Alternative Fuel And Vehicle Technologies Commerce Essay

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This report provides an insight into the current and future situation of the energy sources for powering vehicles in Chile. The country could benefit if special emphasis were put on alternative transport fuels. The analysis of these fuels is structured as follows: the first section discusses issues related to natural gas, followed by biofuels and lastly technological changes to the traditional powered vehicles.

Fossil fuels are responsible for 60% of the total energy generated in Chile and only 0.2% of the vehicles are fuelled by electricity or natural gas. In fact, the past year, there were only 152 electric vehicles in use. In addition, it is very unlikely in the long term that natural gas would be used for fuelling cars due to its unstable supply. The same situation is expected with hydrogen, where the production is still expensive and the technology in a development stage. However, biofuels can be introduced into the market in some degree and the production of alcohols from biomass can be very competitive; specially the one generated from algae. Moreover, biofuels are going to reduce the gasoline consumption by 5%. Electric-powered vehicles are also likely to increase due to the expected clean and varied electricity production.

Table of Contents


2 Natural Gas 2

3 Biofuels 2

4 Electricity and hydrogen as fuels 4



Table of Figures

Figure 1 Chile's Energy Consumption (Alarcon et al., 2009) 1

Figure 2 Chile's Future Transport Energy Consumption (National Energy Commission, 2009) 5


Chile is located in southern South America, stretching along the west side of the continent. From north to south the country is 4300 kilometres long and on average 175 kilometres wide, these extensions allow a varied climate along the country. Due to these climate variations and the different kinds of resources present in the country, it appears to have an advantage in terms of the possible use of alternative sources of energy. However, this seems to be far from true, considering Figure 1, it can be appreciated that Chile still depends on fossil energy such as gas, oil and coal. Natural gas played a major role until 2004, since then oil is the main source of energy. Oil is mostly used in the transportation system, which accounts for 37 percent of the country's total energy consumption (O'Ryan, 2008). Chile is relatively efficient in energy use; in fact, it is 26% more efficient than the US (Dalberg, 2007). According to the National institute of statistics (2009) in Chile there are 2,636,521 private vehicles on the streets from which, a large number use gasoline engines (80.7%) and diesel vehicles account for 19.1%. There are only 152 electric vehicles and 5243 gas-powered vehicles; both only represent 0.2% of the total vehicles. All these figures show the increasing need to find new options in the alternative's vehicle fuels, which could reduce dependence on oil or lessen transport's environmental impact. Moreover, existing solutions could still be improved such as the case of electric vehicles, in which the electricity supplied to the cars could come from renewable resources and not from fossil based alternatives as currently is being done. In fact, fossil fuels are responsible for 60% of the total energy generated in Chile and biomass for only 2% (Alarcon et al., 2009).

Figure 1 Chile's Energy Consumption (Alarcon et al., 2009)

On the face of the situation already mentioned, alternative fuels and energy sources may improve the current pool of energy and they can provide more benefits in the longer term, helping the private and public transportation system and at the same time improving the air quality and reducing the dependency on other countries for the provision of energy. Some of the possible options are the use of alternative fuels such as natural gas and biofuels or the introduction of new technologies like electric-powered vehicles or fuel cell vehicles powered by hydrogen.

Natural Gas

Chile has not met any significant success in the natural gas exploration and as a consequence, it must depend on gas imports. Moreover, the supply can not be ensured in the long term due to Argentina (the main gas supplier) gives priority to its local consumption (Fosco and Saavedra, 2003). Clearly, this has a negative influence on security of supply and although Latin America is used as a successful example of the introduction of compressed natural gas (CNG)-fuel vehicles like Brazil and Argentina (Hengerer and Horn, 2009), the situation is completely different in Chile; the lack of a permanent supplier and high prices make unsuitable for Chile to encourage the use of CNG as a fuel for the private cars. Furthermore, Natural gas is too valuable as a resource to waste on private cars and is likely to peak within a few decades (Diesendorf, 2007): it is essential for making chemicals and fertilisers, in calefaction and as a backup for other power plants. However, Hengerer and Horn (2009) argue that under the conditions of a heavy reliance on natural gas imports, an increased use of natural gas as vehicle fuel is only acceptable if additional efforts to increase efficiency, in particular on the heating market, are undertaken. Therefore, Chile could be able to use natural gas in the private vehicle sector only in the long term, ensuring a constant supply through the diversification of energy import agreements with other countries of the region, such as Bolivia and Brazil.


