Fuel for Thought Part II

As the world goes mad over these low-carb diets, our vehicles, it seems, will be picking up our slack. Dr. Atkins would be appalled, surely; but that won’t stop the biofuels act from finally getting passed into law this month. But that’s a good thing, right? Well, yes, but it’s a bit like legalizing marijuana; it just depends on who you ask, who is growing the crops and what it ends up leading to.

So what, as a consumer, do you need to know? A lot. So sit down, pour yourself a large scotch, (not rum, because a lot of them already contain ethanol) and get ready to be filled up.

Using carbohydrates instead of fossil fuels to run cars is not a new idea. Henry Ford’s first car was made to run on ethanol. So was the first spark-ignition car engine, developed by German Nicolas Otto in the second half of the 19th century. During World War II, the U.S., Brazil and other nations even relied on ethanol to extend gasoline supplies. Today, Brazil supplies most of the world’s ethanol demand and has even become energy independent as of last year.

Locally, ethanol has been widely accepted as burning cleaner than regular gasoline and having a higher octane rating, but more importantly, its allure lies in the fact that it is a renewable source of energy. Shell was the first oil major to introduce it in May of last year, but after the biofuels act gets implemented this year, all oil companies will be required to have a 5% blend of ethanol on 5% of their volume.

Let’s take Petron’s volume as an example. The company sells 2.5 billion liters of fuel a year. That means that they will need to treat 125 million liters of fuel with 5% ethanol. And so on. This will gradually rise to 10% after two years. Currently, the ethanol will still need to be imported from Brazil or Australia until such time that the Philippines can meet the production demands, but at least the foundation has been set for a cleaner, greener, more self sufficient nation.

Of the three major oil companies, three manufacturers and some independent bodies I spoke to for this article, each one embraced the new law and fully supported it. The Chamber of Automotive Manufacturers even took out an ad congratulating the government for it. Initially, their concerns were that ethanol is not compatible with all cars and could create some warranty issues, which is why the law was drafted to allow consumers a choice, as well as a gradual implementation that allows manufacturers enough time to introduce ethanol capable vehicles and for the public to get cozy with the idea. In other words, while no solution is in sight, regular unleaded will still be available.

Sounds too good to be true? You may want to pour yourself a taller glass.

While ethanol gets the nod from both the oil industry and the car industry, it is the mandatory implementation of the 1% Coco Methyl Ester (CME) on all diesel fuels that is leaving a nasty residue in some mouths. Unlike the ethanol component, the new biofuels act requires that every last drop of diesel that comes out of a pump be mixed with a minimum of 1% CME. No exceptions. Not even on the industrial diesel that powers generators. So what’s 1% between friends?

The industries affected (automotive and oil) both fear that not enough research has been conducted to guarantee consumers that the introduction of even just 1% of CME will have a positive effect on either their vehicles or the environment. In fact, independent tests commissioned by some oil companies show the reverse to be true.

And who are we doing this for if not the environment and our countrymen?

As of today, I’m told that approximately 65% of all CME will be supplied by Chemrez, a local Chinese company. The same company is said to be currently developing another plant, which will increase their production to as much as 80% or more. While it may be true that this will create local jobs and fill the BIR’s pockets with wads full of much-needed cash, coconuts are a commodity like anything else and the concern is that there is absolutely no guarantee that the prices won’t skyrocket once a mandatory demand is created.

If prices remain at today’s cost of 60 pesos per liter of CME, this should work out to a minimum added cost to the consumer of 35 centavos extra per liter of diesel. That is just cost of product. Once you start to factor in the cost of cleaning out and modifying pipes and fittings to accommodate the new bio diesel, this will inevitably shoot up.  Anything that the oil companies need to do to comply with the new law will be billed directly to you. Let’s face it, nice as everyone may be, nobody is doing this for love.

Another concern is that CME does not react well with water. Tests conducted by our local oil companies have shown that the very properties that make up CME "grabs" water. This becomes an issue during storage. Strangely enough, as part of the transportation of fuel, oil companies use water to push diesel through pipes. It may sound bizarre, but once inside the tank, any excess water just floats to the top where it is easily skimmed off. The same technique is used when water finds its way into storage tanks in humid countries like the Philippines.

The concern now with CME is that it cannot easily be separated from the water, which if no solution is found, will lead to corrosion in the tank, pipes, fuel lines and then eventually in your car’s fuels system. This is why the oil companies and even the manufacturers have been asking for more time so that they can study it and come up with the necessary measures to cope with it.

Of all the manufacturers I spoke to, only Ford confidently claim that their diesel vehicles will run on up to 5% coco diesel. According to Luie Dy Buncio, Ford’s VP for Sales & Marketing, all their gasoline models will happily run on a 10% ethanol mix; the Focus will even take in as much as 20%, while oddly enough, the new Escape hasn’t got a sweet tooth at all and is not recommended to run on any blend of ethanol whatsoever.

Just about everyone else seems to be opposed or non-committal towards the issue.

And lastly, while the CME industry claim that the introduction of just 1% in all diesel fuels will reduce emissions and generate up to a 10% saving in fuel usage, the oil industry argues that it is yet to receive anything to support those claims and feel that the mere mention of it until such time is just plain irresponsible.

