An Evaluation on Bio-Diesel Policies in Turkey Yahya Ulusoy, Rıdvan Arslan, Yücel Tekin Uludağ University, Vocational School of Technical Sciences Ali Sürmen Uludağ University, Engineering and Architecture Faculty
Content: • INTRODUCTION • CORNERSTONES OF ALTERNATIVE FUELS AND ENGINES INTEREST • A HISTORY OF BIO-DIESEL IN TURKEY • WHAT WAS WRONG WITH THE POLICIES ? • WHAT SHOULD WE DO? • COCLUSION
INTRODUCTION Use of alternative fuels and economical cars is a critical issue, not very recently but since 1973. Maybe temporary or not, but increase in raw petroleum prices and related petroleum products have reached at a level of crises by mid 2008.
Each crises or global or national energy movement should be met as early as and by as appropriate precautions as possible. In Turkey energy market is “of highly governmental characteristics”
Therefore governmental policies are still of determinative importance. Failure in these policies means a direct failure (i.e. a caotic feature) in the fuel or energy market. …economical losses, backrupties, upsets, radical returns to conventional ones exc.
CORNERSTONES OF ALTERNATIVE FUELS AND ENGINES INTEREST 1.The most important energy crises of the last half century is that of 1973’s. Under the economical conditions of Turkey by 70’s a shock was inavitable and that is what we practised.
Reaction by the Government: To provide finance from the Eurepean sources for the extra energy expenses. Reaction by the ordinary consumer: -Use the cars less -Buy smaller cars -Use a diesel car or replace the gasoline engine with a diesel one
The last one is very important and known as what is called “dieselisation” attempt. Because diesel fuel was very cheap besides that diesel concept was more economical.
Neither academicians nor the governmental authorities emphasized the facts that; -Much lower diesel price is a socio-political preference. There is no technical or economical reasoning for that. - Diesel engines on originally gasoline engine cars create serious power train (gear box) problems.
But the most importantly: This crise didn’t create an impact for a long term vision on future of the energy problem of TURKEY.
On contrary “engine dieselification” movement ended dramatically with a substantial increase in diesel fuel prices owing to appetizing volume of engines “dieselified”. This is defined as “pulling the bite”. Customer was “fished” by the government.
2. Introduction of NG as a domestic and industrial fuel in Turkish market early 90’s. NG is promoted as an environmentally-friend modern and very cheap fuel. Really it was… But in a ten years period price of natural gas was two-fold
Reaction by the Government: -We are so sorry! -There are some rules of economy Reaction by the ordinary consumer: -We are fished!
As a matter of fact Turkish Government “fished” itself; Encouraged building NG conversion plants by private sector, bought electricity very expensive and sold cheaper.
Including governmental authorities everybody perceived that; There was no mid- or long term strategies or projections over the future energy needs and preferences of Turkey
3. Use of LPG as an engine fuel in Turkey. LPG formerly was a subvanted fuel for domestic and industrial use.
Since 1973 petroleum crisis it was known that LPG could be used as a very cheap engine fuel. But neither energy authorities nor academic world mentioned about use of LPG as an engine fuel in negative or positive sense.
In 1995 LPG was legalized as an engine fuel. Between 1996-1998 Turkey was a paradise of LPG-fueled car use.
-Number of LPG-fueled vehicles increased exponentially. -Cars were in queue in front of machine shops for conversion -Storehauses were full of imported LPG kits
Nobody said that; • Stop it !... • This price of LPG is artifical • It is some sort of social support for kitchens… • We can’t allow LPG to be used as auto fuel for commercial purposes • Wait until we evaluate the situation and get a decision for the autogas. -Storehauses were full of imported LPG kits
But after 2001 economical crises of Turkey Turkish Government ”pulled the bite” again and declared very high prices for LPG as autogas. With these new prices, LPG lost its attractiveness against gasoline seriously. Similar economical and social results….
Once it is understood that; There is no “alternatif fuel idea” in mind of formal energy authorities OR Governmental energy policies (if any) can not follow the dynamism of the private sector in alternative fuel attempts.
But at least they are supposed to give an early enough respose to private sector or puplic applications. Even saying “stop and wait until a governmental legislation or decision” would threaten the puplic and prevent uncontrolled investments and employment in LPG sector.
After this LPG crisis, diesel engines were remembered again and Bio-diesel is introduced to attention of investors and customers firstly.
And we made this warning: “...Government has not shown any reflex until a considerable decline in economical measures. The reaction of government about both NG and LPG after this decline was quite a “nightmare” for Turkish consumer. ……These two unpleasant experiences injured the confidence of people to the Turkish Government. The new attempts for bio-diesel as an automotive fuel remind the same policies and render the private investors timid in any effort”
We were wrong in defining the investors as “timid”. In contrary; despite all descouraging experiences in the past they were very bold in bio-diesel investments as well.
