Vietnam revives biofuel plan, sets national switch in 2018

After more than two years failing to promote a locally-produced biofuel product in major cities, Vietnam has announced an even more ambitious plan: a national switch.

The trade ministry said in a new report that it will make sure the 92-octane gasoline A92, currently the most popular grade in Vietnam, is phased out and replaced by the greener E5 in 2018, Tuoi Tre (Youth) newspaper reported.

The ministry has reportedly ordered top fuel companies PV Oil and Petrolimex, both state-owned, to promote the use of E5. Five percent of the product is ethanol synthesized from cassava, hence the name.

Studies conducted by the Hanoi University of Technology found that E5 is good for engines while producing fewer emissions.

Vietnam had planned to make Hanoi, Ho Chi Minh City and some large cities switch to the fuel by the end of 2014. But somehow the product never caught on.

Industry insiders said a national switch could be “impossible.”

A member of PV Oil said the domestic supply of ethanol is 150,000 tons a year, which is enough to produce around three million tons of E5, while the demand would be more than 7.5 million tons.

Government sources said two ethanol plants in the southern province of Binh Phuoc and the central province of Quang Ngai will resume operations soon.

Fuel companies also said a complete switch to E5 also means they will have to invest in blending facilities specifically for the fuel, which could cost a lot of money and time.

E5 is now less than 2 percent cheaper than A92. Retailers said the government should offer more tax incentives to widen that margin and make E5 more attractive.

The more expensive 92-octane grade, A95, is favored by owners of newer vehicle models. It is more environmentally friendly than A92.