into approximately 127 million 

liters of biodiesel. The third operational biodiesel plant in New Zealand ran by BioDiesel New 

Zealand Ltd., uses waste vegetable oil and it hopes to ultimately produce biodiesel from 

rapeseed oil. The company currently produces about 1 million liters of biodiesel, and it has 

plantings of 1,200 hectares of canola, which it hopes to expand to at least 5,000 to 6,000 

hectares (USDA). Aquaflow Bionomic is currently testing biodiesel production from algae. 

Biofuels blend was not commercially available in New Zealand until August 2007, when Gull 

Petroleum started offering E10 at three sites in Auckland. The company plans to expand the 

supply to most of its 30 stations over time. E10 (Gull Force 10) will be included in Foodtown, 

Countdown and Woolworth’s grocery fuel discount programs. 

Sources: 

1. USDA, GAIN Report, 2007, http://www.fas.usda.gov/gainfiles/200702/146280233.pdf 

2. The New Zealand Herald, Biofuel manufacturers fear rocky road ahead for fledgling 

industry, March 14, 2008, http://www.nzherald.co.nz 

77 
 

 

 

 

Papua New Guinea 

Increased interest in palm and coconut oil as biodiesel feedstock and rising prices of fossil fuels 

are accelerating biofuels development in Papua New Guinea (PNG). The government is working 

on a strategy for positioning PNG as a major biofuels producer. 

PNG is one of the world’s largest producers of palm oil (far behind Malaysia and Indonesia) and 

the government actively promotes the expansion of oil palm plantations, often to the detriment 

of the rain forests and local communities. The plantations now are largely under the control of 

large companies such as New Britain Palm Oil and Golden Agri-Resources (part of Malaysian 

Sinar Mas). Cargill is increasing its investment in oil palm plantations and mills in PNG as well. 

Annual production of palm oil is about 300,000 tonnes or 1.4% of the global CPO production 

(Jan Willem van Gelder, 2002). The coconut oil industry is relatively small, approximately 

50,000 tonnes per year. 

There is no information on biodiesel production and consumption in PNG. However, there is a 

widespread use of straight vegetable oil (SVO) or mixture of SVO and petro-diesel. Many local 

suppliers of fuel blend filtered coconut oil with diesel, including Unitech in Lae, which has been 

successfully testing biodiesel blends in engines as part of their mechanical engineering 

research (Island Business). SVO is used by private vehicle owners and government fleets. Two 

shipping companies based in Rabaul have been buying coconut oil from the long established 

Copra Products Ltd mill at Malaguna for the past couple of years and have largely replaced 

diesel fuel for their ships (Kokonut Pacific, 2007). 

In PNG, SVO and biodiesel are the alternative fuels of choice due to feedstock availability and 

diesel driven market. However, PNG is also interested in experimenting with ethanol. A cassava 

ethanol plant is under development in Launakalana, in Central province. The developer, South 

Korean company Changhae Tapioka, will select varietals from a pilot growing program and 

43,000 acres when the plantation development effort is complete (Biofuels Digest). 

Sources: 

1. Agrofuels in Asia - Fuelling poverty, conflict, deforestation and climate change”, by Almut 

H. Ernsting. Seedling, GRAIN, July 2007, http://grain.org/seedling/?id=479 

2. The palm-oil - biodiesel nexus”, Seedling, GRAIN, July 2007, 

http://www.grain.org/seedling/?id=486 

3. Island Business - Coconut oil, a serious commodity option, 

http://www.islandsbusiness.com, October 2007 

4. Kokonut Pacific Pty Ltd., Coconut power in PNG, http://www.kokonutpacific.com.au/, 

October 2007 

5. Jan Willem van Gelder, Australian economic links with the oil palm sector of Papua New 

Guinea, December 2002, 

http://www.biodieselkeepitgreen.org/Palm%20Oil/PNG%20oil%20palm%20detailed%20s 

tudy.pdf 

6. Biofuels Digest, February 2008, http://www.biofuelsdigest.com 

78 
 

Peru 

Peru is interested in adding ethanol and biodiesel to its energy matrix, driven by the desire to 

create jobs, attract new investments, increase exports, and mitigate climate change. Some of 

the challenges for the biofuels industry in Peru are lack of strong policy and incentives for 

promoting the sector’s development as well as substantial R&D investments. 

Production. Currently, there is no fuel ethanol production in Peru. As of March 2008, there are 

two ethanol plants under construction, both in Sullana, Piura, each with 100 million liters/year 

capacity. Two more plants, also in the Northern region, are planned with a total capacity of 200 

million liters/year. 

There is one operating biodiesel plant in Callao, Lima. The plant is operated by Pure Biofuels 

Corp. with a capacity of 127 million liters/year, and it is currently under expansion. Pure Biofuels 

acquired Interpacific Oil SAC’s biodiesel production business in 2007, Peru’s largest and 

longest running biodiesel processor. Interpacific currently produces 27 million liters per year of 

biodiesel and has been producing commercial quantities since 2002. Two plants are under 

construction: Industrias del Espino (capacity 42.5 million liters/year) near Tocache, San Martín, 

and Herco (capacity 85 million liters/year) near Lurin, Lima. 

Feedstock. The primary feedstock for ethanol production in Peru is sugar cane. Sugar cane 

production was around 7 million tonnes in 2006. Sugar mills in Peru are located along the coast 

and have a total milling capacity of 37,000 tonnes of cane per day. Because sugar cane in Peru 

is produced year round, mills do not need to be very large. Yields and cane age vary greatly 

from one producer to another. Yields range from 53 to 190 tonnes of cane per hectare and age 

from 13 to 18 month between cuts (USDA). 

