May 9, 2006

South Korea to explore bio-ethanol use

South Korea will spend a total of KRW 2.5 billion (US$ 2.7 million) in 2006 and 2007 to launch a study on adopting bio-ethanol fuel for use by private vehicles, the Ministry of Commerce, Industry and Energy said Tuesday (May 9).

As demand for the new fuel is expected to increase, prices would become more volatile and the government needs to come up with ways to secure supply over the long term, the ministry said. An option being considered is to develop overseas plantations of corn, wheat or sugar cane.

In line with the global trend of using more biofuel amid high oil prices and efforts to reduce greenhouse gas under the Kyoto protocol, South Korea last December began allowing refineries to mix bio-ethanol with gasoline by up to 6.7 percent, the ministry said in a statement.

It said if oil prices rise further and stay around US$80-US$90 a barrel, using bio-ethanol fuel would prove economically feasible.

However, in order to use bio-ethanol practically, "economic and technical problems must be solved first," the ministry said.

To make bio-ethanol fuel suitable for passenger cars in the country, refiners would need to revamp their facilities to go through an additional refining process, it said.

The commerce ministry will comprehensively look into these issues with the refining industry and auto industry under the project, the ministry said.