According to the International Energy Agency (1999), biofuels consist of a group of esterified vegetable oils produced from oil-containing crops, mainly by rapeseed, soybean, sunflower and palm. Chile has a potential in innovating in this area through the use of algae for fuel production. Although it is a new input for biofuels production, Chile already invested US$31.6 millions this year, on research and development of technologies that can produce biofuels from algae ( Algae biofuel could be a good alternative for fuelling vehicles in Chile because there is an extensive Chilean coast, more than 3 thousand kilometres with the perfect conditions for the rise of micro and macroalgae, like high solar radiation which strongly supports the process of photosynthesis. In addition, unlike the fuels produced from oil-containing crops such as sunflower, sugar cane, palm or other oils, the cultivation of algae is cheaper and easier, because it does not require extensive agricultural land, special fertilizer or irrigation water. Moreover, it is expected that the country will produce more than 50 million gallons of biofuels a year, which is equivalent to 5% of total gasoline that is currently consumed in the country (, in other words 5% of the vehicles could be powered by local biofuel. In addition, the use of ocean algae can improve the economy as well, diversifying the industry and helping to increase the fisherman's income. According to the National energy commission (, in no more than four years Chile will be able to count ocean algae as a renewable source of energy. Vehicles powered with this fuel can be benefited owing to it has better lubricating properties and its emissions are less pollutant, it also has the potential to be carbon neutral (Diesendorf, 2007). However, according to IEA (1999) if it is stored like diesel fuel, it will require about fifteen percent more fuel weight than diesel fuel under the same conditions, but the volume of the tank has to increase by only nine percent.

Another option is the use of alcohol fuels like methanol which is usually made from natural gas. Although more than 80% of this fuel is made in this way, it can also be produced using biomass (IEA, 1999). One of the issues is the cost involved in generating this fuel, this is due to it is technically but not yet commercially feasible (IEA, 1999). It is suggested that the optimal alcohol fuel of the future might consist primarily of methanol but contain between a 10% and 15% of hydrocarbons as blending agents (IEA, 1990). In Chile, there is huge variety of biomass that can be used in the methanol production, mainly coming from the waste of the beer, wine and cellulose industries. According to Chamy and Vivanco (2007) in Chile is possible to produce methanol and to provide with 3.5 percent of the electricity currently generated (400 MW). The main barrier for developing this fuel in Chile is that it is still more expensive than the gasoline, which means that the incentives to produce it are more related to the reduction of waste materials than to produce an alternative fuelling energy. However, it is still possible to produce it more efficiently based on anaerobic lagoons, which are provided with farms wastes and that produce methane (Rural Industries Research and Development Corporation, 2009). The same principle could be applied to Chile due to the existence of abundant farms and agricultural activities, which are continuously producing waste. In fact, in 2001 only the capital city produced about 2.3 million tons of municipal solid waste (Gebremedhin et al., 2009). All the waste today is deposited in sanitary landfills and is not treated further. Additionally, Chile's logging industry and the waste that it generates makes bio-mass an option in the south of the country (Bennett, 2009). One of the issues with this fuel is its low energy density, which is the reason of why it is used mostly in mixtures with gasoline. In addition, fuel systems need to be adapted with special materials to avoid corrosion (IEA, 1999).

Ethanol is very similar to methanol in its properties and it is largely produced in Brazil from sugar canes, but according to the Chilean ministry of agriculture it is very difficult to get into this market due to the large lands that are required and Chile main goals are to give priority to the food industry ( According to this ministry in Chile there are 1.45 million hectares available for ethanol production and the land could be used mainly for rapeseed crops. From one hectare of rapeseed is possible to get between 1500 and 2000 litres of ethanol; this figure is very low compared to the Brazilian sugar cane from which it can be obtained 6700 litres per hectare. What these figures show is that Chile can not be competitive in the production of ethanol, but its production could feed part of the internal energy requirement of the private car industry.

Both ethanol and methanol can be handled in similar ways to regular fuels. They can be used in petrol engines with little modification. Brazil has decreased its oil imports by almost half owing to the use of ethanol, in fact, since 2004 a new generation of vehicles has emerged that can run on petrol and ethanol blends (Warren, 2007). These facts can encourage the use of these kind of fuels in Chile, as a result of the proximity of the country with Brazil it can be benefited by the already created technology of the cars, that is to say, Chile can import ethanol efficient cars and use its internal production for fuelling them in order to achieve reduction in emissions (up to 90%) and lessen dependency on oil imports.

