Fuel Choice for Asia

Like the rest of the world, Asia’s transportation sector is dominated by oil. Cars, trucks, ships and planes are made to run on nothing but petroleum fuels. All at a time when petroleum supply at affordable prices is anything but certain.

Growing instability in the Middle East, resource nationalism and corruption in many oil exporting nations and geological constraints mean that as we progress into the 21st century, the challenge posed by oil dependency will increasingly grow.

Oil price hikes are known to be causes of economic recessions, and perpetual costly oil fuels inflation and imposes significant burden on working families. Asian countries’ economic development will depend on their ability to maintain strong trade relations with their oil suppliers and to ensure open sea lanes. But more important will be the pace in which they diversify their transportation systems away from the current single-fuel system.

Developing Asia’s crude oil demand is projected to almost double by 2035, yet relatively to its needs, Asia is poor in oil. However, it is well endowed in energy sources like coal, conventional and non-conventional natural gas and biomass. All three can be put to use as a feedstock of automotive fuel.

Asian countries like Thailand, India and Malaysia exhibit large and growing fleets of compressed natural gas vehicles. A liquid alcohol fuel called methanol, which can be made cheaply from natural gas, coal and biomass, is now being blended and tested in 26 out of China’s 31 mainland provinces. Indonesia and Malaysia have set their sights on biofuels.

Many Asian countries are looking at electricity stored in automotive batteries as the fuel of the future. While battery prices have a way to go in terms of cost reduction, the value of shifting from petroleum to electricity is compelling for more than one reason. Electricity is cleaner, cheaper on a per-mile-driven basis and can be domestically produced. Furthermore, it allows us to integrate into the transportation system energy sources that to date have been excluded from it such as solar, wind, hydro, geothermal and nuclear power.  

Each of those competitors to oil has pros and cons. Some involve a higher premium on the vehicle side, others require costly infrastructure, and some are not cost-competitive except in high oil prices. However, the uncertainty regarding future oil prices requires that in the next 20 years Asia's automobiles become increasingly open to some sort of fuel competition. Asia is today the world's fastest growing automobile market and Asian automakers produce one half of the world’s new vehicles. The key to breaking oil’s virtual monopoly over transportation fuel and providing consumers much needed fuel choice is therefore in their hands. Should they lead, the world will follow.

About the Author

Dr. Gal Luft is co-director of the Washington, DC based Institute for the Analysis of Global Security and senior adviser to the United States Energy Security Council. He is co-author of Petropoly: The Collapse of America’s Energy Security Paradigm (2012), Turning Oil into Salt: Energy Independence through Fuel Choice (2009) and Energy Security Challenges for the 21st Century (2009)