ETHANOL FREQUENTLY ASKED QUESTIONS
For Policymakers and Legislative Staff
GENERAL
Q: What is ethanol and what is it made from? Ethanol is “ethyl alcohol”. When used as fuel, ethanol is blended in a percentage with gasoline to make a finished motor fuel, called gasohol. When people say “ethanol” or “gasohol”, they commonly mean the blend of 10% ethanol and 90% gasoline called E10. Ethanol is made by converting crops and other biomass into sugars; the sugars are then fermented into ethanol which is then distilled into its final form. When used as a motor fuel, its main uses are to enhance vehicle performance and as a fuel oxygenate to improve the emissions profile of gasoline. Q: Why all the interest in ethanol? Ethanol is the most widely used renewable alternative fuel today. By renewable, it means that it cannot be exhausted, unlike traditional fuels such as gasoline and diesel. Against a backdrop of escalating world oil prices due to such factors as uncertainty of sustained supply of oil in the future, renewable fuels such as ethanol are in the limelight. Under a sustainable production system, ethanol is inexhaustible. What makes ethanol also interesting is that it can be readily used in existing cars. Using ethanol requires no modifications to the existing car fleet. This is apart from the environmental and other add-on benefits of ethanol. As discussed in the supplementary Briefing (see accompanying handout), ethanol has real benefits in terms of energy security, environmental quality, and employment generation. Q: Is ethanol the same as biodiesel? No. Ethanol is blended with gasoline and used in combustion engines, whereas biodiesel fuel, like petroleum diesel, is used in compression-ignition engines.
ETHANOL’S IMPACTS
Q: What impact does ethanol have on gasoline prices? Ethanol shall add to the overall supply of motor fuel in the Philippines and help keep pump prices competitive and affordable. It is also projected that ethanol can be locally produced at a much lower cost compared to the cost of gasoline refined from imported oil. It is therefore foreseen that ethanol shall make gasoline cheaper, benefiting the public at large.
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Q: Does ethanol really help reduce air pollution? Yes. There is a significant reduction in both carbon monoxide and hydrocarbon “tailpipe” emissions when ethanol is blended and used with gasoline in automobiles. In fact, a number of ethanol programs worldwide, including the United States, are anchored on ethanol’s positive impact to the environment. Q: What about ethanol’s impact on fuel economy? Critics of ethanol often allege that because ethanol contains less energy than pure gasoline, ethanol-blended fuel has a negative impact on gas mileage, In reality, variables such as speed, tire pressure, and weather’s effect on driving conditions have a much greater impact on fuel economy that the fuel used in engines. On the other hand, ethanol is an oxygenated fuel that has the ability to improve combustion efficiency in many vehicles. For most vehicles, this increased efficiency offsets the slightly lower energy content in gasohol. Besides, ethanol has a higher octane rating than gasoline. With a 113 octane rating, ethanol is the highest performance fuel on the market
Q: What does a typical ethanol plant offer in terms of economic benefits? An ethanol plant will have a large positive impact on the area’s economy. According to some studies, an average sized ethanol plant will: • • • • • • Generate foreign exchange savings from reduced importation of foreign oil Expand the economic base of the local economy Generate additional household income Support the creation of new jobs Generate new tax revenue for local governments Generate additional revenue for local farmers by increasing demand for their crops
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ETHANOL AND CARS
Q: Will my vehicle run on ethanol-blended fuel? All vehicles from major car manufacturers are “ethanol-compatible” and can use a blend of up to 10% ethanol. Since the 1980s, major automakers all over the world have covered the use of up to 10% ethanol under warranty, and no engine modifications are necessary to use E10. When ethanol was first introduced in the 1980s, some cars experienced deterioration of some elastomers (rubber-like parts) and metal fuel system components. Manufacturers have since upgraded their fuel systems so that today, they are now all compatible with ethanol fuels. Q: Ethanol removes debris and clogs the fuel filter and fuel injectors. Is this true? Unlikely. Gasohol has been, as mentioned above, approved for use in vehicles worldwide. Modern fuel lines are also fully compatible with ethanol. Today's gasoline also contain detergents to control fuel-tank deposits that can clog fuel filters. And because ethanol burns cleaner than conventional gasoline, it leaves fewer deposits on intake valves and combustion chambers. Q: What are flex-fuel vehicles? Flex-fuel vehicles, or FFVs, are vehicles designed to run on varying blends of unleaded gasoline with ethanol. Worldwide, and especially in Brazil and the United States, FFVs are becoming popular due to the escalating cost of gasoline. FFVs can run on pure gasoline, pure ethanol, or any ratio of gasoline and ethanol. If gasoline prices are high, motorists can easily shift to ethanol. Q: Why should we get excited about FFVs? FFVs shall help insulate the public from the high, and still rising, cost of gasoline. Because ethanol can be produced locally at a lower price, FFVs can simply use ethanol instead of gasoline, and thereby provide savings to motorists.
