Oenon Holdings Inc. (Oenon) is planning to commence ethanol production at biofuel plant in 2009, using rice imported by the government. Oenon is planning to generate 5,000 kiloliters of ethanol by the end of December 2009 from 12,000 metric tons of foreign rice from government stockpiles. Oenon plans to double the production in 2010, and increase output to the plant’s capacity of 15,000 kiloliters a year in 2011.

Japan is planning to increase biofuel output almost fivefold in four years to 50,000 kiloliters in the year to March 31, 2012 to help meet a Kyoto Protocol treaty commitment on reducing emissions of greenhouse gas blamed for global warming. Japan lags behind a global shift to biofuels due to scarce local farm product supplies.

“We will start ethanol production with imported rice,” communications department manager Masumi Ushigome said. In the future, Oenon is planning to make biofuel from higher-yielding rice grown in the northern Japanese island of Hokkaido, where the company’s ethanol plant is situated, he added.

The ethanol plant was constructed under a government project to test the commercial viability of technology to produce the fuel from local crops including rice, wheat, sugar cane and beet. The government subsidized around half of JPY4.9 billion ($50 million) in capital spending on the plant, Ushigome said.

Production Costs

Oenon hopes the cost of producing ethanol, a type of alcohol, at the plant may attain JPY50 per liter including wages. If the company purchases rice at JPY20 a kilogram, the total costs for the fuel may reach JPY100 a liter, Ushigome said. Retail gasoline price in Japan averaged JPY115 a liter as of April 20, 2009.

Oenon plans to decrease production costs to less than JPY100 a liter, Ushigome said. Oenon plans to sell the ethanol to a Japanese producer of ethyl tertiary butyl ether, or ETBE.