Barriers to SE Asia Biofuel Exports to the European and US markets

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1 Barriers to SE Asia Biofuel Exports to the European and US markets Samai Jai-In, Ph.D. Energy Specialist, Energy Standing Committee, House of Representatives, Thailand IEA HQ, Paris 16th September 2010

Thailand s Economy in 2009 65 Millions Population ~1% of World; Per capita 4,338$, (PPP : 8,500$) GDP US$273 Billions (553.4 Bn, PPP) Agriculture: 11.4 % of GDP 40 % of Employment Manufacturing: 44.

2 Thailand s Economy in Millions Population ~1% of World; Per capita 4,338$, (PPP : 8,500$) GDP US$273 Billions (553.4 Bn, PPP) Agriculture: 11.4 % of GDP 40 % of Employment Manufacturing: 44.5 % of GDP 20 % of Employment 1st Import Item : Crude Oil (15.6% of import bill) Major Agricultural Products & World Rankings Rice 30.2 MT from 11 M. Ha.(1 st Exporter) Rubber 3.02 MT from 1.76 M. Ha.(1 st Producer&Exporter) Sugarcane 64.4 MT from 1.01 M. Ha.(Export 75%, 2 nd ) Cassava 27 MT from 1.17 M. Ha.(Export 80% 1 st ) Oil Palm 6.6 MT from 0.42 M. Ha.(3 rd Producer)

3 ASEAN GDP in MUSD, Current Market Prices, Data from ASEAN Total Population : 583 Millions, Ave. GDP Per Capita : 2,581 USD (GDP PPP 5,320 USD) Total Land Area 4.4 Million Sq.km. 1,600, ,400, ,200,000.0 ASEAN Total GDP : 1,506 Billion USD Japan GDP : 5,100 Billion USD (2007) China GDP : 4,200 Billions USD India GDP : 891 Billions USD (2007) 70,965 90, ,773 Lao PDR Brunei Darussalam Cambodia 146, ,120 Myanmar 1,000, , , , , ,544 86, , , , ,134 52,953 98, , , , ,790 60, , , , , , , , , , , , ,174 Viet Nam Philippines Singapore Malaysia Thailand Indonesia /

4 Asia has changed, Thailand has also changed : Economic & Social Integration, Climate Change Impact, The way we live (urbanization) and the way we work also change, And so do Agriculture : The backbone! Demographic Changes Aging society by 2025,

5 Share of Transportation Fuels in Thailand (Figures in Million Litre/D) Since 2008, All HSD contains 2% of Biodiesel 100% % 80% 70% % NGV LPG 50% Gasohol Gasoline 40% Diesel 30% % 10% 0% (Jan-Oct)

Securing Energy Resources Oil 1 Policy Natural Gas

as National Agenda E85 Ethanol based oil Bio Diesel NGV

Thailand s Energy Policy Policy Presented to the

Conservation Conservation Measure Efficiency Standard

Energy Price Price structure reflect its genuine cost

business 5 Preserving Environment coupled with Energy

6 Securing Energy Resources Oil 1 Policy Natural Gas Electricity Alternative Energy 2 Set Renewable Energy as National Agenda E85 Ethanol based oil Bio Diesel NGV Wind /Solar / Biogas/ Biomass/ Small Hydro energy Thailand s Energy Policy Policy Presented to the Parliament on Dec 30 th Policy Encouraging Energy Conservation Conservation Measure Efficiency Standard Encouraging Private Investment 4 Policy Ensure Fair Energy Price Price structure reflect its genuine cost Develop Services Quality Safety in Energy Related business 5 Preserving Environment coupled with Energy Development and Consumption Green house Emission Reduction Support CDM Projects Policy

7 Drivers Agriculture Diversification Alternative end-use from food/feed market Less labour intensive Higher Productivity Rural Job Creation Bridge Building I : ASEAN/GMS Cross- Border Trades Bridge Building II : Low Carbon Society

