An overview of the gasohol market in Vietnam, the next direction?

ng - Over USD 30 million investment in biofuel R&D and second-generation 
 targets are proposed (volume) ethanol technology 
 - Biofuel imports are banned but the import of feedstock for production of 
 biodiesel is permitted to the extent necessary 
 - GHG reduction of 3.5%/4%/6% in There is no tax relief for FAME biodiesel, HVO/HEFA fuels, vegetable oils and 
 the fuel mix for the entire fuel ethanol: 
 sector from 2015/2017/2020 - FAME biodiesel, HVO/HEFA fuels and vegetable oils have the same fuel tax 
 Germany onwards as diesel fuel (€ 0.4104/litre) 
 - Ethanol has the same fuel tax as gasoline fuel (€ 0.6545/litre) 
 - The fuel tax for CNG and biomethane is € 0.0139/kWh until 2023 
 - A carbon tax is indirectly applied via CO2 tax for passenger cars 
 - An excise tax exemption and the price subsidies are provided by the State 
 Oil Fund (see Table 5, 6 for details) 
 - Producers/Investors can take advantage of a 0% import tax for equipment 
 produced outside Thailand and exemption of corporate income tax for up 
 to 8 years, with an additional 50% reduction for 5 years 
 - Thailand’s government provides over THB 1.5 trillion (USD 45.7 million) in 
 nancial support over the next 10 years to ensure success of bioeconomy 
 Thailand - The government also supports the manufacturing of vehicles that are 
 compatible with E20 and E85 gasohol. Improvements in the fuel eciency 
 of vehicles is promoted by setting the excise tax rate for Eco-cars (less than 
 1,300 cc engines with fuel consumption rate of no more than 5 litres per 100 
 kilometres) at 17% compared to 30% for E10 vehicles. An additional 3% 
 reduction in the excise tax rate was provided for the manufacturing of Eco-
 cars that are able to use E85 gasohol. This helped increase annual sales of 
 E20 and E85 passenger cars, which account for approximately 60% of total 
 passenger cars 
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 Table 5. Excise tax rates applied on gasoline and similar products in Thailand in 2019 [11]
 Gasoline products Tax rate (Baht per litre) 
 Unleaded gasoline 6.50 
 Gasoline other than unleaded gasoline 6.50 
 E10 5.85 
 E20 5.20 
 E85 0.975 
 Table 6. Oil fund levied on petroleum products in Thailand in 2019 (Baht/litre) [12]
 Products Retail price Oil fund 
 Unleaded gasoline 95 35.33 7.77 
 Gasohol 95 E10 27.68 1.81 
 Gasohol 95 E20 24.67 -1.08 
 Gasohol 95 E85 20.04 -6.68 
 Gasohol 91 E10 27.41 1.82 
 In the world rankings, Thailand stood in the 6th Alternative Energy Development Plan 2015) to 2.6 billion 
position in terms of ethanol production and the 7th litres in 2036, down by 37% from the initial target of 
in terms of consumption in 2018 [9]. This country has 4.1 billion litres, due to the uncertainty over the ability 
introduced gasohol to the domestic market early, since to further increase molasses and cassava supplies, the 
2002. Thailand’s government imposed many policies to primary feedstocks for ethanol production. 
promote the gasohol demand and supply, of which fiscal 
 The United States is the world’s largest producer and 
policies are most important. By reducing excise tax and 
 consumer of gasohol, and has established a mandatory 
offering subsidies through the State Oil Fund, gasohol 
 policy (The Renewable Fuel Standard - RFS) to produce 
was made 20 - 40% cheaper than the premium gasoline. 
 and consume E10 since 2005. This programme assigns to 
These government price subsidies have led to increase 
 obligated parties (fuel refiners, blenders, and importers) 
of gasohol consumption up to 97% of total gasoline 
 a renewable volume obligation (RVO). The RVO for each 
consumption in 2019 [8, 10]. Table 5 describes more detail.