On a whole, both the oil industry and the auto industry agree with the need for a bio fuel act. It is more on the implementation and the proper testing procedures where the tension begins.

Don’t get me wrong, the shift from fossil fuels to renewable resources alone is already a great leap forward; but let’s not over simplify things. For the biofuels act to work we need everyone to be batting on the same side — oil companies, government, suppliers, manufacturers and the public. This is not meant to be a band aid solution; this is much needed chemotherapy to save the country from our hopeless addiction to crude oil. It took Brazil over 30 years and over 16 billion dollars from 1979 to the mid-nineties just in loans to sugar farmers to get where they are today. That does not even take into account subsidies including foregone revenue from tax breaks as well as other costs to consumers. So please, don’t expect us to get there overnight.

But thanks to Brazil, we have a much easier learning curve. We can take a leaf out of their book and work towards an energy independent nation, so long as we do not get caught up in the hype.

I would like to believe that every motorist is committed to a cleaner environment. Just like we are all for eradicating poverty and hunger. Problem is, if it has to come directly from our pockets, many will look the other way. Biofuels, in principle, is a good thing. But the costs have to be shared in order to get to the bigger picture. Shell has been subsidizing their ethanol effort for eight months now just to kick things off. Now that the party is over, if ethanol still remains a more expensive option, guess what? Give me some of that good ‘old fashioned crude, please. Charity, after all, will always begin at home.

And if our government is not prepared to invest in this program in the same way as their South American counterparts, then the whole exercise becomes fruitless. I’m all for the ozone layer, but not if it will cost me 50 pesos a liter. And I know I’m not alone. In 1986, after civilians replaced generals in Brazilian politics, the world price of oil plunged, endangering the government’s pledge to keep the price of ethanol below that of gasoline. In 1989, President Jose Sarney started cutting ethanol price supports. Sales of ethanol cars plummeted and some Brazilians felt the entire experiment had been a waste.

Today, they are stronger than ever; but despite being known as the ethanol capital of the world, it may surprise many to know that Brazil has only enjoyed intermittent success with its ethanol program. It fascinated me to know how a country as successful as they are with alternative fuels overcame their problems to land them in the enviable position they are in today. So, as the biofuels act drew closer and closer to getting carved into stone, I decided to dig a little deeper by flying over to Sao Paolo , Brazil , last October for the final F1 race and made a little pit stop myself.

Aside from the government assistance, I learned that Brazil basically had to reinvent itself. They reinvested in R&D and came up with a better way to make ethanol, including using the remains of processed cane to power sugar and ethanol plants, and using industrial waste from ethanol production to fertilize sugar fields. As a result, the productivity of Brazil’s ethanol producers has steadily increased. In 1975, Brazil squeezed 2,000 liters, or about 520 gallons, of ethanol from a hectare, or nearly 2.5 acres, of sugar cane. Today, it’s nearly 6,000 liters.

But the biggest difference came when the government realized that, despite its influence and best intentions, it could not control the world’s market price of oil and ethanol, so it developed something else: the flex fuel engine. Today, more than 80% of all new cars sold in Brazil are fitted with Flex Fuel engines. The idea behind this was to be able to stabilize the prices of fuel by having a vehicle that could take both. Now, as a motorist pulls up to the pump, they have a choice of gasoline or alcool, depending on which one is cheaper on the day.

Nobody I have spoken to during the research of this article is opposed to change, but making it mandatory to use CME in diesel fuels could end up backfiring on our government. Unless more is done to insure that prices will be controlled and side effects (or concerns at least) minimized, this will hit the public utility sector harder than anyone else, which will in turn affect the transportation and the majority of the nation’s workforce that depend on it. Not to mention the private diesel motorists and the industries that depends on them, too. They may have found out the hard way, but even a country as advanced as Brazil understands that the power of energy independence is worth nothing without the power of choice.

How’s this for interactive? Some of your questions regarding Manny de los Reyes’ column last week he answers himself…

Did I read right from Manny de los Reyes? Change oil every year regardless of mileage? — 09175086424 (Regarding the oil change, yes once a year, regardless of mileage [I did say it’s not for taxi/fleet operators]. But it should work for busy private car owners who don’t want to be bothered with kilometer readings.)

For Manny de los Reyes: Can I use this same maintenance scheme for my pickup? I have an Isuzu Fuego. Or do I change oil more frequently than the once a year you recommended? Thanks! — Nick, Bacolod (For diesels, it should be more frequently. Missed that one...every six months, if you don’t want to base on kilometer readings.)

For Manny de los Reyes: Your January 3 article, "The 10 Best Things You Can Do For Your Car This 2007" was a great read. One question, though — how about the clutch? — 09175242839 (Unlike other wear-and-tear items like oils and belts/hoses that degrade with age even without use, the clutch and the brakes wear out only with use [which is why I did not include them]. But if one wants to abide by the "car birthday" system, anywhere between two to four years for clutch replacements is safe and practical. It ultimately depends how much you use your car and if the driver is a "clutch driver". I’d change brake pads/shoes every two years.)

I wouldn’t mind having Manny de los Reyes as my backseat driver. He makes a lot of sense with all his tips. — RS Lim

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