Main feedstock for biodiesel production is palm oil. According to the Peruvian Minister of 

Agriculture, Peru's current palm oil production is 48,000 tonnes per year. Production is 

concentrated in the provinces of Ucayali, San Martin, and Loreto. Peru still needs to import 

significant quantities - upwards of 475,000 tonnes per year. The economy is also considering 

jatropha as feedstock with several plantation trails in different locations in San Martin (Tarapoto) 

and Amazonas (Bagua Chica) (GTZ). 

Economics. 

Ethanol US$/liter 

From sugar cane 0.25 

Source: Palmas e Industrias del Espino, 2008 

Biodiesel US$/liter 

From palm oil 0.24 

Source: Palmas e Industrias del Espino, 2008 

Biofuels in use. Biofuels are not currently used in Peru. However, B2 will be offered at service 

stations beginning July 2009, and in January 2010 E7.8 will be offered for use. 

Infrastructure and Vehicles 

There are no stations offering biodiesel or ethanol blends in Peru. 10 Toyota Hi Lux are running 

on vegetable oil as test vehicles since January 2006 (GTZ). 

79 
 

 

 

 

 

Trade. Peru plans to produce ethanol and biodiesel for domestic consumption and export. 

According to the current US - Peru Trade Agreement, Peru would be able to export ethanol tariff 

free into the United States. 

Policy. The Peruvian government plans to introduce a B2 mandate in January 2009 (extending 

it to B5 in 2011) and E7.8 mandate in 2010. To support the development of biofuels in Peru, the 

government adopted Law 28054 “Ley de Promoción del Mercado de los Biocombustibles” in 

2003. The main objectives of the Law is to diversify the fuel market, stimulate farming and 

agribusiness, promote sustainable development, and offer an alternative market in the fight 

against drugs. 

Sources: 

1. Palmas e Industrias del Espino 

2. Dirección General de Hidrocarburos, Ministerio de Energía y Minas, 

http://www.minem.gob.pe/ 

3. Asociacion Peruana de Productores de Azucar y Biocombustibles, 

http://www.appab.org/ 

4. US Department of Agriculture, GAIN Report, 2006 

http://www.fas.usda.gov/gainfiles/200604/146187346.pdf 

5. Biopact, May 2007, http://biopact.com/2007/05/pure-biofuels-to-acquire-peruslargest.html
 

6. Programa Desarrollo Rural Sostenible (PDRS) and RöttgerDeutsche Gesellschaft 

fDeutsche füür Technische Zusammenarbeit (GTZ); www.gtz-rural.org.pe 

80 
 

The Philippines 

The Philippines embraced the development of biofuels few years ago with hopes to achieve 

future energy security, augment farmers’ income, and generate rural employment. It also hopes 

to position itself as a leading biofuels producer in the region. The main challenge facing the 

industry is the availability of feedstock and processing facilities to supply the demand of the 

National Biofuels Program set by the government. 

Production. Biofuels production in the Philippines is currently limited to biodiesel only. There 

were seven biodiesel production plants as of August 2007, with a total output of 257 million liters 

per year. This production capacity exceeds the requirement of the mandatory volumes set by 

the Biofuels Act, thus the biodiesel producers see it as an excellent export opportunity. 

Production of fuel ethanol will commence in late 2008, in time for its mandated use in 2009. 

Several ethanol plants are currently under construction but their scheduled completion, inclusive 

of their corresponding feedstock supply-base, is uncertain (USDA). 

Feedstock. Primary feedstock for biodiesel production in the Philippines is coconut oil. The 

Philippines is one of the largest producers of coconut oil in the world - approximately 1,400 

million liters per year. Nearly 20 percent (400 million liters) of this production is used for 

domestic consumption while the balance of 80 percent is exported. Mindanao accounts for 

almost 60 percent of the economy’s total coconut oil production (Embassy of the Republic of the 

Philippines). Potential biodiesel feedstocks in the Philippines are jatropha and palm oil. The 

government has announced its plan to launch massive propagation and cultivation of jathropa 

seeds covering around two million ha of unproductive and idle public and private lands 

nationwide in order to produce some 5,600 million liters of biofuel in the next 10 to 12 years 

(Bulatlat). There are few pilot plantations growing oil palm. 

In the Philippines, sugarcane is considered a primary source for ethanol production. The 

government sees it as the most reliable feedstock due to its well established farming 

technologies and the highest yield per ha compared to other feedstock (corn, cassava, and 

sweet sorghum). Sugarcane production in the Philippines is expected to increase to meet the 

requirements of the Biofuels Act. At present, the sugar industry can only supply 79% of the 

needs of the 5% ethanol blend which is between 200 and 400 million litres per year. The 

Philippines therefore needs to expand its current 167,300 sugarcane farms covering a total area 

of 344,700 hectares to meet the ethanol demand. The Sugar Regulatory Administration (SRA) 

already identified 237,748 hectares of new sugar fields, mostly in Mindanao, that can be tapped 

to produce fuel ethanol (Bulatlat). Additional ethanol feedstocks considered by the government 

are sweet sorghum and cassava. 

Economics. 

N/A 

Biofuels in use. B1 and E10 are available nationwide. 

Infrastructure and Vehicles. B1 is available through all service stations in the Philippines and 

it has been successfully used by thousands of vehicles in the Philippines since 2002. E10 is 

currently offered by all Seaoil stations nationwide. It is expected that in 2008 more gas stations 

will be offering E10 (Biofuels Philippines). 

81 
 

 

 

In 2007, Ford Philippines opened a plant that manufactures flexible fuel engines in Santa Rosa, 

Laguna. Flexible fuel engines can run on a mix of up to 20% ethanol. Production output of the 

facility is estimated to reach 105,000 FFV engines in the next 5 years with some units intended 

for export to South Africa and other ASEAN countries. The Ford plant's opening is expected to 

enhance and accelerate the adoption of biofuels in the economy. (USDA). 

