ANALYSIS - Japan Lags in Global Biofuel Race but May Catch up
Author: Aya Takada
Government and industry officials say biofuel consumption in Japan will grow rapidly if the relevant ministries act together to promote it and gain the support of the powerful oil industry, which sees fuels made from crops and other renewable resources as a threat to its business.
"There are no technological problems hindering wider use of biofuels in Japan," said Takeshi Sekiya, assistant director at the climate change policy division of Japan's Environment Ministry.
"It is a matter of money and determination."
Under the Kyoto Protocol, Japan must cut its emissions of carbon dioxide and other greenhouse gases blamed for global warming by 6 percent from 1990 levels in five years from 2008.
To help it reach that target, the government plans to replace about 500,000 kilolitres (kl) a year of transportation fuel with biofuels by 2010, as the Kyoto pact excludes CO2 emissions from biofuels such as ethanol and biodiesel.
Ethanol, or ethyl alcohol, has become a major source of motor fuel in Brazil and is gaining popularity in the United States as soaring oil prices increase the appeal of "green" fuels.
Biodiesel, a fuel made from vegetable oils or animal fats, is also gaining ground as an alternative fuel, especially in Europe.
But in Japan, fuel-use ethanol is not used or made commercially, while only about 2,000 kl of biodiesel is produced annually from used edible oil at plants run by local government offices.
To bring about a change, Japan's Agriculture Ministry will subsidise the construction and operating costs of new biofuel plants using budget money from the fiscal year starting in April.
It also plans to spend 8.5 billion yen (US$71 million) on the construction of three plants capable of producing up to 15,000 kl of ethanol a year, and five smaller-scale biodiesel plants.
It expects home-grown crops such as low-quality wheat and rice, sugarbeet and sugarcane to be used for ethanol output.
"Japan has the potential to make 100,000 kl of ethanol a year from domestic farm products, and we aim to achieve annual production of 50,000 kl within five years," said Tsuyoshi Arai at the ministry's environmental policy division.
With support from the ministry, the Hokkaido Prefectural Union of Agricultural Cooperatives, a farmers organisation in northern Japan, will start building an ethanol plant as early as next year that may have the capacity to produce 15,000 kl a year.
In addition to crop-based ethanol, Japan will also promote production of cellulosic ethanol made from waste wood and leaves.
Next January, Bio-ethanol Japan Kansai Co. Ltd., a joint venture between general contractor Taisei Corp. and four other Japanese firms, will start operating Japan's first plant for commercial production of cellulosic ethanol.
The plant will produce 1,400 kl of ethanol from waste wood a year, and aims to raise output to 4,000 kl in about two years.
IMPORTS STILL VITAL
Still, these target volumes of domestically produced ethanol fall far short of the government's biofuel use target.
The Environment Ministry expects Japan will have to import roughly 400,000 kl of ethanol a year to achieve the target. To do so it will depend on imports from Brazil, the only nation with exportable ethanol.
Japan, the world's second-largest consumer of gasoline with demand estimated at about 60 million kl a year, aims to replace half the consumption with E3 -- a fuel made from 3 percent of ethanol and 97 percent of gasoline -- by 2010.
Although the government approved E3 as fuel for existing gasoline cars in 2003, it is still unavailable at gas stations in Japan, as Japanese oil companies are reluctant to make additional investment to set up E3 blending and storage facilities.
As an alternative to E3, the oil industry will start sales of ETBE-blended gasoline next year. ETBE, or ethyl tertiary butyl ether, is an additive made by compounding ethanol and isobutan