 party is the volume of renewable fuels it is obligated 
 Since 2007, E10 has been introduced nationwide to sell, based on a percentage of the company's total 
in Thailand. The National Oil Fund was adjusted many fuel sales. However, meeting RVO is not easy, oil refiners 
times lower for gasohol, especially E85. Table 6 shows the bear hundreds of millions of dollars each year to comply 
differences of this factor among the types of gasoline in with the RFS ethanol blending requirements. Similar to 
2019. Thailand, in the US, air quality has regularly been a subject 
 of controversy. Through July 2003 in California, which 
 Although using gasohol can reduce CO , bad air 
 2 had recently switched to ethanol in gasoline, the ozone 
quality persists in Thailand’s major cities. The Air Quality 
 exceedances in the South Coast Air Basin were twice the 
Index (AQI) used by cities to determine levels of air 
 levels of the prior 3 years. Moreover, RFS has resulted in 
pollution measured 175 in Bangkok in January 2019, 
 unintended consequences which include higher food 
while AQI levels under 25 are considered to be acceptable 
 prices, a boom-and-bust ethanol industry that is now 
for humans to breathe regularly, according to the World 
 looking to export its product. As a result, opposition to the 
Health Organisation. The reason given is that ethanol 
 RFS and ethanol use in the U.S. has been mounting. Twelve 
increases gasoline vapour pressure (RVP), eventually 
 automotive manufacturers have even opposed any further 
leading to increased volatile organic compound (VOC) 
 increase above 10 vol.% ethanol in gasoline over concerns 
emissions and ozone. Land use change (LUC), especially 
 about corrosion of automotive components [13].
change in soil carbon stock, to increase ethanol feedstock 
supply is an important factor in overall greenhouse 3. Which direction for gasohol?
gas (GHG) emissions of the first-generation biofuels, 
contributing about 58 - 60% of the net GHG emissions. It can be seen that after more than 2 decades of 
In addition, the government is expected to lower the bio-gasoline development, the positive side of gasohol 
ethanol consumption target under AEDP 2015 (Thailand development is to reduce the dependence on mineral 
60 PETROVIETNAM - JOURNAL VOL 6/2021
 PETROVIETNAM
gasoline, reduce CO2 emissions, and open up opportunities and also promote the development of electric vehicles 
for more advanced development in the future. On the and hydrogen vehicles. Therefore, in our point of view, for 
other hand, the reality also indicates the limitations that the current E5 production and distribution infrastructure, 
the supply of raw materials is not guaranteed, consuming Vietnam should maintain a proportion of E5 gasohol from 
many fertile lands that should be used to grow food for 30 - 40% of the total gasoline consumption as at present, 
the world’s population. stop developing E10 and set a strategy/plan to develop 
 electric and hydrogen vehicles.
 The planting of crops also requires a lot of water 
and fertiliser, which can cause chemical residues in the To increase the diversification of the energy resource 
soil and the lack of freshwater for people. According to a mix for transportation, the government as well as 
2013 report of the United Nations Food and Agriculture gasohol production and distribution enterprises need to 
Organisation (FAO), it takes 1,000 - 4,000 litres of water to implement synchronous policies and solutions:
produce 1 litre of ethanol.
 For the government: 
 Moreover, although using gasohol emit low CO , 
 2 - Set specific goals and a roadmap for the 
contributing to reducing climate change, the process 
 development and transition to environmentally friendly 
of consuming them gives off other harmful gases such 
 vehicles, including a clear biofuel development goal and 
as CO, VOC, and NOx which badly impact human health 
 a mandatory roadmap on the minimum blending ratio 
[13, 14]. It was indicated by the Ministry of Environment 
 of biofuels for wholesalers and monitor implementation; 
in 2014 in Brazil, the 2nd country in the world in terms of 
 consider supporting to develop research and application 
gasohol consumption.
 of the second- and third-generation biofuels.
 Besides, many countries are turning to second- and 
 - In the short-term, regional planning can be 
third-generation development. Second-generation 
 considered to meet the amount of raw materials; 
biofuels are derived from cellulose, hemicellulose, lignin 
 help farmers increase productivity; create a policy of 
or pectin, for example, waste or waste in agriculture-
 price difference between traditional gasoline and E5 
forestry, or plant materials grown not intended for 
 gasoline large enough to encourage consumers through 
food (short-term plantations, some grasses, etc.). Third-
 environmental fees and petroleum stabilisation fund, the 
generation biofuels are derived from natural aquatic 
 difference is about 15 - 20% like Thailand's policy.
organisms (algae). These may be research directions 
for development because the advantages of the next - In the long-term, impose environmental taxes (CO2 
generation biofuels are less usage of agriculture land, taxes) on fossil fuels. The Environmental Law promulgated 
exploiting waste and saving farming area while getting in 2020 has introduced the law on environmental tax. The 
higher efficiency: algae can deliver energy efficiency 60 implementation roadmap will be applied experimentally 
times more than land crops and can grow in brackish from now until the end of 2027 and applied officially from 
water in rural areas or barren villages. 2028.
