Global demand to approach 90 million metric tons in 2011
Demand for biofuels will expand almost 20 percent per year through 2011 to 92 million metric tons, despite recent concerns about the impact of biofuels on the environment and world food supplies. Market expansion will be led by a more than doubling of the global market for bioethanol, with the biodiesel market achieving even more rapid growth. Other biofuels will also achieve double digit gains, though from a much smaller base.
Economic, environmental issues spur biofuel demand
The world market for biofuels has expanded rapidly in recent years as a combination of domestic politics, rising oil prices, increasing concerns about global warming, and potential economic opportunity have spurred a broad range of countries to pass laws that support biofuel industries. World bioethanol demand has benefitted from a powerful farm lobby in the United States that has succeeded in passing a renewable fuel mandate, as well as rising oil prices that have boosted bioethanol demand in Brazil. Growing concerns about global warming have helped stimulate both bioethanol and biodiesel demand in the European Union, while several countries in the Asia/Pacific region have institutedbiofuel programs as a means of boosting their local economies. Though protective sentiments will remain high, global trade in biofuels will continue to develop, as many countries in Western Europe, NorthAmerica and Asia/Pacific find that they cannot fully satisfy demand with domestic production. Despite, or perhaps even because of, the success of biofuels in recent years, questions have begun to arise about the wisdom of using biofuels as an alternative energy source going forward. While the impact of biofuels on world food supplies is expected to be a short term issue, the potential negative impact of biofuels on the environment could have longer term consequences. In spite of these concerns, though, countries’ overarching need for energy security and domestic economic development will continue to drive rapid increases in consumption, most notably in the large North American market.
Economic, environmental issues spur biofuel demand
World biofuel production will track increases in demand as most countries seek to foster domestic biofuel industries, both to reduce reliance upon imported oil, and to foster domestic economic development. This will continue to favor the development of cereal-based (maize and wheat) bioethanol capacity in North America and Western Europe, as well as sugarcane- ased bioethanol production in Latin America. Likewise, biodiesel production will center on soy oil in the Americas, rapeseed oil in Europe, and palm (and increasingly jatropha) in the Asia/Pacific. Next-generation cellulosic bioethanol and algal biodiesel technologies will become commercially signifi- cant in the longer term.
Biodiesel Forecast
Brazil has one of the largest renewable energy programs in the world, involving production of ethanol fuel from sugar cane, and ethanol now provides 18 percent of the country's automotive fuel. As a result of this, together with the exploitation of domestic deep water oil sources, Brazil, which years ago had to import a large share of the petroleum needed for domestic consumption, recently reached complete self-sufficiency in oil.
Brazil is promoting its brand of biofuels because the sugar-to-ethanol process releases a fraction of harmful greenhouse gases and requires only 1/5 of the gas and diesel it makes to produce ethanol from corn. Brazilian ethanol is also produced without official price props or government handouts offered in Europe and the US.
According to a recent article in the Wall Street Journal, Brazil is now producing ethanol for about $1.00/gallon compared with the international price of gasoline of about $1.50/gallon. In Brazil, ethanol is mostly derived from sugar cane, and is now available in 29,000 gas stations throughout the country, and represents about 20 percent of Brazil’s transport fuel market. Brazil’s use of traditional gasoline has actually declined since the late 1970’s.
One of the stimuli behind this move was the termination by the Brazilian government of support for the sugar industry, which forced sugar manufacturers to become more efficient and find other uses for the crop. According to the WSJ, 7 out of every 10 new cars sold in Brazil can use “flex-fuel”, meaning gasoline, ethanol, or a mixture of the two.
Brazil has become so efficient in ethanol production that it expects to double current exports of about $600 million/year to about $1.3 billion by 2010 (most sales are to Sweden and Japan). Ethanol releases less carbon dioxide than gasoline.
The Brazil ethanol model is being looked at by China, India, and the U.S. In the U.S., the most recent energy bill signed into law last August stipulates that the use of ethanol must double by 2012. But U.S. ethanol is made from corn which is about 30 percent more expensive than Brazil’s ethanol. According to WSJ, Henry Ford’s first car was made to run on ethanol.
Brazil’s improvement in ethanol efficiency has come in part due to biotechnology. Brazilian scientists at the Centro de Technologia Canaviera (funded by sugar growers), about 2 hours outside of Sao Paulo and in the heart of the sugar industry, have worked on decoding the DNA of sugar cane. The Center has helped Brazilian growers to select varieties of sugar cane that are more resistant to drought and pests, while at the same time yielding higher sugar content. The Center has developed some 140 new varieties of sugar cane over the last 20 years, which has helped lower the cost of growing sugar cane by about 1 percent/year. Brazilians used to get 2,000 liters (520 gallons) of ethanol out of a hectare (2.5 acres) of sugar cane. That yield has triple to about 6,000 liters/hectare.
Additionally satellite imagery of Brazilian sugar cane fields has helped Brazilian researchers to identify which variety of sugar cane will grow best in different parts of the country, the best time to harvest, and where to situate new fields.
Brazil Ethanol Companies
See: Brazillian Sugarcane Industry Association Website
Ethanol Process
