Asian governments are caught between an ever-increasing demand for cheap energy to fuel development and an unabating rise in global oil prices. A few South-east Asian governments are feeling the financial pain of costly fuel subsidies and are looking elsewhere for energy sources.

The hunt for alternative energy sources has led Asian nations to explore biofuel technology, among others. Their widespread use is not yet clearly viable, nor has the cost of implementation been easy to stomach for government budget planners. Media and investor hype, lauding the merits of adopting renewables along with pro-active government claims of embracing biofuels, may obscure important non-economic issues.
 
Biofuels are uniquely appealing to Asian governments interested in decreasing fossil fuel dependence in the transport sector. Production would engage existing national agricultural industries, namely sugar, coconut, cassava, castor kernel and oil palm plantations. Giving a boost to the large number of farmers in the region is good politics for South-east Asian leaders, so policymakers are devoting much airtime and funding to the biofuel cause.

Bio-ethanol

Thailand, India, China and Japan have all launched national policies to promote gasohol, or E10 (a blend of 10% ethyl alcohol and 90% gasoline) and work is under way in the Philippines and Indonesia to also 'go gasohol'. Thailand has the longest-standing programme in gasohol, started in 1985, and now has more than 4,000 stations serving the alternative fuel. E10 will be mandated by the end of 2006, with an import ban on methyl tertiary-butyl ether (MTBE), the petrol-based fuel additive that ethanol replaces.
 
Japan's Environment Ministry is following suit, recently proposing a plan to require the car fleet to use E10 by 2030, which will help the nation meet its strict Kyoto Protocol targets. In China, the government is making E10 mandatory in five provinces, which accounts for 16 per cent of the nation's passenger cars. This is part of a new national energy policy unveiled in January, requiring China to boost renewable consumption to a fifth of total consumption by 2020.

Biodiesel

Biodiesel initiatives are under way in the Philippines ('cocodiesel'), Thailand, Malaysia and, in very early stages, Singapore.

Most recently, and with much fanfare, the Indonesian government announced its new focus on biofuel. The Minister of Energy unveiled on 13 July 2006 the country's intention to raise and invest 200 trillion rupiah (USD 22 billion) over the next five years for biofuel production and distribution.

Indonesia is particularly focused on biodiesel production from palm oil. According to an earlier announcement by the Ministry of Agriculture, three-quarters of the biofuel production funds for the next five years, or 51 trillion rupiah (USD 5.6 Billion), will be used for palm oil production.

Indonesia is keen to replicate the success of the Malaysian government's Envo Diesel programme which, despite hiccups, is expected to produce up to 500,000 tonnes of B5 ( a blend of 5% palm-oil-derived diesel and 95% petroleum-derived diesel).

Malaysia announced guidelines to its biodiesel policy in August 2005, and the buzz is already attracting interest from foreign businesses and governments seeking to set up plants for large-scale production.

More carbon emissions?

The social and environmental benefits of a biofuel industry in South-east Asia as a whole require thorough scrutiny. Though a few projects would make use of existing agricultural land or abandoned farmlands, there is also a possibility that virgin forest would be cleared for new plantations.

This is bad news, and not only for the region's already threatened forests. It also nullifies any emission reductions provided by the use of biofuels. In a comparison of cumulative carbon dioxide emitted in the life cycle of a fuel - from production to distribution to final use in a car engine - biofuel from cleared forest land actually outstrips petrol fuel in its carbon dioxide intensity because of the massive loss of carbon dioxide absorption capacity when virgin forest is cut down.

The second issue with land use is the possibility that fuel source plantations will compete with food crops. With malnutrition and under-nutrition being major concerns in the region, it seems morally ambiguous to choose biofuel at the expense of the basic food needs of South-east Asian people.

Use of jatropha, which can be processed to create oil feedstock for biodiesel, seems like a less controversial and more far-sighted option for South-east Asia, as the plant grows in poor soil and will thus not compete directly with food crops. Jatropha plantations for biodiesel are under way in four regions of Indonesia, and have had success in parts of India.

While the general impulse of governments in response to rising oil prices and in search for energy security has been to seek 'alternative' energy sources or 'solutions', equal emphasis should also be placed on conservation efforts. These can be achieved through capacity building and effective regulatory measures to discipline energy consumption behaviour - without which, any national energy security strategy will be incomplete.

A version of this article first appeared in the Straight Times (Singapore) on July 22, 2006. The complete version is available from the SIIA website (http://siiaonline.org). Gavin Chua Hearn Yuit and Jardine Wall are researchers at the Singapore Institute of International Affairs.