Ethanol Consumption and Trade

ARTICLE IN PRESS
BIOMASS AND BIOENERGY 32 (2008) 730 – 748
Available at www.sciencedirect.com
http://www.elsevier.com/locate/biombioe
Perspectives on fuel ethanol consumption and trade
Arnaldo Waltera,, Frank Rosillo-Calleb, Paulo Dolzana, Erik Piacentea,

Kamyla Borges da Cunhaa
a
State University of Campinas—Unicamp (FEM & NIPE), P.O. Box 6122, 13081-970 Campinas, Brazil
b
ICCEPT, Imperial College London, Room 4.02 RSM Building, Prince Consort Road, Kensington Campus, London SW 7 2 BP, UK
ar t ic l e i n f o abs tra ct
Article history: Since the year 2000 or so there has been a rapid growth on fuel ethanol production and
Received 15 January 2007 consumption, particularly in US and Brazil. Ethanol trade represented about 10% of world
Received in revised form consumption in 2005, Brazil being the main exporter. The most important consumer
21 January 2008 markets—US and European Union (EU)—have trade regimes that constrained the
Accepted 22 January 2008 comparative advantages of the most efficient producers, such as Brazil. This paper
Available online 11 April 2008 evaluates the fuel ethanol market up to 2030 together with the potential for international
biotrade. Based on forecasts of gasoline consumption and on targets and mandates of fuel
Keywords:
ethanol use, it is estimated that demand could reach 272 Gl in 2030, displacing 10% of the
Fuel ethanol
estimated demand of gasoline (Scenario 1), or even 566 Gl in the same year, displacing
International bioenergy trade
about 20% of the gasoline demand (Scenario 2). The analysis considers fuel ethanol
Market scenarios
consumption and production in US, EU-25, Japan, China, Brazil and the rest of the world
Bioenergy
(ROW-BR). Without significant production of ethanol from cellulosic materials in this
period, displacing 10% of the gasoline demand in 2030, at reasonable cost, can only be
accomplished by fostering fuel ethanol production in developing countries and enhancing
ethanol trade. If the US and EU-25 reach their full production potential (based on
conventional routes), the minimum amount that could be traded in 2030 would be about
34 Gl. Displacing 20% of the gasoline demand by 2030 will require the combined
development of second-generation technologies and large-scale international trade in
ethanol fuel. Without second-generation technologies, Scenario 2 could become a reality
only with large-scale production of ethanol from sugarcane in developing countries,
e.g., Brazil and ROW-BR could be able to export at least 14.5 Gl in 2010, 73.9 Gl in 2020 and
71.8 Gl in 2030.
& 2008 Elsevier Ltd. All rights reserved.
1. Introduction improving access to commercial energy [2]. In addition, the

agricultural sector, which plays a key role in the early
Since 2000 there has been a rapid growth in demand for fuel development of ethanol, brings significant benefits to farmers
ethanol. Rising oil prices, environmental and climate warm- and would be a way to reduce costs and market distortions of
ing concerns, interests in energy diversity and security has the existing farm support policies, estimated as US$ 320
made fuel ethanol an attractive alternative, particularly in billion/year in OECD countries alone [3]. Finally, limited
industrial countries [1]. refinery spare capacity has had an impact on raising prices
In developing countries the focus is more on rural devel- of oil products [4], which has also some impact on economics
opment, jobs creation, savings on foreign currency and of biofuels.
Corresponding author. Tel.: +55 19 3788 3283; fax: +55 19 3289 3722.
E-mail address: [email protected] (A. Walter).
0961-9534/$ - see front matter & 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.biombioe.2008.01.026
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BIOMASS AND BIOENERGY 32 (2008) 730 – 748 731
Most experts accept that individual transport will continue Despite some controversy, it is largely accepted that
to play a key role in the future and oil will continue to be the automotive use of E10 vis-à-vis E0 (pure gasoline) contributes
major energy source for decades to come, despite the efforts to the reduction of tailpipe emissions of particulate matter
to find other alternatives. Biofuels (ethanol and biodiesel) are and carbon monoxide [14] and reductions on total hydro-
the best viable alternative in the immediate future, primarily carbons and air toxic emissions (especially benzene) can also
because they can be used in present internal combustion be achieved as long as vapour pressure control is effective
engines and fuel infrastructure, which is one of the major [15]. Nitrogen oxides emissions can be either higher or lower
obstacles to introduce other fuels [5]. Ethanol requires few compared to E0 [15], although other studies [16,17] show that
changes or minor ones, particularly with blends of up 10% the case of ozone formation at worst is neutral. Advantages
ethanol (E10). In US, for example, all automakers warranties regarding emissions are more meaningful if the existing fleet
covered the use of E10 since 1980s [6]. is relatively old or its maintenance is poor. With the
The aim of this paper is to evaluate the ethanol market as introduction of more efficient emission control systems in
automotive fuel up to 2030 and the potential for international vehicles (i.e., electronic injection, catalytic converters and
biotrade. Ethanol market has been evaluated based on canisters), final exhaust emissions tend to be roughly the
projections of gasoline consumption and targets of ethanol same regardless of the fuel [18].
