Renewable Energy -Ethanol

Markets

Ethanol is a flourishing industry. With the excessive exploitation of oil, natural gas, coal and other energy sources, the world has been facing a serious energy crisis.

 

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Many vehicles on the road today can run on blends of ethanol and gasoline¡ªmost on lower-level blends such as E10 (10% ethanol and 90% gasoline), and many on higher level blends such as E85 (85% ethanol and 15% gasoline). Because of the abundance of ethanol-compatible vehicles, the future is bright for ethanol as a fuel. As a renewable energy, fuel ethanol has become the important new energy highly promoted by many governments to solve the problems of high international oil prices and substantially increasing demand for energy. Fuel ethanol will be helpful in easing the oil shortages.  
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FACT: Brazil produces more ethanol than any other country except the U.S., and is the largest exporter of fuel ethanol.
Graphic Source: FRA (Renewable Fuels Association)

Brazil and the United States took the lead in creating many incentives and laws to expand ethanol development . Many other countries such as China, Australia, Canada, France, Spain and Sweden have also followed the suit in large scale production.
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In Brazil

In Brazil, ethanol fuel is produced from sugar cane which is a more efficient source of fermentable carbohydrates than corn as well as much easier to grow and process. Brazil has the tropical climate that is required for the productive culture of sugarcane. Brazil has the largest sugar cane crop in the world, and is the largest exporter of ethanol in the world. High government sales taxes on gasoline, as well as government subsidies for ethanol, have cultivated a profitable national ethanol industry. Nearly all fueling stations in Brazil offer a choice of either gasoline type C or hydrated ethanol. Brazil remains in the leading position in fuel ethanol. Gasoline is expected to blend 22%~24% ethanol. The government of Brazil is encouraging the development of E85% (85% ethanol admixture) cars.
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In the United States

The United States allows up to 10% blends (ethanol is blended with gasoline to form an E10 blend) (10% ethanol and 90% gasoline), and some states require this (or a smaller amount) in all gasoline sold. Other countries have adopted their own requirements. Blends of at least 85% ethanol are considered alternative fuels under the Energy Policy Act of 1992 (EPAct) in the Unites States. E85, a blend of 85% ethanol and 15% gasoline, is used in flexible fuel vehicles (FFVs) that are currently offered by most major auto manufacturers. FFVs can run on gasoline, E85, or any combination of the two and qualify as alternative fuel vehicles under EPAct regulations. President Bush announced the Advanced Energy Initiative, thus there has been an increased interest in ethanol as a fuel

In 2004, the United States took the first step in banning MTBE. MTBE consumption amount was reduced to 7.29 million t/year from the peak 12.88 million t/year. Meanwhile, Ethanol consumption amount was increased to 9.44 million t/year from 5.15 million t/year of the beginning of 2002.
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In Canada

The Canadian government estimates that, ¡°If 35 percent of gasoline in Canada contained ten percent ethanol, GHG emissions would be reduced by 1.8 megatonnes per year (1.8 million tonnes), which is the equivalent of removing more than 400,000 vehicles from the road.¡± Beginning January 1, 2007, gasoline sold in Ontario contains an average of at least five per cent ethanol. This may be accomplished by the actual blending of ethanol, or through the trading of renewable fuel credits (Ontario Regulation 535/05). Implementing a 5% blend of ethanol in gasoline will generate hundreds of jobs in rural Ontario, create a market for an additional 50 million bushels of corn every year and reduce greenhouse emissions by the equivalent of 200,000 cars. Canada¡¯s ethanol production is expected to triple, to over 650 million litres by 2010. Over 70 per cent of revenue from an ethanol plant is spent within a 150 kilometre radius of the plant site. With the increase in fuel prices lately ethanol blends are becoming very economical compared to gasoline.

In other countries


The European Parliament has issued a directive which targets 5.75% (caricom) (based on fuel content) transportation fuel consumption from biofuels. Thus ethanol will play an increasing role in the market besides MTBE in Europe.

Other countries (mainly China, Poland, India, Canada and Australia) have also issued directives in ethanol gasoline. The fuel ethanol consumption in these areas is expected to have a rise of 3.43 million t/year.

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