Indonesia Has Potential For Ethanol-Fuel Cars: GM

Sao Paulo, Brazil. Indonesia might be a potential market for ethanol-fueled cars, following in the footsteps of other sugarcane-producing nations like Brazil that promote the alternative source to fossil fuel, a General Motors executive said. 

“The key is the government policy that makes ethanol mandatory or at least ensures ethanol availability nationwide,” William Bertagni, GM Brazil’s executive director of engineering, said in an interview with the Jakarta Globe earlier this week. 

“If Indonesia has sufficient infrastructure for ethanol distribution, we are more than ready to sell flex-fuel cars there or introduce this technology to Indonesia, like what we’ve been doing here in Brazil for decades,” he said. 

Brazil was forced to turn to energy sources other than fossil fuel during the oil crisis in the early 1970s. GM, which back then had been operating in the South American country for three decades, helped the government to develop car engines that could run on ethanol. 

“The government couldn’t afford to import oil so the use of ethanol was made mandatory. All fuel stations had to sell ethanol, so we as a major car manufacturer in the country designed and developed an engine that could adapt with the ethanol and gasoline as well,” Bertagni said. 

At the beginning of the project, the main problem was ethanol’s corrosive effect on car engines. 

“As a fuel, ethanol worked well with the engine, but it caused corrosion. It took years until we finally developed engines with special materials that could withstand this negative effect and run on E100 [100 percent ethanol],” Bertagni said. 

Although ethanol’s effect was lower on a per-mileage basis than gasoline, its cheaper price and low emissions helped spur ethanol-based car sales for GM in Brazil. But other problems lingered. 

The government’s regulation limiting ethanol’s selling price to 60 percent that of gasoline was tested in 2003 when the price for sugar skyrocketed. Higher sugar prices prompted sugarcane producers to sell to sugar factories rather than to biofuel producers. That, in turn, caused an ethanol shortage across the country, and sales of ethanol-fueled cars plunged, forcing GM to halt production. Consequently, GM developed engines that operated on both ethanol and gasoline. 

“Now we have cars that can run on E100, E20 or E-zero and all manufacturers that sell cars here in Brazil must have flexible cars; Fiat, Volkswagen, Ford and also Japanese and Korean producers. We are pioneer in flex-fuel technology,” Bertagni said. 

“Now if you take a look at the back of every car here, it carries the words Flex, or FlexEco, et cetera. In fact, when you go to the fuel station in Brazil and choose to buy gasoline only, what you get is the mix of gasoline and 22 percent ethanol. If you insist to buy pure gasoline, then they will say, ‘Please, don’t come here.’ ” 

In the last four years, GM has invested $3 billion on research and production in Brazil, where it has 23,000 employees, according to GM Brazil president Grace Lieblein. 

Still, any plan to create an ethanol industry from sugar would mean that Indonesia needs to produce more sugar cane than it consumes. Brazil, the world’s largest sugar producer, will ship 125,600 metric tons of sugar to Indonesia in the current season, Bloomberg reported on Friday, citing data from Williams Servicos Maritimos. To cover a shortfall Indonesia is set to import about 3 million tons in the 2012-13 season, the newswire reported, citing Green Pool Commodity Specialists, an Australian firm. 

According to a 2011 biofuels report on Indonesia by the US Department of Agriculture’s Foreign Agricultural Service, 13 companies were producing industrial ethanol in Indonesia, with total capacity at 244 million liters as of 2010. While ethanol was mainly for industrial use, production as a fuel stopped in 2010 amid a dispute over pricing. In 2009 only 1.72 million liters of ethanol fuel was produced, compared to 350 million liters of biodiesel, data from the USDA report show.