8 Labour Force : 36 M strong, but. Thailand will move into an aging society by 2025, window of opportunity is closing.. From NESDB

9 USD/Ha./Yr. Net Farm Crop Income USD/Ha/Yr Data from OAE, MOAC 2, , Average Farm Holding in Thailand ~ 3 Ha./Household Poverty Line = 524 USD/person/yr = 2,100 USD/Household/yr Average Farm Holding 1, , Poverty Line : 700 USD/Ha./Yr. 3.7 Mln. HH - Rubber Palm Cane Cassava Rice Maize

10 New Equation into the old ag. commodity

11 Th.B./Kg. New Equation into the old ag. commodity 4.5 Oil Palm Price FFB (Data from DIT,MOC) 15yr REDP B2 Mandate B3 Ma nda te National Biofuel Strategy Biodiesel Project initiation

12 THB/Kg. Food&Energy Crop Price Statistics in Thailand Data from OAE, MOAC Palm FFB THB/Kg Cassava Root THB/Kg Cane Price THB/Kg Palm FFB THB/Kg Cassava Root THB/Kg Cane Price THB/Kg

13 M.Ha. Energy Crop Plantation Areas in Thailand (M.Ha., data from OAE, MOAC) Oil Palm Cassava Cane

14 M.B Food/Feed/Fuel Crop at Farmgate Values in Million Baht (Data from OAE,MOAC) 140,000 OilPalm 120, ,000 Cane Cassava 38,189 26,007 80,000 60,000 40,000 20,000-16,049 40,940 11,472 13,807 43,962 7,543 9,203 16,115 32,789 5,549 4,875 34,827 25,785 24,964 26,106 23,918 24,053 25,475 44,229 29,134 31,760 22,528 15,021 17,712 18,337 17,152 12,010 12,

15 Sugarcane Area and Production in Thailand (Data : OAE) Planted areas(1000 rais) Production(1000 tonnes) 8,000 80,000 7, Rai = 1 Ha. 70,000 6,000 60,000 5,000 50,000 4,000 40,000 3,000 30,000 2,000 20,000 1,000 10,

16 Cassava Area and Production in Thailand (Data:OAE) Planted areas(1000 rais) Production(1000 tonnes) 12,000 30,000 10, Rai = 1 Ha. 25,000 8,000 20,000 6,000 15,000 4,000 10,000 2,000 5,

17 Oil Palm Production in Thailand Plantation Area (M.Ha.) FFB Production (M.Tons)

18 Gasoline and Gasohol Consumption in Thailand, ML/Day % 40% 60% 1% 39% 9% 18% 23% 31% 20% 16% 61% 60% 62% 61% 55% 5% 40% 64% 33.5% (Jan-Oct) Gasoline 91 Gasoline 95 Gasohol

19 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Liter/Day Biodiesel Consumption Volume (Aprl. 2010) B5 Volume Sale ML/day (B ML/day) Diesel(B2) Volume Sale ML/day (B ML/day) Total volume of B ML/day B3 Mandate since June 1 st, 2010 : B100 Vol. 1.9 ML/day B100 in B5 B100 in B2 Total B100 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , , ,701,326 1,072, ,481 Update: Sep. 09

20 Biodiesel Consumption in Thailand ML/day 2,000,000 1,800,000 1,600,000 1,400,000 B3 Mandate since June 1 st, 2010 B100 in B2 B100 in B5 628, ,200,000 1,000, , ,000 1,072, , ,000 0 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06 Nov-06 Feb-07 May-07 Aug-07 Nov-07 Feb-08 May-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10

22 Alternative Energy Targets for Road Transport Sector of Thailand Million Litre/Day % 28% Total 2008 =60 ML/d NGV Replace Gasoline NGV Replace Diesel Gasoline Gasohol Bio Diesel Total 2022 =96 ML/d 5% 15% 9% 5% 20% 16% % 45% Diesel