Trade. Chemrez Inc. has exported 500,000 liters of coconut based biodiesel to Germany and to 

Asian markets including China, Chinese Taipei, South Korea and Malaysia. If the mandated 

biodiesel blend increases to 2% in the next two years, as specified in the Biofuels Act, biodiesel 

companies in the Philippines may concentrate on supplying the domestic market and export 

only excess volumes. 

Policy. The Philippine Biofuels Act, implemented in January 2007, establishes the following 

requirements for ethanol and biodiesel: 

5.1 Within two years from the affectivity of this Act, at least five percent (5%) 

bioethanol shall comprise the annual total volume of gasoline fuel actually sold and 

distributed by each and every oil company in the country, subject to the requirement that 

all bioethanol blended gasoline shall contain a minimum of five percent (5%) bioethanol 

fuel by volume. 

5.2 Within four years from the effectivity of this Act, the National Biofuels Board 

(NBB) created under this Act is empowered to determine the feasibility and thereafter 

recommend to the Department of Energy (DOE) to mandate a minimum of ten percent 

(10%) blend of bioethanol by volume into all gasoline fuel distributed and sold by each 

and every oil company in the country. In the event of supply shortage of locally-produced 

bioethanol during the four-year period, oil companies shall be allowed to import 

bioethanol but only to the extent of the shortage as may be determined by the NBB. 

5.3 Within three months from the effectivity of this Act, a minimum of one percent 

(1%) biodiesel by volume shall be blended into all diesel engine fuels sold in the country; 

provided that the biodiesel blend conforms to the Philippine National Standards (PNS) 

for biodiesel. Within two years from the effectivity of this Act, the NBB created under this 

Act is empowered to determine the feasibility and thereafter recommend to DOE to 

mandate a minimum of two percent (2%) blend of biodiesel by volume which may be 

increased taking into account considerations including but not limited to domestic supply 

and availability of locally-sourced biodiesel component (Republic Act No. 9367). 

Among the incentives designed to encourage the production and use of biofuels are an 

exemption of the ethanol/biodiesel portions of fuel blends and an exemption from value-added 

taxes for raw materials (coconut, sugarcane, jatropha, cassava, etc.). There are also favorable 

loan policies available from banks for biofuel investors and producers. 

Sources: 

1. Biofuels Philippines, January 2007, http://www.biofuels.com.ph/index.html 

2. Embassy of the Republic of the Philippines, Berlin, Germany, January 2007, 

http://www.philippineembassy.de/bln/index.php?option=com_content&task=view&id=266&Itemid=74 

3. Bulatlat, The Philippines alternative weekly magazine, Vol. VII, No. 3, February 2007, 

http://www.bulatlat.com/news/7-3/7-3-biofuels.htm 

4. Dr. N. A. Orcullo, Jr., De La Salle University-Dasmariñas, Biofuels Initiatives in the 

Philippines, October 2007, http://www.buyusa.gov/thailand/th/philippines.pdf 

82 
 

 

5. US Department of Agriculture, GAIN Report, 2007, 

http://www.fas.usda.gov/gainfiles/200706/146291288.pdf 

6. Republic Act No. 9367, the Biofuels Act of 2006, 

http://www.senate.gov.ph/republic_acts/ra%209367.pdf 

83 
 

 

Russia 

Russia is one of the world’s largest producer and exporter of fossil fuels, thus biofuels don’t 

receive particular attention. However, commitments under the Kyoto Protocol and interest in 

producing biofuels for export, particularly to the EU, could provide a platform for biofuels 

industry development. 

Although, it doesn’t produce fuel ethanol, Russia has very well developed ethyl alcohol industry. 

There are many distilleries producing ethanol for the alcohol, chemical and pharmaceutical 

industries with a total capacity of 1,000 million liters. There are 2 fuel ethanol plants under 

construction (one in Omsk, Siberia and another one in Volgograd region) and about dozen 

planned. Some sources report production of fuel ethanol in Russia, however no official data 

exists, and thus experts concede that most production is likely in the experimental stage 

(USDA). 

Russia is one of the world’s largest producer and exporter of grains, particularly wheat, barley 

and corn. Therefore, feedstock availability is not a concern. However, increasing grain prices 

may constrain bioethanol production in Russia. If grain prices continue to increase, using grain 

as the source of bioethanol will not be economically feasible. On the other hand, alternative 

sources such as sugar beet molasses may be an option. Furthermore, Russia has ample 

sources of cellulosic biomass from its large wood processing industry. Experts estimate the total 

wood biomass available for energy production at 800 million tonnes (USDA). 

There is no biodiesel production in Russia. A number of companies have recently announced 

plans to build biodiesel plants, with rapeseed as feedstock. National output of the oilseed has 

been rising steadily, from 300,000 tonnes in 2005 to an expected 550-600,000 tonnes in 2006. 

The Russian Agriculture Ministry has also set targets of increasing rapeseed output to 1.5 

million tonnes in 2007 and 5 million tonnes in the long term. As with the ethanol industry, 

biodiesel produced from the proposed biodiesel plants are also intended for export markets in 

the EU (IADB). 

Currently, there is neither federal legislation nor incentives to encourage the production and 

consumption of fuel ethanol in Russia. In December 2006, a group of deputies in the Duma, the 

lower chamber of Russia’s National Assembly, prepared draft legislation that lifts the excise 

taxes and eases regulation on motor fuel containing less than 10% ethyl alcohol. This was 

intended to make bioethanol more economically attractive for alcohol producing plants. The 

draft legislation was scheduled for consideration by the Duma in the fall of 2007 with no results 

to report yet (USDA). The government charges an excise duty of at least 26 rubles (US$1.10) to 

sell 1 liter of ethanol, the same as for other types of alcohol. The tax alone is more than the cost 

of 1 liter of gasoline (The Moscow Times). 

Prime Minister Viktor Zubkov announced that a government program to develop biofuels in 

Russia will start in 2008. It stipulates the construction of 30 new ethanol plants and upgrades of 

existing facilities. Zubkov said that Russia will eventually produce 2 million tonnes of ethanol per 

year if the program is successful, without specifying when the government hopes to reach this 

target (The Moscow Times). 

