Japan Aims to Cut 2030 Oil Demand with GTL, Biofuel
Date: 09-Jan-06
Country: JAPAN
Author: Ikuko Kao
Japan's energy agency has been working for more than two years to iron out long-term energy policy guidelines aimed at enhancing national security for the resource-poor country.
So far the government has focused on limiting Japan's dependence on crude oil - almost all of which is imported - to 40 percent of total energy needs from about 50 percent currently.
But a new draft due in February will be the first to specify a target for biofuel and GTL usage, said an official at the Agency for Natural Resources and Energy, a unit of Japan's Ministry of Economy, Trade and Industry (METI). It is expected to be formalised in June.
"It will be first time to mention in our guideline that our country should replace 20 percent of petroleum products used now with non-conventional fuels to achieve an objective, for example, bio-ethanol and GTLs," said the official, who declined to be named.
GTL technology processes natural gas rather than crude oil to make clean fuels such as low-sulphur diesel, which emits less greenhouse gases than gasoline.
For the world's third-largest oil consumer, securing non-conventional energy such as bio-ethanol and GTLs may be easier than increasing competition with world No. 2 consumer China to get into upstream crude and gas projects.
But analysts said introducing bio-fuels and GTLs would still mean ending up with heavy dependency on imported energy.
"Theoretically speaking, the government guideline is on the right track. Especially, the introduction of GTL fuels looks practical in the long term, and it will encourage new global investments in GTL projects not just in Qatar but also other gas producers like Indonesia and Australia," said Hidetoshi Shioda, an energy analyst at Mizuho Securities Co.
Gulf state Qatar, home to the world's third-largest reserves of natural gas, is set to have the world's first commercial GTL facility in 2006.
"But GTLs and bioethanol are imports anyway. How do you secure security of hauling bioethanol from all the way across the globe from Brazil? That's the question," Shioda said.
Gasoline with up to 25 percent bioethanol is used in Brazil, the world's largest bioethanol producer. But analysts said Japan's 20 percent target looked too ambitious, compared to a European Union target of 5.75 percent biofuel content by 2010.
"Japan already has a bitter memory of having failed to meet a target to introduce bio-ethanol-blended gasoline," said an environment analyst, who asked not to be named.
The Environment Ministry in Japan had aimed to introduce auto fuel containing 3 percent bioethanol - often made from sugar, wheat, corn or soybeans - onto the retail market at the start of the fiscal year from April 2005.
But such gasoline did not become available at Japanese gas stations because of scarce availability of bioethanol. The government policy also requires oil companies to make large investments to make bioethanol-blended gasoline.