Asia’s first plant to mass-produce biofuel that does not reduce food stocks will be built in Thailand, according to Japanese trading house Sumitomo Corp., which will back the project along with a local company.
Sumitomo has signed a memorandum of understanding for the project with Global Green Chemicals, a subsidiary of Thai petrochemical group PTT Global Chemical.
The partners are discussing commercial production of bioethanol made from bagasse, which is left over after sugarcane is crushed for its juice.
They are not the only investors looking at Thailand’s biofuel potential. Japanese household goods maker Kao aims to test production in the Southeast Asian nation later this decade.
Bioethanol, which proponents see as a path toward cutting greenhouse gas emissions, is increasingly used in automobile fuel and sustainable aviation fuels. Plastic makers are increasingly adopting bioethanol as a raw material instead of the petrochemical naphtha.
But critics warn that shifting farmland to the production of crops for biofuel risks exacerbating food shortages. So-called second-generation biofuels, made from feedstocks like bagasse, represent a potential solution to this problem.
Sumitomo’s Thai plant is expected to be built as early as 2025. Production volumes have yet to be determined. The company says the plans are the first of their kind to be announced in Asia.
Global bioethanol output is estimated at 100 million tonnes a year. The U.S. and Brazil are leading producers.
The mainstream method of producing bioethanol uses food sources including sugarcane and corn. Bioethanol prices track prices of other fuels, but there is also an impact on food prices. Corn futures have risen not only on Russia’s invasion of Ukraine, which has disrupted exports of grain, but also higher fuel prices.
“Farmers have started to sell [their products] for fuel purposes, which fetch higher prices compared to feed purposes,” said a grain trader at a Japanese trading house.
Inedible plant waste such as bagasse, leaves, and stems poses less of a risk to the food supply, proponents say.
Kao, whose products include laundry detergent and soap, is developing a method to make bioethanol from the material left over after tapioca starch is extracted from cassava. Tapioca pearls found in bubble tea are made from cassava starch.
The company aims to have a demonstration plant running in Thailand around 2027.
Second-generation biofuels involve complicated production processes and large amounts of feedstocks, posing a higher potential cost hurdle.
Thailand, where Sumitomo and Kao plan to locate second-generation bioethanol production, is one of the world’s leading producers of sugar and cassava. This will mean ready supplies of feedstocks.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.