Electricity and hydrogen as fuels

Electrical energy can be stored in rechargeable cells in the vehicles and when needed it can be converted to mechanical energy to power the vehicle. This system is increasingly used in Europe where there are more than 40000 battery electric vehicles (Warren, 2007). However, as mentioned in the introductory section, in Chile there are only 152 electric-powered vehicles. To achieve new successful car technologies it is important to consider that the improvements in car technologies must come from making radical design changes, not just a small step by step approach (Diesendorf, 2007). Indeed, the current engine technologies are not as efficient as we would like to; of the energy released in combustion only between 5% and 15% is used to move the car (Hordeski, 2007). One of the issues that a switch to electric vehicles can create is the need to reduce the distance people travel and to install infrastructure to charge them up. However, Chile can be benefited by the use of electricity for powering vehicles due to the abundance of sources to produce this energy in the country. Currently, the generation by conventional power plants represents 97% of the total electricity production, while the remaining 3% is produced by non-conventional renewable power plants (Alarcón et al., 2009). Over the last years, conditions for the development of alternative energies for electricity production have improved significantly and there are a few initiatives related to the use of wind power and biogas, and new hydroelectric and biomass power plants. In addition, the Chilean government is encouraging the development of clean electricity and in fact, between 2010 and 2014 the obligation to supply energy from non-conventional renewable generators will be 5% by law. This quota will then increase by 0.5% each year through to 2025, when generators must secure 10% of power generated through renewable sources (Bennett, 2009). For instance, owing to the long extension of the coastal side of the country, there are several areas that are suitable for offshore wave energy technologies, which provide the potential for utility scale-projects (Cruz et al., 2009). What is implied here is that the Chilean electricity in the near future is going to be produced from a variety of sources and hence, the dependency on fossil fuels can be reduced. The benefits can be translated into lowering the emissions and reducing their sources from urban areas (Warren, 2007). In addition, having a solid infrastructure for the electricity generation will certainly encourage the introduction of electric-powered vehicles.

On the other hand, electricity can be produced on-board the vehicle through hydrogen. Natural gas is the least expensive way to produce hydrogen today (Hordeski, 2007), but as mentioned earlier, the Chilean natural gas supply can not be currently guaranteed and, therefore, electrolysis power by renewables must be considered as the option. Using hydrogen as fuel offers the possibility of introducing the fuel cells, which have the advantage of producing electricity in a direct way allowing high efficiency (Warren, 2007). However, prototype fuel cells exist, but are very expensive compared to other technologies and they still require a lot of research (Diesendorf, 2007). Furthermore, hydrogen has a much lower energy per unit volume than gasoline and as a consequence, storage tanks are heavier and the volume needed is greater. Despite the promising technical accomplishments to date, development of an adequate infrastructure to provide hydrogen as fuel is still a long way off (Tachtler and Szvszka, 1993). In addition, Engerer and Horn (2010) argue that hydrogen will not contribute significantly to the fuel supply for private cars in the foreseeable future. Initiatives do not exist in Chile to provide an infrastructure dedicated to hydrogen, a situation that prevents and slows the development of this technology, so that in the short term is not seen as an option, rather, it is expected that neighbouring countries such as Brazil and Argentina be the pioneers and in the long term Chile can follow them.


There is an increasing interest into the diversification of the transport fuels in order to reduce the dependence on oil fuels. However, in the case of Chile, it is very unlikely that natural gas would be used for fuelling cars in the near future due to its unstable supply. The same situation is expected with hydrogen, where the production is still expensive and the technology in a development stage. However, biofuels can be introduced into the market in some degree and the production of alcohols from biomass can be very competitive; if algae are used then there is not a direct competition with the use of land for traditional crops or livestock. Moreover, as mentioned before, biofuels are going to reduce the gasoline consumption by 5%. It is also likely that the numbers of electric vehicles are going to expand in the medium and long term, especially because of the solid Chilean infrastructure and the increasing interest in using cleaner energy sources where Chile has opportunities owing to the beneficial geographical situation that the country has in terms of producing electricity from renewables. However, in the Figure 2, the future situation of the energy consumption by the private transport sector is presented. In this graph, electricity and biofuels are not considered as in important source. This situation could mean that if Chile does not change the current pattern it is very unlikely that alternative fuels and technologies will play an important role in less than 20 years.

Figure 2 Chile's Future Transport Energy Consumption (National Energy Commission, 2009)