Sources: 

1. Russian Biofuels Association (RBA), http://www.biofuels.ru/ 

84 
 

 

 

2. A Blueprint for Green Energy in the Americas, Inter-American Development Bank 

(IADB), 2007, http://www.iadb.org/biofuels/ 

3. US Department of Agriculture, Foreign Agricultural Service, GAIN Report, June 2007, 

http://www.fas.usda.gov/gainfiles/200706/146291296.pdf 

4. The Moscow Times, March 2008, 

http://www.moscowtimes.ru/article/1009/42/361259.htm 

85 
 

 

Singapore 

Singapore places a great importance on the development of biofuels as part of its long term 

energy strategy. The economy is trying to position itself as a major processing and trading 

biofuels hub in Asia, as well as among the leaders in second generation biofuels production. 

Singapore has a well established trading market and infrastructure already in place - its shipping 

terminals would allow transportation of biofuels to many places around the world. It also has 

proximity to feedstock suppliers, (such as Malaysia and Indonesia for palm oil) and emerging 

high demand centers (India and China for example). 

In the last few years Singapore has made a considerable progress in this direction. About five 

biodiesel plants are currently operating on Jurong Island, Singapore’s petrochemical hub, with a 

total capacity exceeding 700,000 tonnes per year. Few more plants are planned to begin 

operation in 2008. The Economic Development Board of Singapore expects the biodiesel 

production output to exceed 1 million tonnes per year by 2010, and reach 3 million tonnes by 

2015. Most of the existing and planned facilities use palm oil, soya oil, and small amounts of 

used cooking oil. Jatropha is planned to be added when sufficient supplies are available. 

Nine industry players, including DaimlerChrysler and Shell Eastern Petroleum, have already 

started a Singapore biodiesel testing project for the evaluation of biodiesel in modern diesel 

powered cars. The project aims to improve the use of methyl esters from palm oil in motor fuels 

in Southeast Asian climates (IHT, 2007). 

Biodiesel - producing companies in Singapore plan to export initially to the United States and 

Europe while the Asian markets are developing and mandatory blending regulations in the 

region take effect. 

To remain competitive, the government in May committed to spending 350 million Singapore 

dollars, or US$240 million, in the next five years to help make Singapore a world leader in clean 

energy production, including both solar power - the government's main focus - and biofuels. 

Singapore intends to market itself as a research and development center, a global testing 

ground and a site for early adoption of clean energy solutions (IHT, 2007). 

Sources: 

1. Mr S Iswaran, Minister of State for Trade & Industry, speech given at the 23rd AsiaPacific Petroleum Conference in Singapore, 11 September 2007, summary provided by 

BiodieselNow at http://www.biodieselnow.com/forums/p/18252/135097.aspx 

2. International Herald Tribune (IHT), http://www.iht.com/, 29 October, 2007 

86 
 

 

Chinese Taipei 

Chinese Taipei is promoting the development and use of biofuels to reduce CO2 emissions and 

imports of fossil fuels. The government supports many research projects focused on advanced 

biofuels production technologies, not competing with the food industry such as ethanol from 

cellulosic biomass and biodiesel from used cooking oil. 

Production. Biodiesel production in Chinese Taipei was 3.8 million liters in 2007, a substantial 

increase from 2.4 million liters in 2006. There are five operating plants with a total capacity of 

42.1 million liters per year. One plant is under construction with an annual capacity of 100 

million liters per year. 

At present, there is no fuel ethanol production. State-owned Taiwan Sugar Corp. produces 

around 20-30 million liters of sugarcane-based ethanol every year, mostly for the beverage 

industry. Two fuel ethanol plants are planned with annual capacity of 100 million liters each. 

Feedstock. The primary feedstock for biodiesel production in Chinese Taipei is used cooking 

oil. Additional domestic feedstock includes soybean and sunflower, and the government 

encourages growing these crops on fallow rice paddy fields. 

Chinese Taipei is considering ethanol production from sugarcane, sweet sorghum, molasses 

and other biomass from agricultural wastes. 

Economics 

Ethanol US$/liter 

From sugar cane 0.62 

Source: ITRI, 2007 

Biodiesel US$/liter 

From used cooking oil 1.08 

From soybeans 1.34 

Source: ITRI, 2007 

Biofuels in use. E3 sales started in 2006, and biodiesel is offered at different blending levels 

from B1 to B20. 

Infrastructure and Vehicles. Nearly 300 service stations offer B1, and E3 is supplied by 8 

stations. Biodiesel is used by city buses in Kaohsiung City and Chiayi County. 

Trade. Currently, the biodiesel produced in Chinese Taipei is for domestic consumption, and no 

import has been recorded. Biodiesel incentives could force Taiwan to import more soybeans, as 

biodiesel demand exceeds the supply of recycled cooking oil, the US Department of Agriculture 

estimated. 

Small volumes of ethanol are imported annually from China; Indonesia; and Thailand for use by 

the food industry. 

Policy. The government plans to introduce an E-3 mandate in 2011. It also plans to have B1 

diesel available at all gas stations nationwide by 2008 and B2 diesel by 2010. Some policies in 

place include: 

87 
 

 

• Commodity Tax and air pollution control fee exempt 

• Offer incentives to encourage motorists to switch to ethanol gasoline 

• Subsidies provided for demonstration programs 

Sources: 

1. Industrial Technology Research Institute (ITRI), http://www.itri.org.tw/eng/index.jsp 

2. U.S. Department of Agriculture, GAIN report 2007, 

http://www.fas.usda.gov/gainfiles/200706/146291267.pdf 

88 
 

 

Thailand 

Thailand has set up serious efforts to reduce oil imports and carbon emissions by planning to 

replace at least 20 percent of its vehicle fuel consumption with renewable energy sources such 

as ethanol and biodiesel within the next five years. Biofuels are also seen by the Government as 

an opportunity for rural development and export. 

