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26 Feb 2020

Energy

Biofuel Faces Challenges from Car Owners….New Stimuli Needed to Bolster Demand (Current Issue No.3088)

            Demand for biofuel blended with diesel and gasoline fuels has increased steadily in recent years, supported by pricing mechanism and the increase in the number of biofuel-powered vehicles. Although prices of biofuel blends are attractive, thanks to state subsidies, such blends with lower proportion of biofuel are more popular despite their higher prices.   

            On January 1, 2020, B10 diesel was adopted as the standard fuel in Thailand and E20 gasohol is scheduled to be promoted to that status around mid-2020, with the aim of promoting their consumption. However, we at KResearch view that factors inhibiting biofuel demand, such as the lack of confidence seen in car owners towards biofuel should be addressed.

              KResearch expects that if the above factor is rectified, biofuel consumption will likely be sustained in the future. This is because every one percent increase in B10 diesel consumption will bolster its demand by approximately 340 million liters, and every one percent increase in E200 gasohol consumption will push its demand by around 60 million liters. Aside from state subsidies for biofuel, the private and public sector agencies, such as carmakers may get involved in promoting biofuel by offering non-price incentives, such car engine warranty for biofuel-powered cars, and an upgrade of car engines for biofuel, which should be as efficient as car engines for conventional fuels. In addition, biofuel should be promoted as helping reduce PM2.5. Such efforts should help promote sustainable growth in biofuel going forward.