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Two Lanes: Japan's Biofuel Drive
[Analysis] Two different types of bio-gasoline are now on sale on a trial basis
Hisane Masaki (hmasaki)     Print Article 
Published 2007-12-15 03:22 (KST)   
This the second part of a three-part article. Read the first part.  <Editor's Note>
In October, Japan launched the first test sales of gasoline directly mixed with bioethanol in Osaka, western Japan. The government of Osaka prefecture has been commissioned by the Environment Ministry to conduct the test sales.

Gasoline directly blended with up to 3 percent of ethanol (E-3) began to be sold at two gas stations -- one in Sakai City and the other in Daito City in the prefecture -- at the same prices as regular gasoline.

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A plant in Sakai city, completed in January, produces bioethanol from waste wood and another plant in Okayama city, in Okayama prefecture, also western Japan, mixes it with gasoline for the test sales.

Initially, E-3 supplies in Osaka are limited to some 100 cars of local companies that have registered with the Osaka prefectural government in advance. The government plans to increase the number of E-3-supplying gas stations gradually and to begin selling the product to ordinary motorists as early as fiscal 2008.

The Environment Ministry has provided subsidies of 700 million yen (approx. US$6.2 million) for the test sale project for fiscal 2007. A small-scale test sale has also started on the island of Miyakojima, southern Japan, using E-3 made from sugar cane produced there.

Earlier in April, Japanese oil distributors, backed by the Ministry of Economy, Trade and Industry (METI), began to sell another type of bio-gasoline -- gasoline blended with ethyl tertiary butyl ether (ETBE) -- in the Tokyo metropolitan area, also on a trial basis.

ETBE is a gasoline additive made by combining bioethanol -- grain alcohol derived from such plants as sugar cane and corn -- with isobutylene, a petroleum product.

In November, a filling station owned by the Environment Ministry in Tokyo's Shinjuku Gyoen National Garden started supplying E-3 to the ministry's official cars. The ministry hopes all the other official government cars will be filled with E-3 at the pump.

The E-3 test sales in Osaka had originally been scheduled to launch in August, but was delayed until October because of the petroleum industry's refusal to supply gasoline for the E-3 test sales.

The petroleum industry and the Environment Ministry have been at odds over how bioethanol should be mixed with gasoline. The petroleum industry favors gasoline blended with ETBE while the ministry prefers the direct bioethanol-gasoline mixture.

In April, Nippon Oil Corp. and other major Japanese oil distributors began to sell ETBE-blended gasoline at 50 gas stations in the Tokyo metropolitan area on a trial basis. It was the first time that bio-gasoline had been sold in Japan on a commercial basis.

The bio-gasoline now on sale in the Tokyo metropolitan area is 7 percent ETBE-blended -- and 3 percent bioethanol-blended. Prices for the bio-gasoline are at the same levels as those for regular gasoline. But the ETBE-blended gasoline is not selling as well as the petroleum industry initially expected.

The volume of ETBE imports may double in fiscal 2008 when 100 gas stations are to start selling ETBE-blended gasoline. The oil distributors plan to spread the sale of bio-gasoline across the country, selling the product at 1,000 outlets in fiscal 2009.

As reasons for opposing the direct mixing formula, the petroleum industry cites higher costs, among other things. "The ETBE formula can be done through existing petroleum-refining facilities," Fumiaki Watari, president of the Petroleum Association of Japan (PAJ), said earlier this year. The direct mixture formula, by contrast, requires additional capital spending and cooperation from many companies to produce bio-gasoline, Watari said.

The Environment Ministry argues, however, that the ETBE formula makes it technically difficult to raise the concentration of bioethanol in bio-gasoline. The ministry plans to raise the legal limit on the percentage of bioethanol in the mix from the current 3 percent to 10 percent in the future.

With the backing of METI, the petroleum industry plans to blend 360,000 kiloliters of ETBE with gasoline in fiscal 2010 to save consumption of 210,000 kiloliters of crude oil. But the figure will still be far less than the government's target of saving 500,000 kiloliters of crude oil through the use of biofuels. The recently launched test sale project in Osaka is one of the key steps to save the remaining 290,000 kiloliters.
Hisane Masaki is a Tokyo-based journalist, commentator and scholar on international politics and economy. This is the second part of a rewritten and updated version of an article that originally appeared on Asia Times. The third -- and last -- part will come later.
©2007 OhmyNews
Other articles by reporter Hisane Masaki

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