Production. Ethanol production in Thailand was 192.8 million liters in 2007. There are nine 

operating plants with a total capacity of 435 million liters per year, and nine plants are under 

construction (440 million liters per year). Figure 24 illustrates some of the existing, underconstruction and planned production facilities. 

Source: DEDE 

Existing ethanol plants 

Molasses 8 plants 

Tapioca 1 plant 

Other (under construction/planned) 

Molasses 12 plants 

Tapioca 24 plants 

Figure 24 Ethanol Production Plants in Thailand 

89 
 

 

Biodiesel production in Thailand was 58 million liters in 2007. Currently, there are nine biodiesel 

plants with a total production capacity of 655 million liters annually. 

Feedstock. Almost 90% of ethanol produced in Thailand is from cane molasses. The remaining 

10% is from cassava. The proportion is expected to shift over time in favor of cassava. 

Molasses supplies are expected to increase to 3 million tonnes, half of which will be used in 

food industries (mostly for liquor production), and the balance will be for exports and fuel 

ethanol production (USDA, 2007). Cassava production was 22.5 million tonnes in 2006 and it is 

expected to grow as the planned cassava-based ethanol production plants start operating. 

The main raw material for biodiesel in Thailand is palm oil. The economy ranks third in the world 

after Indonesia and Malaysia. Total crude palm oil output is 1.3 million tonnes a year, around 

800,000 tonnes of which go to the food sector. Of the 500,000 tonnes used in non-food 

businesses, 420,000 tonnes are now needed to make B2. At least 600,000 tonnes would be 

required to make B5. The Government plans to expand palm oil cultivation area by 2.5 million 

Rai (1 hectare = 6.25 Rai) during the next five years. Few biodiesel plants are using used 

cooking oil as feedstock. Jatropha is seen as an alternative feedstock for biodiesel production in 

Thailand, and one plant intends to use this feedstock. 

Economics. 

Ethanol US$/liter 

From cassava 0.54 

From cane molasses 0.46 

Source: DEDE, 2007; 34.5 Baht/US $ 

Biodiesel US$/liter 

From palm oil 0.86 

From used cooking oil 0.68 

Source: DEDE, 2007; 34.5 Baht/US $ 

Biofuels in use. Thailand currently sells gasohol (E10), which accounts for around 20% of total 

petroleum sales, through its service stations. The state-owned companies PTT and Bangchak 

started supplying E20 in January 2008. Bangchak plans to introduce E85 at its stations in the 

near future. 

B2 is available nationwide; PTT and Bangchak started selling B5 in 2007. 

Infrastructure and Vehicles. There were 3,822 gasohol service stations in Thailand as of 

December 2007. Currently, 40 stations in Greater Bangkok sell E20 (February 2008). B2 is 

available at all stations throughout Thailand; 976 stations offer B5 in Greater Bangkok. 

E20 compatible vehicles are available in Thailand from Ford, Toyota, Honda and Nissan. 

Trade. Most ethanol producers plan to supply ethanol domestically (particularly those who do 

not have sugar mill businesses) due to concerns regarding sourcing of raw materials (USDA, 

2007). However, fuel ethanol export is expected to grow as the production increases in 

Thailand. About 14.4 million liters of fuel ethanol was exported in 2007 to Singapore; the 

Philippines; Chinese Taipei; Australia; and Europe. 

90 
 

 

 

 

 

Policy. Policymakers in Thailand have taken measures to increase investments in the 

production and use of ethanol, including BOI privilege for fuel ethanol plant, waiver on excise 

tax for the ethanol blended in gasohol, low rate of oil fund levy, and expansion of cassava 

production. Also, the government set gasohol prices around 2.0 - 2.50 baht/liters cheaper than 

regular and premium gasoline. The government requires all its fleets to be fueled with gasohol. 

The cabinet approved an excise tax reduction for car using gasoline containing at least 20% of 

fuel ethanol, proposed by the excise department and effective from January 1, 2008. The excise 

tax cut is expected to lower the price of cars by at least THB10,000 ($1=THB0.03204). A car 

with a cylinder capacity of no more than 2,000 cm3 and an engine performance no more than 

220 hp will be taxed at 25%, down from a previous 30%. Cars with a cylinder capacity of no 

more than 2,500 cm3 and no more than 220 hp will be charged at 30%, down from 35%. Finally, 

cars with a cylinder capacity between 2,500 and 3,000 cm3 and no more than 220 hp will be 

taxed at 35%, down from a previous 40%. The rates apply to passenger cars and vans with 

fewer than 10 seats. The excise department estimates that about 30,000 new vehicles powered 

by E20 or higher will be in the market in 2008 (DEDE, 2008). 

The Thai government announced the Strategic Plan on Biodiesel Promotion and Development 

in January 2005. The plan targets to replace 10% of diesel consumption in 2012 by increasing 

palm oil cultivation, promote community-based and commercial biodiesel production. The Thai 

government introduced a B2 mandate in February 2008, which would require the production of 

approximately 420,000 tonnes of biodiesel per year. The government is making available 3,000 

million Baht in soft loans to farmers growing palm crops. It also supports R&D of other crops 

such as jatropha. A B-5 mandate is planned to be introduced in 2011, and B10 in 2012. 

Sources: 

1. Department of Alternative Energy Development and Efficiency (DEDE), 

http://www.dede.go.th/ 

2. U.S. Department of Agriculture, GAIN Report, 2007, 

http://www.fas.usda.gov/gainfiles/200706/146291285.pdf 

3. Energy Current, March 2008, 

http://www.energycurrent.com/index.php?id=3&storyid=8770 

4. Bangkok Post (Thailand), March 8th, 2008; http://www.bangkokpost.com 

91 
United States of America 

Biofuels in the United States provide a significant economic stimulus in the rural areas. Various 

factors contribute to the industry growth including concerns about MTBE contamination, 

Renewable Fuels Standard and other Federal and State policies, sustained high oil and gas 

prices, and a need to diversify the fuel supply with domestic, cleaner products. 