use throughout this period. The potential for international Large-scale use of biofuels is currently one of the main
ethanol trade was evaluated by comparing the estimated strategies for the reduction of GHG emissions [19]. The Clean
ethanol consumption according to two scenarios, and the Development Mechanism offers good opportunities despite
perspectives of domestic ethanol production in the main the fact that no methodology is available for projects of
regions considered in this paper. biofuels use in transport. Based on a typical Brazilian figure of
2.7 kg of CO2 equi avoided per litre of anhydrous ethanol [20],
ethanol fuel could represent additional income of US$
0.02–0.05 per litre (based on credits ranging from US$ 7 to 20
2. Potential contribution of biofuels in per tonne of CO2 equi); this is meaningful compared with
developing countries production costs of US$ 0.23–0.28 per litre [21].
Biofuels can positively impact on the socio-economic devel-

opment, e.g., by alleviating poverty, through job creation, 3. Ethanol experiences and perspectives
reducing reliance on imported oil and on increasing access to
modern energy services [7]. Many developing countries have a 3.1. Overview on fuel ethanol experiences
reasonable potential for biofuels production due to the
availability of land and cheaper labour force, although they Global ethanol production in 2005 reached 45 billion litres
may lack skills, capital and finance. However, large-scale (45 Gl), of which about 33 Gl were used as fuel and the rest for
production of biofuels requires careful management to avoid beverage and other industrial applications [22,23], although
direct competition with food production and constraints on estimates vary (e.g., 33–37 Gl [24]). In this paper 33 Gl was used
water availability, and preserving biodiversity [8]. although this seems conservative. Global ethanol production
For countries that are net importers of crude oil, biofuels in 2006 has been estimated as 51 Gl, of which about 39 Gl as
can enhance energy security and reduce expenses in hard fuel [25]. Fuel ethanol use in 2005 was roughly equivalent to
currency, while providing socio-economic development. 17.6 Mtoe (0.74 EJ), or approximately 2% of global gasoline
Thirty-eight of the world’s poorest countries are net oil consumption. Brazil and US have dominated ethanol produc-
importers, of which 25 import 100% of their oil and therefore tion and utilization, representing more than 80%. Brazil has
are very vulnerable to supply and price volatility [9,10]. been for decades the world’s largest producer and consumer,
Biofuels offer good possibilities for some of these countries but was surpassed by US in 2006.
to supply their domestic markets and even to become Fig. 1 shows the evolution of fuel ethanol production from
exporters. 1982 to 2006. Production figures are more reliable for Brazil
Biofuels production can also induce industrial spin-off, and US. As shown, prior to 2000 there are some inconsis-
creating job opportunities at low cost; e.g., in Brazil invest- tencies on the total world production, partially explained by
ment for ethanol production is very low compared to other the various uses of ethanol. In 2000 fuel ethanol represented
economic activities [11]. The sugarcane industry in Brazil is about 60% of the total production (17.3 Gl vis-à-vis roughly
responsible for about one million direct jobs (about 50% in 30 Gl) [26], about 73% in 2005 (33 Gl vis-à-vis almost 45 Gl)
sugarcane production), plus approximately 2.5–3.0 million [23,29] and possibly has surpassed 77% in 2006 [25]. A
indirect jobs [12]. However, job creation in the future will be significant growth of fuel ethanol production has occurred
lower as mechanization of agricultural activities is increasing. since 2000, mainly in US and in Europe (e.g., France, Germany
It is accepted by most experts that, on balance, the and Spain), as illustrated in Table 1.
environmental benefits of ethanol are positive. For example, In 2005 about 60% of ethanol production was from
thanks to ethanol–gasoline blends the removal of lead from sugarcane, 30% from grains (mostly corn), 7% from synthetic
gasoline brought considerable health benefits to big cities in ethanol (from ethylene, coal, etc.) and 3% from other feed-
Brazil [13]. Lead gasoline is still in use in some African and stocks.
