The Southeast Asian bioethanol market is brimming with opportunities following the recent industry growth, rising number of entrants, and intense competition for best market positioning. The expansion of current producers, backed by the influx of new participants, has dramatically increased local production over the last 3-7 years. The governments have also laid strong emphasis on bio-based fuels to lower dependency on petrochemicals, assuring the Southeast Asian market of steady demand in future. New analysis from Frost & Sullivan finds that the market earned revenues of US$529.7 mln in 2008 and estimates this to reach US$6.17 bln in 2015 due to its potential as a next-generation biofuel and the pushing up of production within the region.
The volatility of fossil fuel prices and their impact on the economy have pushed governments to promote the use of various renewable energy sources using locally available feedstock. They have implemented policies such as the National Energy Policy or National Biofuels Programs to encourage the use of alternative energy sources. The usage of bioethanol in gasoline formulation is nearly untapped and holds great potential, especially considering the current high domestic demand of fossil gasoline across Southeast Asia. Governments are promoting energy diversification efforts, particularly because bioethanol programs will offer a chance for rural development in Southeast Asia's poorer regions. Bioethanol will fare better as a gasoline additive than an energy fuel.
Despite its potential, there are few R&D activities in gasohol formulations for reducing the effects of engine suitability and component issues. The lack of awareness of the benefits of bioethanol restrains the market from growing rapidly. Bioethanol producers are also under immense pressure to acquire appropriate feedstock, as it must be a competitive source of bioethanol and should not compete for cultivation space with food. Generally, Southeast Asian companies produce molasses from sugar cane, which is the primary feedstock used in most bioethanol production. Molasses are also exported and used by other food-based industries such as in amino acid, rum, spice flavoring, feed, and ketchup. However, cassava is being seriously considered by government officials and local producers due to its potential to offer employment in poorer areas and reduce competition between raw materials for bioethanol and food. A liter of bioethanol can be produced directly from 6.5 ks of cassava compared to a liter of bioethanol from 15 kgs of sugar cane and 4 kgs of molasses, respectively.
As bioethanol holds great promise as a new energy fuel, it is gaining popularity among both foreign and local producers, fostering competition. To milk its potential, local governments and bioethanol producers can educate the consumers on the 'green' and product-enhancing qualities of bioethanol as fuels and select better feedstock to ensure continuous production.
Governments can offer tax reductions or subsidies for the use of bioethanol at the implementation stage to end users. Producers can resort to strong product branding, better quality standards, and provision of trial products to gain control of market share. Most producers pass on the development costs to the end users, unless they are aided by government funds and regional development programs. They can implement extensive product logistics and promotions to gain an edge over competitors and acquire new customers.