A HISTORY OF BIO-DIESEL IN TURKEY Foregoing scientific analyses show that agricultural potential of Turkey and technical infrastructure for bio-diesel production is very suitable .
Therefore the European Directive 2003/30/EC stating that “the share of bio-fuels over the energy use in the transport sector should be 5.75 % by 2010” is achievable.
Due to this fact, first stage of bio-diesel movement roughly between 2000-2005 was quite a success practically, although not formally controlled and disciplined for a certain period.
A number of factors, pushing bio-diesel production up, were practiced in early history of bio-diesel use in Turkey… such as;
Decrease in the gap between crude oil and vegetable oil prices after 1995 created a heading towards use of bio-diesel. • A general governmental policy to increase variety in energy sources is declared.
3. Production cost of bio-dieselwas half the sale price of normal diesel by early 2000’s, which would lead competitiveness in the mind of investor. 4. Abundance in some national oil stocks; mainly in cotton oil.
Low investment cost for bio-dieselproduction plants. • Some incentives are declared for production of oil crops.
Petroleum Market Low exempted bio-diesel use from Private Consumption Tax. 8. Governmental authorities, although not officially but privately, promised that they will not allow for any discouraging movement in this market; gave confidence.
“THERE CAN’T BE PRIVATE CONSUMPTION TAX FOT BIO-DIESEL” Dr.Hilmi Güler, Minister of Energy and Natural Sources 9.11.2003
Conference; '‘NATIONAL FUEL: BIO-DIESEL'' ‘I SUPPORT BIO-DIESEL. I WILL DO EVERYTHING ON MY SHARE THROUGH MY MINISTRY AND TURKISH GOVERNMENT'ANKARA, 10/08 /2005 Dr. Mehdi Eker, Minister of Agriculture
Some fruits of these encouriging factors: • By 2005, 286 bio-diesel producers. • Total initial (designed) capacitywas 2.3 million tonnes. (But only about 60-70 of them, with a total capacity of 1.5 million tonnes, were able to be qualified for licence of production. 1.5 million tones was enough to take the second place after Germany).
Number of Bio-diesel producers in Turkey: 286 Production Capacity: 2 320 000 ton (2. in EU) Figure 1. Bio-diesel plants in Turkey
3.Bio-diesel producers, as majority of their plants were built in the period 2004-2005, had realized a bio-diesel production of 90.000 tonnes in total. (42000 tonnes of the vegetable oil, needed for this production, was imported. Smuggling???).
4.65 % of the bio-diesel producing companies established by the agricultural product traders. 50 % of these have oil milling plants.
5.In addition to individual investments, unions of agricultural cooperation have taken bio-diesel production in their agenda of activity. Çukobirlik have built its plant, Antbirlik have already received approval of capacity.
Unfortunately 2006 is a point of turn in bio-diesel production. • Bite is pulled again ! • Investors are fished (this time for nothing) !
High rate of Private Consumption Tax was set up for bio-diesel in April 2006. It was going to be exempted of PCT if; • Bio-diesel was 100% nationally produced and blended with diesel fuel at 2% BD-98%. • Bio-diesel was sold not through the first hand but through gas stations, i.e. if the sale was legalized. This was no good !!!
These decision were wright ! Because; Without PCT more than 90 % of the plants were technically insuefficient. Even very primative conditions. And maybe more than 50% were dealing with smuggling.
So that by the end of 2006 only • Only 215 firms (out of 268) applied for licensing. • 20 firms fulfilled the requirements. • 3 firms could formally received licence • It is expected that at the end of the legalization process only about 50 firms was going to be qualified.
2.CCEM laid down ITS Convenience Certificate and ITS Certificate for Production Convenience as conditions. 3. Bureaucracy… Unreasonable delays happened in providing licence from Control Committee of Energy Market.
4. There was not an accredited laboratory for necessary bio-diesel quality test in Turkey.
At the end; • 200 firms, out of 286terminated their production as they were no more able to resist the conditions. • Many plants were sold to scrap dealers. The rest survive under extreme conditions due to high PCT (Private Consumption Tax)
Bio-diesel production stayed at 10.000 tonnes by late 2006. • In 2007 the production was only 3.000 tonnes and the number of bio-diesel producing companies were only a few.
Inactivation of bio-diesel plants due to these drawbacks resulted with appearance of “out-of-standard” and what is called “under stair” small production units; producing illegally.