Asian countries, and thus blending ethanol with gasoline Recently, nearly 40 countries have introduced or have
could solve this problem at low cost. shown interest on fuel ethanol. By the end of 2006, mandates
ARTICLE IN PRESS
732 BIOMASS AND BIOENERGY 32 (2008) 730 – 748
45
Other countries
40 USA
Brazil
35
Fuel ethanol production [Gl]

30
25
20
15
10
0
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
1982
Fig. 1 – Fuel ethanol production from 1982 to 2006. Sources: The world [23], US [27], Brazil [28].
Table 1 – World fuel ethanol production (Gl) and average

annual growth rates, 2000–2006 Brazilian experience with ethanol–gasoline blends dates
back to the 1930s although it was not until 1975, when the
World Brazil US Rest of the Brazilian Alcohol Program (PROALCOOL) was created, that
world gasoline began to be replaced in a significant scale in all
passenger vehicles. In 1979 the Brazilian government decided
2000 17.58 10.70 6.17 0.71
in favour of large-scale production of hydrated ethanol fuel in
2005 33.00 16.04 14.78 2.18
specially modified engines.
2006 39.31 17.76 18.38 3.17
Despite its considerable success (i.e., reduction of oil imports,
Average growth 14.4 8.8 20.0 28.3 stabilization of the sugar market and enhancement of Brazilian
rate (%)
competitiveness), the PROALCOOL was not exempted of
controversy partly due to the financial support given by the
Sources: [23] for the world, [27] for US, [28] for Brazil and [25] for
government, which also benefited inefficient producers. In
2006.
mid-1980s criticism increased even further due to the decline of
the international oil prices, and the large surplus of gasoline. In
the 1990s, the government reduced its support due to a debt
for biofuels blending existed in nine countries at national crises which, combined with other factors, led to ethanol
level (Brazil, Colombia, Germany, France, Malaysia, Philip- shortages causing serious difficulties to the consumers. Fuel
pines, Thailand, United States (federal renewable fuel stan- prices were liberalized and by the end of 1990s all subsidies to
dard), and Dominican Republic) and in four countries the sugarcane and ethanol industry were removed.
mandates were valid in some states/regions (India, China, Sales of neat ethanol-fuelled vehicles started to grow again
Canada, and United States—Hawaii, Minnesota, Montana, in 2001 due to a larger price difference between ethanol and
Washington, Wisconsin) [12,23]. In most countries ethanol is gasoline, caused by the combination of higher oil prices and
blended with gasoline in proportions that vary from 2% to 10% lower costs of ethanol. More importantly, since 2003 with the
(volume basis), except in Brazil where this proportion varies launch of FFVs a new boom on sales pushed up the demand
between 20% and 25%. Brazil is also the only country where for ethanol considerably; FFVs reached 85% of new vehicle
neat ethanol fuel is used in large scale. The main experiences sales in 2006.
on fuel ethanol use are described below. The success of FFVs and the relative low price of ethanol
vis-à-vis gasoline are the main reasons why it is predicted
that the domestic ethanol market will rise significantly in the
3.2. Brazilian experience and perspectives near future. In 2006 ethanol production (anhydrous+hy-
drated) was 17.8 Gl, as illustrated in Fig. 2.
Besides the existence of neat ethanol vehicles, all motor Brazil is the only country in the world with conditions to
gasoline sold in Brazil contains 20–25% ethanol [on volume hugely expand ethanol production capacity rapidly in the
basis (E20–E25)]. Neat ethanol vehicles use hydrated ethanol, short- to mid-term due to the availability of land, technology,
while anhydrous ethanol is blended with gasoline. In Brazil capital, know-how and relatively cheap labour force. Cur-
flex-fuel vehicles (FFVs) can also be fuelled with hydrated rently about 80 new industrial units are in different stages of
ethanol. construction, compared to 335 units in operation; it is
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20000
18000
16000
14000
Ethanol production Ml 12000
10000
anhydrous
8000
6000
4000
2000 hydrated
0
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Fig. 2 – Fuel ethanol production in Brazil from 1970 to 2006. Source: [28].
