Government efforts to encourage Thais to consume less energy and conserve more at a time of spiralling prices have been spotty and inconsistent to date by SOONRUTH BUNYAMANEE and YUTHANAN PRAIWAN

The continued rapid rise in global energy prices has prompted governments worldwide to seek ways to rein in energy consumption and costs. Thailand has been no exception, though government measures to deal with prevailing conditions have been hitandmiss.

On the one hand, authorities have staged flashy campaigns to encourage people to save energy. Meanwhile, local drivers continue to enjoy gasoline prices that are among the lowest in the world, as subsidies from the state Oil Fund, now being phased out, distort market mechanisms.

Authorities are also keen to promote alternative fuel. But the supply is limited, as is the number of outlets where motorists can buy it. As well, their eagerness to encourage the procurement and consumption of products such as biodiesel and gasohol seems to die down whenever oil prices weaken.

Still, the government has become painfully aware that world oil prices are highly unlikely to ease back down to comfortable levels of US$2830 per barrel. More importantly, Thailand, as a net oil importer, will inevitably experience pressure from a mounting trade deficit, which could affect its economic growth rate in the long run.

As a result, finding alternative energy to reduce reliance on oil imports and devising new technology for energy conservation are being given top priority in an energy system master plan for the next five to 10 years. If the measures all take hold, a revolution in the country's consumption patterns could take place.

Under the energy road map, the government has set a target to have 120,000 units of personal cars, taxis and tuks tuks powered by natural gas for vehicles (NGV) by 2008 in a bid to reduce gasoline consumption by 10%. It also has set a target of 66,000 NGVpowered trucks, pickups and buses in the same year to ease diesel consumption by 10%.

Fill up before the price rises. As the Review went to press, premium gasoline was nearing 24 baht a litre, and diesel had crossed the 20baht barrier.

As well, authorities plan to end premium gasoline sales nationwide by 2007 and to increase gasohol consumption to four million litres a day by the end of this year from 900,000 litres at present. It aims to increase the number of gasohol service stations to 4,000 from 730 at current. The alternative fuel will be available at Caltex, Jet, and Petronas stations in addition to those of PTT, Bangchak, Shell and TPI.

For biodiesel, the government hopes to encourage the consumption nationwide of 8.5 million litres a day in 2012 and set up a pioneering biodiesel plant with a daily production of 300,000 litres in 2009.

In addition, tax incentives are being offered to importers of energysaving equipment and softloan support for factories upgrading to energyefficient machinery.
So far, so good. Now all the government needs to do is follow through seriously, concretely and consistently.

"Past conservation campaigns flagged whenever oil prices fell, but today we live in a different world," says Energy Minister Viset Choopiban, a former president of the state energy giant PTT Plc.

In the past, he said, oil price movements in the world market were cyclical and seasonal. But since last year, prices have gone up continuously due mainly to the effect of demand and supply. When one thinks of where demand could go, just thinking of China is enough to concentrate the mind.

"The oil price base will no longer get back to the past level and the country and its people must change their energyconsuming behaviour," says Mr Viset.

Consequently, he says, the government's energy conservation campaign and alternative energy promotional programmes cannot lose momentum anymore. The ultimate goal of the programmes is to reduce the proportion of energy consumption growth to GDP to a 11 ratio in eight years' time, from 1.4 to 1 currently.

Cario, Thailand's first electric car, is one of the latest efforts to help save energy.

But energy experts say the goal cannot be reached until oil price distortion in the local market ends.

The government in May bought time to float local diesel prices, which were capped at 18.19 baht a litre, by changing the subsidy structure to subsidise the price for another 10 months.

Under the restructuring, excise taxes on diesel would be cut by one baht per litre for six months, followed by a second cut of 50 satang for another four months, aimed at reducing the burden of the Oil Fund, which has spent 88 billion baht on subsidies since they began in January 2004.

But Piyasvasti Amranand, a former senior energy planner and now chairman of Kasikorn Asset Management, said high oil prices were likely to prevail over the next several years, which if so, would have a clear impact on growth.

Viset People must change their habits

Piyasvasti Oil prices should be freely floated

"It's hard to see oil prices falling under $40 per barrel. Diesel prices might have to rise by two baht per litre over the next several months if oil prices increase again," he said.

He believes oil prices should be freely floated to move in line with market forces, both to limit subsidy losses and to encourage the public to save.

According to Kasikorn Asset Management, economic growth could slow to 4% this year, with inflation of 4.3% based on oil prices averaging $45 a barrel.

Mr Piyasvasti also suggested the Energy Ministry speed up a plan to prioritise fuel types this year in preparation for the establishment of new power plants in 2011.

He said the country had currently relied on natural gas for 70% of power generation. To ease the volatility, the government should count more on other kinds of fuel.

It should prepare as well for possible opposition by local people to the construction of new coalfired power plants, hydropower plants and nuclear power plants. In the past, there was a spate of protests against the building of coalfired power plants in Hin Krut and Bo Nok, Prachuap Khiri Khan, which ended up with the transfer of the plants to other sites and of their fuel type to gas.

To ease the opposition, the government needs to improve public relations to give people a proper understanding of power plant safety and how operators deal with environmental problems.

Mr Piyasvasti said many countries were suffering from hefty power costs incurred by the use of natural gas and bunker oil as fuel, and were now seeking alternative energy sources.

In Europe, many have paid greater attention to increasing the number of coalfired power plants since prices of coal are not as volatile.

In China, a study in nuclear power plants has gained momentum because the country currently counts on coal to generate power to such an extent that local capacity cannot meet demand.

In Malaysia, coalfired power generation has also increased even though the country is the largest producer of gas in the region.

Counting on coal to produce power could boost industry competitiveness since its cost is lower than that of gas and oil. Of the total fuel used for power generation, 72% is natural gas, 13% coal, 9% hydro power and the rest bunker oil and recycled fuel.

He said the construction of power plants of each fuel type would take time to plan _ four to five years for a coalfired plant, eight to nine years for dam construction and up to 15 years for a nuclear power plant.

Given that each type of plant will inevitably attract protests, the sooner the government starts planning a concrete strategy, the better.

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