Japan develops cost-competitive way to make ethanol from farm waste

TOKYO Thu May 30, 2013 7:48am EDT

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TOKYO (Reuters) - Japan's Kawasaki Heavy Industries Ltd said on Thursday it has developed technology to produce fuel for cars from farm waste at a cost that is competitive with imported ethanol made from food products, such as sugar cane.

Replacing fossil fuels with bio ethanol to make fuel for autos can help reduce carbon dioxide (CO2), which contributes to global warming, but the cost of production and competition with food supplies tempers its appeal.

A five-year study, subsidized by the Japanese government, proved that Kawasaki Heavy's new technology, if introduced commercially, can produce ethanol from rice straw at a cost of 40 yen (40 U.S. cents) per liter, the company said.

If the costs for gathering straw waste from rice farming in Japan are added, production would be 80 yen per liter, a company spokeswoman said.

That compares with 80 to 100 yen per liter for importing ethanol from Brazil, a farm ministry official said.

Japanese oil companies currently use an additive made from Brazilian ethanol to mix with gasoline to help the world's fifth-biggest greenhouse gas emitter's efforts to reduce global warming.

The Kawasaki spokeswoman said the company has no specific plan for commercial production and added the technology would be competitive in a country with ample biomass resources with lower labor costs such as Brazil and in South East Asian nations.

The Japanese government is more cautious about the prospects for such technology.

When the farm ministry mapped out plans for bio ethanol production technology in September, the ministry said it would take about five years before commercial production of ethanol from non-food products would be economically viable.

(Reporting by Risa Maeda; Editing by Aaron Sheldrick and Muralikumar Anantharaman)

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