Production. Annual US ethanol production increased from insignificant quantities in the 1970s 

to approximately 21,000 million liters in 2006. Most of the ongoing and projected biofuel 

expansion in the United States is for ethanol, but biodiesel is expanding as well, from negligible 

quantities in 2000 to about 750,000 tonnes in 2006. 

According to the Renewable Fuels Association, there are about 135 existing ethanol 

biorefineries with a total capacity of 28,000 million liters per year (December 2007). Under 

construction or expansion are 74 plants with approximately 23,000 million liters capacity. There 

are six commercial cellulosic ethanol plants under construction. Four of them (BlueFire Ethanol, 

Inc., Broin Companies, Iogen Biorefinery Partners, and Abengoa Bioenergy) will employ 

biochemical conversion process, and two (Range Fuels and ALICO Inc.) will produce ethanol 

via thermo-chemical conversion process. When fully operational, the biorefineries are expected 

to produce more than 130 million gallons (492 million liters) of ethanol per year. A map 

illustrating the geographic location of these facilities is provided in Figure 25. 

Figure 25 US Ethanol Biorefineries 

According to the National Biodiesel Board, there are 165 operating biodiesel production facilities 

with a total capacity of 7,000 million liters (September 2007). 84 plants are under construction or 

92 
 

expansion with approximately 5,000 million liters capacity. A map illustrating the existing and 

under construction biodiesel production facilities is provided in Figure 26. 

Figure 26 US Biodiesel Production Facilities 

Feedstock. Today, nearly all ethanol in the US is made from corn grain. The increase in the use 

of corn for ethanol nearly doubles the production each year. In 2006/2007, the increase was 250 

million bushels; in 2007/2008 the increase is 500 million bushels. In 2008/2009 the increase for 

the crop year is expected to be 1,000 million bushels. USDA predicts that by next year, the total 

use of corn for ethanol will approach 30 percent of the entire US crop. The rapid expansion of 

the corn growing sector produced an unprecedented demand shock to the world agricultural 

system. The price of corn is about 75 percent higher than last year, and the higher price of corn 

has consequently increased the price of all other grains worldwide. 

Ethanol provides a rapidly growing environment for other grains, such as sorghum and milo. 

Ethanol production consumed approximately 26 percent of the nation’s sorghum crop in 2006. 

In the future, corn may cease to be the main feedstock for US ethanol production if 

lignocellulosic biomass (agricultural and forestry residues, dedicated energy crops) is 

successfully developed and commercialized as an alternative. A report by the US DOE and US 

Department of Agriculture (Biomass as Feedstock for a Bioenergy and Bioproducts Industry: 

Technical Feasibility of a Billion Ton Annual Supply, 2005) suggests that, by the middle of the 

21st century, the US should be able to produce 1,300 million US tons of biomass feedstock per 

year, enough to displace approximately 30 percent of its current petroleum consumption. 

93 
 

 

Approximately 90% of biodiesel produced in the US is made from soybean oil. Some experts 

estimate that if the biodiesel industry keeps its current momentum, over 10% of US soybean oil 

could be used for biodiesel production in the next few years. The US is the world leader in 

soybean production with about 87 million tonnes produced in 2006/2007 crop year. Half of this 

production was exported, which placed the economy in second place as the largest soybean 

exporter, after Brazil. 

Economics. 

Ethanol US$/liter 

From corn 0.46 - 0.48 

From lignocellulosic biomass 0.53 - 0.66 

Source: NREL, 2007 

Biodiesel US$/liter 

From soybeans 0.39 - 0.79 

From used cooking oil 0.26 - 0.50 

From algae 1.50 - 2.00 

Source: NREL, 2007 

Biofuels in use. Low-level ethanol fuel blends are sold in every state. Nearly one-third of US 

gasoline now contains up to 10% ethanol to boost octane or meet air quality requirements. All 

auto manufacturers approve the use of low-level ethanol blends because these fuels work well 

in gasoline engines and have no noticeable difference in vehicle performance (US DOE EERE). 

Ethanol is also widely available in high-level blends such as E85, used to fuel E85 - capable 

vehicles, such as FFVs. According to the Renewable Fuels Association, there are about 190 

million liters of E85 consumed in the economy today. 

The most common biodiesel blend in the US is B20, but lower level biodiesel blends, such as 

B2 and B5 are becoming increasingly available. Higher blends such as B100 are currently used 

by professional fleets. These government and private fleets are equipped with maintenance 

departments prepared to deal with the cold-weather performance and material concerns 

associated with higher blends. In comparison, B20 and lower-level blends can be used in nearly 

all diesel vehicles. The National Biodiesel Board estimated that about 950 million liters of 

biodiesel was sold in the US in 2006, much higher than the 284 million liters sold in 2005. 

Infrastructure and Vehicles. As of early 2007, nearly 1,200 US fueling stations offered E85. 

The stations are highly concentrated in the Corn Belt, but are spreading throughout the 

economy. Figure 27 illustrates the geographic distribution of these stations. 

94 
 

 

Figure 27 US E85 Refueling Infrastructure 

There are about 6 million registered FFVs in the US, available in a variety of models from US 

and foreign automakers. More information on the FFVs available in the US is available at 

http://www.eere.energy.gov/afdc/vehicles/flexible_fuel_availability.html 

Approximately 700 fueling stations offered biodiesel in 2007. The stations are available 

throughout the US, and Figure 28 shows their distribution. 