23 Ethanol Production in Plants : 2.9 ML/day Consumption : 1.3 ML/day

24 Oleochemical Plant, Rayong BDF Plants : 14 Production capacity : 5.9 ML/day Consumption : 1.9 ML/day Vertical integration among petroleum refiners & oil palm complex (TOL-PTTCh, PBC-RPC, BCP

น ำม นสบ ด ำ Biorefinery Concept Use up to 100% Biodiesel Small&Smart Solution Farm Truck Palm BDF for Farm Truck Agri machines Palm Fronds Solid Fuel pellet Gasification Single Cylinder Engines

25 น ำม นสบ ด ำ Biorefinery Concept Use up to 100% Biodiesel Small&Smart Solution Farm Truck Palm BDF for Farm Truck Agri machines Palm Fronds Solid Fuel pellet Gasification Single Cylinder Engines Manure Glycerol Power ENERGY ISLAND Power Cake Empty Fruit Bunch Palm and JCL Plantation JCL Toxicity Test Power Power BIODIESEL Glycerol BDF Production Unit Vegeta ble oil Oil Extraction Oil seeds Quality Control Single Cylinder Engines Animal Feed

26 Oil Palm Expansion in Acidic Areas FFB Yield 30 Tons/Ha. in 2008 FFB Yield 36 Tons/Ha in Planted Oct.2004

27 Farm Co-op, Conversion technology, Microgrid B100 Own-use, Animal Feed- farm use, Sell excess to refiners for food,fuel, Small & Smart = Beautiful & Competitive

28 Indonesia : Biodiesel Plants 11 plants, 2.5 Million Tons/yr Source T.Soerawidjaja, Bioenergy Forum 2009

Biodiesel Industry (Installed Capacity 2006 : 150,000

29 Malaysian Oil Palm Industrial Complex from M. Ali Hassan et al, 5 th Asian Biomass Workshop, 2009 Biodiesel Industry (Installed Capacity 2006 : 150,000 tonnes 2007 : 600,000 tonnes 2008 : 1.46 mln. tonnes 2009 : 2.65 mln. tonnes

30 Thailand s renewable energy sector Transportation bioenergy is just part of a larger programs in energy development in the age of energy security and climate change adaptation, SPP(10-90MWe)/VSPP(<10 MWe) regulation started in 1993, now 16% of power generation Commoditization of biomass residues : Price signal works!

31 Biomass Sector Potential for 4,400 MWe and 7,000 KTOE heat 2010:Existing capacity : 2,454 MWe and 3,320 KTOE Target for 2022 : 3,700 MWe and 6,760 KTOE This is existing BAU with no export projection! Expandable Potentials Oil Palm Acreage Expansion : 1 Million Acres by 2013, Rubber Acreage Expansion Pulp & Paper Wastes Forest Industry Development : Forest Residues : 100 MWe potentials for local community

33 Agriculture Residues

34 Way forward Roles & significance of Small Holder Best Practice : Small & Smart Solutions, Some of the extreme poverty : Bottom Billions, < 1 USD (PPP) / day are in the Greater Mekong Subregion.Too ill, too weak, too poor, too deep in political conflict to climb up the ladder of Development, Small Holder Empowerment = Poverty Reduction Biofuel can be the 1 st step, then congregate and develop onto higher values products :starch, sugar and oleochemical platform, Capacity buildings & (Fair) Trade instead of Food Aid ASEAN Common Market South-South Actions

35 Barriers to Export Standard Harmonization :- NTB s or Consumer Protections? CFPP Perceived compatability with existing vehicles Free Trades Agreements Japan & Brazil Alliance US and Caribbean Zones AFTA? Logistics Bottlenecks The Big Big Barrier : Ag. Subsidies!

Biofuel Transitions in S.E. Asia : Thailand s Leading Example

Biofuel Transitions in S.E. Asia : Thailand s Leading Example Samai Jai-Indr, Ph.D. Energy Specialist, Energy Standing Committee, House of Representatives, Asia Oceania Convention on Global Sustainable