17 December 2011
Thailand goes Biofuels. New politics of power

Sudden changes in energy policy have become as predictable as an oil price hike ahead of a major national holiday. But even taking into account the capricious nature of such policies and the impact of external factors outside our control, the last few months have been as turbulent as a roller-coaster ride.
Now industry observers are hoping that Energy Minister Pichai Naripthaphan's renewed commitment to biofuels, made earlier this month, does more than mark an end to the government's post-election flirtation with pure petrol at the expense of renewable energy.
The country is in urgent need of an unambiguous and long-term energy strategy, something that has eluded successive governments for a decade or more. These failed policies are well summed up by the huge variety of pumps cluttering the forecourts of petrol stations.
When it took office, the Pheu Thai government startled energy planners by sidelining the 38-year-old State Oil Fund, designed to support national energy security and stabilise domestic retail oil prices. Levies imposed on regular petrol (91 octane), premium petrol and diesel to subsidise the Oil Fund were slashed, making pure petrol competitive with gasohol – too competitive as it turned out, because motorists began to abandon what they regarded as power-sapping biofuels in favour of non-renewable pure petrol.
Cost adjustments followed to preserve realistic price points. This satisfied a campaign pledge and undoubtedly pleased many people, in particular 17 million motorcyclists, most of whom only trust regular petrol. But it created an uproar among influential ethanol producers, who were forced to export supplies earmarked for the domestic market.
Now comes Mr Pichai's announcement that all regular petrol will be removed from the market by next October “to create greater opportunity for farmers who grow biofuel crops”. While this is good news for farmers, owners of motorcycles that are not gasohol-compliant have expressed shock and dismay. It is also important that we not make the mistake of sacrificing food security for energy security by using too much arable land to grow biofuel crops. Compressed natural gas (CNG or NGV) is another clean and efficient fuel that is making Bangkok's air breathable again. Energy credit cards were given to users of public vehicles to buy this on Thursday. But there were fewer takers than expected, possibly because of concern over the graduated price increase starting next month.
These developments help underline the need to end the lack of continuity and flip-flopping that occurs when one government follows another. This creates instability and throws markets into turmoil.
The overall picture should become less hazy next week. Future energy needs will be assessed when leaders from six countries in the Mekong region meet in the Burmese capital of Naypyidaw, where Mr Pichai will need to focus his attention on energy cooperation. Continued supplies of natural gas from Burma are vital for economic development and to supplement gas piped in from the Gulf of Thailand. Hydropower from projects along the Thai-Burmese border can no longer be counted on in the long term, given changing political circumstances. Coal-fired plants are magnets for activists because they spew greenhouse gases into the atmosphere and nuclear power has become a hard sell everywhere after the Fukushima tragedy. Tough decisions that will shape the future have to be made and then followed through. Above all, there must be continuity of purpose.