95 
 

Figure 28 US Biodiesel Refueling Infrastructure 

Trade. In 2006, the phase-out of MTBE in most fuel markets across the economy resulted in an 

unprecedented increase in ethanol demand. RFA reports that 2,500 million liters of ethanol were 

imported in 2006, mostly from Brazil with small volumes from Central America and the 

Caribbean (Jamaica; El Salvador; Costa Rica; Trinidad; and Tobago). 

EarthFirst Americas Incorporated (EFA) reported twice the import of palm oil-based biodiesel 

from Ecuador, at the end of 2005 and early 2006. The second shipment totals 3 million liters, a 

substantial increase from the first shipment of 1 million liters. The announcement was received 

with a negative reaction by the American Soybean Association (ASA), a trade group 

representing US soy producers, and called on the Congress to establish protectionist measures 

to block imported biodiesel from competing with the domestic soy-based product. 

The US biofuels import market will unlikely grow very much in the next few years given the 

increased domestic production. In fact, some analysts predict that the US biofuels market could 

become independent of imports in the next one-two years. 

Policy. The US policy and legislation play a crucial role with regard to the development and use 

of biofuels. The National Biodiesel Board determined that the most pressing issue for the 

industry in 2007 was public policy. More than quality, distribution or new markets, the NBB 

believed policy was the issue that would most impact the vitality of the industry. 

96 
 

 

 

 

 

 

The Energy Policy Act of 2005 was the first major piece of federal energy legislation since 

1992 and it contains a number of policies and incentives to further enhance and encourage the 

development and production of biofuels: 

o	 Established a Renewable Fuel Standard (RFS) that mandates all gasoline sold in the 

U.S. contain 7.5 billion gallons of renewable fuels by 2012. In 2013, the renewable fuels 

used should contain 250 million gallons of fuel derived from cellulosic biomass 

o	 Tax incentives for blenders of $0.51/ gallon (13.5 cents/liter) for ethanol, and 

$1.00/gallon (27 cents/liter) for biodiesel 

The DOE’s Office of Energy Efficiency and Renewable Energy (EERE) tracks existing Federal 

and State biomass related policies, along with other legislation that drives the development and 

deployment of biofuels in the US. Additionally, the Alternative Fuels Data Center sponsored by 

DOE's Clean Cities Program, provides a listing of state and federal incentives and policies 

related to alternative fuels. 

Sources: 

1. Renewable Fuels Association, http://www.ethanolrfa.org/ 

2. National Biodiesel Board, http://www.biodiesel.org/ 

3. BBI International, http://www.bbibiofuels.com 

4. DOE’s Office of Energy Efficiency and Renewable Energy (EERE), 

http://www.eere.energy.gov/ 

5. DOE’s Alternative Fuels and Advanced Vehicles Data Center (AFDC), 

http://www.eere.energy.gov/afdc/ 

6. US Department of Agriculture (USDA), http://www.usda.gov 

97 
Viet Nam 

Biofuels production in Viet Nam is in its very early stage of development. Although Viet Nam has 

been producing ethyl alcohol for many years (76 million liters in 2005), it has been consumed 

primarily by the alcoholic beverage and pharmaceutical industries. Just recently, in November 

2007, the government approved the production and use of biofuels as it seeks to diversify its 

energy portfolio. Its target is 500 million liters of fuel ethanol and 50 million liters of biodiesel by 

2020. The government plans to create favorable conditions for the development of biofuels and 

promote investments, including tax incentives and low-interest loans. Main priority for the 

biofuels R&D in Viet Nam is increasing crop productivity and development of advanced 

conversion technologies. 

Viet Nam is rich in biomass resources and it has great potential for biofuels production. The 

existing ethyl alcohol industry is already using cane molasses and starches as feedstock. 

Estimates show that if Viet Nam uses all cane molasses and 10% of cassava and corn 

production, it could produce around 320 million liters of fuel ethanol. Sugar cane production has 

been consistent during the past 6 years, about 15 million tonnes annually, while cassava 

production has grown rapidly from 2 million tonnes in 2000 to about 8 million in 2006. Viet Nam 

is also rich in cellulosic biomass, such as agricultural residues (rice husk, straw, baggase and 

cane leaf) - 45.6 million tonnes, and woody residues - 1.6 million tonnes (Tran Dinh Man, 2007). 

Dedicated energy crops, elephant grass in particular, are also seen as an opportunity. Pilot 

elephant grass plantations have been set up in Dongthap province (67 ha), BacKan (100 ha), 

and TuyenQuang (200 ha). Viet Nam has also expressed interest in production of ethanol from 

seaweeds. 

Two fuel ethanol plants are expected to come online in Viet Nam during 2008 - 2009: 

•	 Vietnam's Bien Hoa Sugar Company and Singapore's Fair Energy Asia Ltd have signed 

a memorandum of understanding for the construction of an ethanol plant capable of 

producing 63 million liters a year. The plant will be built in an industrial zone in Ninh Dien 

village, Chau Thanh district, in the southwestern province of Tay Ninh, and it will use 

sugarcane molasses (Biopact). 

•	 Petrosetco, a subsidiary of state-run oil monopoly Petrovietnam has teamed up with 

Japan’s Itochu Corp. to build a biorefinery in Ho Chi Minh City’s Hiep Phuoc Industrial 

Park. The facility will use cassava as a feedstock and it is expected to produce 100 

million liters of ethanol annually. The company plans to build three additional ethanol 

plants using cassava, sugarcane and rice as feedstock. 

Potential biodiesel feedstock in Vietnam includes animal fat (catfish oil), used cooking oil, rubber 

seed and jatropha oil. 

After two years of experimentation, the Vietnamese catfish processor and exporter Agifish 

announced in 2006 that it has successfully produced biodiesel using catfish oil. The company is 

building a 10,000 tonnes/year biodiesel facility in the southern Mekong delta province of An 

Giang. The company points out that a kilogram of catfish fat could produce 1 liter of biodiesel. 

Vietnam produced about 60,000 tonnes of “Basa” fish oil in 2005. The production in the past 

was primarily for exports to the United States and Europe (Mail & Guardian). 

