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Thailand has implemented a new policy that encourages the use of E85-capable cars. Both the excise tax on E85 fuel as well as the cars that burn them have been cut. E85 excise tax has been dropped from 3.65 baht per litre to 2.75 baht per litre, and excise duty for CBU vehicles that are E85-capable have been dropped between 25% to 35%, depending on engine displacement.

You may be thinking – since when are E85 vehicles popular in Thailand? That’s the thing, they aren’t. This new policy thinks forward and is an attempt to encourage the next generation of Thai motorists to prefer E85-fueled products.

The Thai Energy Ministry will meet up with refineries, petrol kiosks and car manufacturers later this week to promote the use and supply of E85. Car manufacturers reported to be interested in bringing in CBU E85 vehicles in the next 3 to 5 months include GM, Ford and Volvo. In fact, Volvo already sells E85-capable cars in Thailand, and is the only manufacturer to do so.

CKD production of E85 vehicles will begin in 18 months. We may end up seeing Thailand become the manufacturing base for E85 vehicles for the region, as more and more countries look towards alternative fuels such as E85 in face of rising crude prices.

A litre of E85 fuel is 10 baht cheaper in Thailand compared to a litre of RON95 gasoline. The ethanol in Thailand’s E85 comes from sugarcane or tapioca. Thailand is aiming for its national fuel consumption to consist of 60% E85 fuel by 2011.