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POLICY AND LEGISLATION
Q: Why is a mandate necessary? In order for the Philippines to harvest ethanol’s wide-ranging benefits, the government needs to attract private sector investors through a mandate, which shall create the domestic market for the biofuel. Ethanol plant projects require extremely huge investments. According to financial estimates, the development and maintenance of facilities for a medium-sized distillery entail at least 2 billion pesos. • Investors have expressed that the government must first indicate its seriousness to address the energy security problem by placing the proper policies to attract investments from the private sector. Investors have reason to be worried should the mandate proposal be dropped. The experiences of other countries such as India, Australia, and even the United States show that without a clear government mandate, oil companies prefer not to sell gasohol.
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Q: Do car firms and car owners have reason to worry about the mandate? Fears of some car manufacturers are based on (i) the perceived negative effect of gasohol to particular engine parts, and (ii) that the proposed mandate as provided in the Biofuels Bill will not allow for any lead time for the general public to prepare. These fears are unfounded. On the contrary: • Fuel ethanol will benefit car owners. It as a measure to combat rising prices of gasoline that not only strain the wallet but also add to urban pollution. According to oil firms which have begun selling gasohol, to date no reports of damages have been put forward and car owners have in fact expressed satisfaction over E-10. The Worldwide Fuel Charter and a 2003 document called Automobile Manufacturer Fuel Recommendations have established ethanol’s compatibility with vehicles and engine parts. According to these documents, every major automaker in the world approves the use of up to 10% ethanol-blended gasoline under warranty. The Biofuels Bill is set to implement a phased introduction of gasohol, which shall commence two years after the effectivity of the measure. Two years should be sufficient time to prepare car owners via education campaigns and information drives.
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Q: Will there be enough ethanol to cover the mandate’s requirements? Should the mandate be approved, the expected ethanol requirement shall necessitate the establishment of at least 14 ethanol production facilities with a capacity of around 100,000 liters per day over a course of ten years. The question translates to the sufficiency of feedstock e.g. sugarcane supply. Yes, there will be enough sugarcane to meet the requirements of the mandate. All fuel ethanol requirements can actually be supplied by converting excess sugar/sugarcane production. New cane areas are also readily available. According to the Sugar Regulatory Administration, the Philippines has a potential 326,000 hectares of land that can be planted with sugarcane. Q: Will sugar prices inflate due to the ethanol mandate? As ethanol shall present a new significant demand for cane, cane for sugar production might be not enough. This may cause a shortfall on sugar supply, leading to higher prices of raw and refined sugar. Is this correct? No. Prices are governed, for the most part, by supply and demand. Two things shall be working on tandem to keep the existing supply-demand situation of the domestic sugar industry: a) Cane supply, which corresponds to sugar production volume, of existing sugar districts shall not be diminished, as b) New distilleries shall not be placed in sugar districts New distilleries will rather be established in areas significantly far away from sugar districts to avoid uncertainty in cane supply due to competition posed by sugar mills, especially that sugar prices have been experiencing significant gains lately. Likewise, cane growers in existing sugar districts will not supply to far-away ethanol plants/distilleries due to transport costs. What shall happen, then, is that ethanol plants will be placed in “new” cane areas, while the existing sugar districts shall still produce sugar. This way, the existing sugar production volume shall not be affected by the ethanol mandate. Questions must be addressed to: THE PHILIPPINE FUEL ETHANOL ALLIANCE c/o Mr. Marlon Joseph S. Apaňada Information Officer Tel: +632.8911138 Fax: +632.8911144 Mobile: +63917.830.9846 Email: marlon_apanada@yahoo.com; info@bioethanol.com.ph
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