Technology for producing biodiesel from used cooking oil has been successfully developed by 

HCM City’s Research Centre for Petrochemical and Refinery Technology. About 73,800 tonnes 

of used cooking oil were produced in 2005, which would translate to approximately 33,000 

98 
 

 

 

 

tonnes of biodiesel. A trial project producing 2 tonnes/day biodiesel is underway by Saigon 

Petro (Tran Dinh Man, 2007). 

Biodiesel production from rubber seed oil and other oil-bearing crops (jatropha) is under 

research by the Institute of Applied Materials & Science and Institute of Tropical Biology in 

HCMC. The Department of Agriculture & Rural Development has a jatropha trial plantation of 

5,000 ha. Eco-Carbone has identified four regions in Vietnam for Jatropha development, and 

will enter into partnership with local farmers and communities for a minimum of 30,000 ha. 

Within the framework of the R&D program carried out by Eco-Carbone, a series of agronomic 

tests for yield comparison are being implemented in order to select the most productive 

Jatropha species for cultivation in Vietnam. Biodiesel production is expected to start in 2010 and 

Eco-Carbone's objective is to reach 60,000 tons of biodiesel production per year at full capacity 

(Eco-Carbon). 

Sources: 

1. Asia Cleantech, Asia Clean Energy & Asia Clean Technology News, November 2007, 

http://asiacleantech.wordpress.com/2007/11/25/vietnam-approves-plan-to-use-biofuels/ 

2. Tran Dinh Man, Institute of Biotechnology, VAST, Hanoi, Vietnam, Utilization of 

Agricultural and Wood Wastes in Vietnam, November 2007, http://biomass-asiaworkshop.jp/presentation_files/34_Man.pdf
 

3. Biopact, August 2007, http://biopact.com/2007/08/vietnam-to-build-two-cassavaand.html
 

4. Eco-Carbon, March 2008, http://www.eco-carbone.com/ 

5. Mail & Guardian, July 2006 

http://www.mg.co.za/articlepage.aspx?area=/breaking_news/breaking_news__internatio 

nal_news/&articleid=276189 

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Appendix B: Projected Export of Major Oilseeds and Products by 2017/18 

Projected Palm Oil Export by 2017/18 

0 

5,000 

10,000 

15,000 

20,000 

25,000 

Thousand Tonnes

 Malaysia

 Indonesia

Year 

Source: World Oilseeds and Products: FAPRI 2008 Agricultural Outlook 

Figure 29 Projected Palm Oil Export by 2017/18 

Projected Soybean Export by 2017/18 

60,000 

50,000 

Argentina 40,000 

-10,000

9

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7/18 

Brazil

30,000 Canada

 CIS

20,000 India

 Paraguay 10,000 

United States

0 

Thousand Tonnes

Year 

Source: World Oilseeds and Products: FAPRI 2008 Agricultural Outlook 

Figure 30 Projected Soybean Export by 2017/18 

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17/18 

Projected Soybean Oil Export by 2017/18 

0 

1,000 

2,000 

3,000 

4,000 

5,000 

6,000 

7,000 

8,000 

9,000 

Thousand Tonnes

 Argentina

 Brazil

 Paraguay

 United States

Year 

Source: World Oilseeds and Products: FAPRI 2008 Agricultural Outlook 

Figure 31 Projected Soybean Oil Export by 2017/18 

Projected Rapeseed Export by 2017/18 

0 

1,000 

2,000 

3,000 

4,000 

5,000 

6,000 

7,000 

Thousand Tonnes

 Australia

 Canada

 CIS

Year 

Source: World Oilseeds and Products: FAPRI 2008 Agricultural Outlook 

Figure 32 Projected Rapeseed Export by 2017/18 

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Projected Rapeseed Oil Export by 2017/18 

Thousand Tonnes

-400 

Year 

Source: World Oilseeds and Products: FAPRI 2008 Agricultural Outlook 

Figure 33 Projected Rapeseed Oil Export by 2017/18 

Appendix C: Gasoline and Diesel Consumption in APEC Economies, 2005 

Table 10 Gasoline and Diesel Consumption in APEC Economies, 2005 

Economy Gasoline Consumption Diesel Consumption 

Australia 14,520 7,643 

Brunei Darussalam 196 107 

Canada 29,751 12,511 

Chile 2,081 3,260 

China 46,097 46,934 

Hong Kong, China 325 1,317 

Indonesia 12,942 9,974 

Japan 44,391 27,896 

Korea 6,969 14,841 

Malaysia 7,756 4,998 

Mexico 27,704 12,487 

New Zealand 2,325 1,741 

Papua New Guinea N/A N/A 

Peru 771 2,209 

The Philippines 4,111 4,211 

Russia 26,260 13,527 

Singapore 727 1,323 

Chinese Taipei 7,845 3,657 

Thailand 5,280 12,625 

United States 373,930 135,346 

Viet Nam 2,546 3,558

1,800 

1,600 

1,400 

1,200 

1,000 

800 

600 

400 

200 

0 

-200 

 Australia

 Canada

 CIS

 1,000 tonnes; Gasoline and diesel consumption by transportation sector 

 Source: IEA, 2005 

102 
 

 

 

Prepared By: 

Anelia Milbrandt 

National Renewable Energy Laboratory (NREL) 

1617 Cole Blvd 

Golden, Colorado, USA 80401 

Phone: (303) 275-3000 

Website: www.nrel.gov 

Dr. Ralph P. Overend 

NREL Research Fellow (Retired) 

Ottawa, Ontario, Canada 

Produced for: 

APEC Secretariat 

35 Heng Mui Keng Terrace Singapore 119616 

Tel: (65) 68919-600 Fax: (65) 68919-690 

Email: info@apec.org Website: www.apec.org 

© 2008 APEC Secretariat 

APEC#208-RE-01.8 

103