 Vietnam will continue to consume gasoline in For the bioethanol production enterprises:
transportation in the next period, and gasohol is still - Ethanol production enterprises need to closely 
more environmentally friendly than gasoline which is associate with cassava farmers, negotiate and sign 
a type of mineral fuels. Furthermore, the energy picture cassava offtake contracts to ensure a stable source of 
in the future will be a diversification of environmentally input materials and harmonise the interests of the parties.
friendly energy/fuel sources. Energy for transportation 
 For the gasohol production and distribution 
will focus on biofuel, electrical energy (for electric 
 enterprises:
vehicles-EV) and hydrogen (for fuel cell electric vehicles - 
FCEV). Specifically, EV and FCEV will be widely developed - The wholesalers need to build a gasohol strategic plan 
in the next 10 - 20 years, and biofuels are considered as including measures to cut costs; and improve right 
a transitional step in the gradual transition from mineral awareness of consumers about gasohol to promote 
fuels to eco-friendly fuels/energy. It is a fact that many biofuel consumption.
countries in the world such as Thailand, the US, and 
European countries still use E5, E10, and E20 gasoline, 
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PETROLEUM ECONOMICS & MANAGEMENT
4. Conclusion của Thông tư liên tịch số 39/2014/TTLT-BCT-BTC ngày 
 29/10/2014 quy định về phương pháp tính giá cơ sở; 
 These days, gasohol is used in over 50 countries 
 cơ chế hình thành, quản lý, sử dụng Quỹ bình ổn giá và 
worldwide. This is considered a solution to help protect 
 điều hành giá xăng dầu theo quy định tại Nghị định số 
the environment and reduce the dependence on fossil 
 83/2014/NĐ-CP ngày 3/9/2014 của Chính phủ về kinh 
fuels. From 1 January 2018, Vietnam has applied the policy 
 doanh xăng dầu. 2016.
that only E5 biofuel and RON 95 would be produced and 
available for purchase. [6] Mahmood Ebadian, James D.McMillan, Jack 
 (John) N.Saddler, and Susan van Dy, “Implementaation 
 However, ethanol production facilities in Vietnam 
 agendas: 2018-2019 update compare and contrast 
sometimes struggled with a shortage of raw materials 
 transport biofuels policies”, IEA Bioenergy, 2019.
because the export price of cassava to China is higher 
than the domestic purchase price. Besides, the difference [7] Matthew Fielding and May Thazin Aung, 
of retail price between E5 RON 92 gasoline and traditional “Bioeconomy in Thailand: A case study”, Stockholm 
gasoline is not attractive enough and people's concerns Environment Institute, 2018.
causes a trending down of the consumption E5 RON 92 [8] Sakchai Preechajarn, Ponnarong Prasertsri, and 
gasoline from 40% in 2018 to 32% in 2020. Maysa Chanikornpradit, “Thailand biofuels annual”, United 
 In our point of view, for the current E5 production States Department of Agricultural, Foreign Agricultural 
and distribution infrastructure, Vietnam should maintain Service, 15/11/2019. 
a proportion of E5 gasohol from 30 - 40% of the total [9] Narin Tunpalboon, “Thailand industry outlook 
gasoline consumption as at present, stop developing E10 2019-21: Ethanol industry”, Krungsi Research, 7/2019. 
and set a strategy/plan to develop electric and hydrogen [Online]. Available: https://www.krungsri.com/bank/
vehicles. The development of biofuel requires close co- getmedia/0c42d6fd-18d7-41c1-9369-96dded234800/
ordination between businesses and the government while IO_Ethanol_190710_EN_EX.aspx.
ensuring biodiversity, soil and water quality. In addition, 
 [10] Anuman Chanthawong, Shobhakar Dhakal, 
there are some sustainable solutions which should be 
 John K.M.Kuwornu, and Khalid Farooq, “Impact of subsidy 
implemented to reduce carbon in the transportation 
 and taxation related to biofuels policies on the economy 
sector including electric and hydro vehicle conversion.
 of Thailand: A dynamic CGE modelling approach”, Waste 
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62 PETROVIETNAM - JOURNAL VOL 6/2021