Thai automakers warn about E85 plan

BANGKOK, May 28 (UPI) -- The new Thai government may want to speed up E85 use in the country, but some automakers say that might wreck the previous regime's eco-car program.

The Thai Cabinet, faced with tackling soaring energy prices, has approved a plan for energy saving that would include bringing E85 fuel to the markets three years ahead of schedule, the Bangkok Post reported Wednesday. Thailand is a major auto manufacturing hub in Asia.

E85 is made up of 85 percent ethanol and 15 percent high-grade gasoline. Some reports have said Thailand, like Brazil, could become a major ethanol producer with its abundant output of sugar and cassava, both in increasing demand for producing the fuel.

Thai Energy Minister Poonpirom Liptapanlop said excise taxes for E85-compatible cars would be cut to promote the fuel, the report said. Corporate tax incentives also would be given to ethanol producers.

But Suparat Sirisuwannakura, executive vice president of Toyota Motor Thailand, said carmakers would need substantial investment to alter production lines to make cars run on E85.

A government official agreed E85 would require substantial capital outlay, both by automakers and energy companies, the report said.

Expressing frustration over the changing policies, another auto executive told the Post, "I just wish that the government would focus on one thing. Take compressed natural gas -- already seven car manufacturers have committed to producing CNG cars this year. Now, the government wants E85. What will come next?"

Additionally, the tax breaks would affect the business plans of the country's six automakers committed to the eco-car program, which was promoted by the previous interim government of Prime Minister Surayud Chulanont.

The eco-car program requires vehicles to meet strict fuel efficiency and emission standards.

Suparat warned a lower tax rate would almost certainly encourage automakers to give up eco-cars in favor of E85 vehicles.

The current government estimates Thailand could save more than $3 billion annually on imported oil if E85 use rose to 60 percent of consumption by 2011. Thailand imports more than $20 billion of oil annually.

Only Volvo currently offers E85-compatible cars locally, the Post reported.

Thailand currently is using E20 fuel, which was introduced in February, but its supply remains limited. E10 gasohol enjoys much wider use.