expected that ethanol production capacity could more than new target of 132 Gl of renewable fuels (also mostly ethanol)
double by 2015 [29]. This expansion potential is not exempted in 2017 as part of the strategic plan to reduce gasoline
of criticism both in Brazil and internationally, because consumption by 20% that year [33].
concerns with sugarcane monoculture, water use, potential In addition, five states—primarily potential large-scale
environmental and biodiversity impacts, working conditions producers—have introduced local legislation to booster
and so forth. For an overview of sustainability of ethanol renewable fuels, e.g., Minnesota has adopted the target of
production in Brazil, see the paper by Smeets et al. (this 20% ethanol blends to take effect from 2013 [30].
issue). In the US, corn is the prime feedstock for ethanol
production [30]. In 2006 the cost of production of fuel ethanol
3.3. US experience and perspectives from corn was about 0.33–0.50 Euro/l compared to
0.21–0.29 Euro/l for cost of production from sugarcane
The US has the world’s largest and fastest growing fuel in Brazil [24]. The energy balance of ethanol production
ethanol market, with an estimated production of 18.4 Gl in (the ratio of energy contained in the biofuel to the fossil fuel
2006 [27], a two-fold increase from 2002 to 2006. It is expected energy used to produce it) from corn is also far less favourable
that the production capacity could double again between 2007 (e.g., 1.25 [34], 1.32 [35] and 1.34 [36]) than in Brazil—8.3–10
and 2009. In the past, ethanol was used in niche markets in [20]). In the long term, the competitiveness of ethanol from
the Midwest, where production is concentrated, but since corn will depend on major improvements of all stages of the
2006 fuel ethanol is consumed countrywide and blended in production chain (i.e., reducing energy consumption,
30% of the gasoline consumed in the country [30,31]. E85 greater energy self-sufficiency, developing new co-products,
blends are also used but its expansion is curtailed by lack of etc.). It is estimated that production costs could be reduced by
infrastructure. Ethanol is sold in most states as octane 8–15% in the mid-term [24] while the energy ratio could be
enhancer or oxygenate blended with petrol and in 2006 improved from about 1.3 to 2.9 if fossil fuels used in industrial
represented about 3% of gasoline equivalent [30]. processes are switched to biomass-based fuels, such as wood
In addition to environmental reasons and the influence of chips [37].
the farming sector, another major driving force is the desire to However, despite the strong interests of corn producers, the
reduce external oil dependency, together with the phasing- long-term sustainability of fuel ethanol in the US will
out of methyl tetrabutyl ether (MTBE) as octane enhancer, ultimately depend on the use of new feedstocks. Considerable
banned in 23 states in 2005. A major concern with MTBE is efforts are being made to develop new routes of liquid fuels
water contamination and its health effects. from cellulosic material. In 2006 a forecast by EIA [32] stated
In August 2005 the US government signed into law the that by 2030 more than 93% of the ethanol production could
Energy Policy Act of 2005, creating a national Renewable Fuels still be based on corn and less than 7% on cellulose
Standard which set targets of 28.4 Gl of renewable fuel to be feedstocks. However, recent estimates are that corn-based
used in the transport sector by 2012, the vast majority fuel ethanol could reach 55–57 Gl between 2012 and 2017, and the
ethanol. In 2006 the Energy Information Administration—EIA remaining from cellulosic material [38]. The estimates of the
[32] estimated that fuel ethanol consumption could reach US DOE are that through RD&D efforts cellulosic ethanol cost
55.3 Gl in 2030, but in early 2007 US Federal Government set a could be 0.35 $/l by 2012 and approx. 0.32 $/l by 2017 [33].
ARTICLE IN PRESS
3.4. Experiences and perspectives in Europe Tropsch liquids or even hydrogen) are also intensively being
investigated in many of the EU MS [42].
European Union (EU) has a strong policy for promoting the The short-term policy is to avoid large-scale implementa-
use of alternative fuels, particularly biofuels. In 2001 an EU tion of biofuels until feedstock costs can be reduced
Directive established that by 2005 biofuels should cover 2% of significantly. Some countries, e.g., Germany and France, have
the total transport fuel consumption (energy basis), while the both political and cultural interests in their agricultural
target for 2010 was set at 5.75%. However, so far the average sectors and national policies are in favour of local produc-
biofuel contribution has been minimum (e.g., 0.5%, 0.6% and tions of biodiesel and ethanol [42]. However, the high cost of
1% in 2003, 2004 and 2005, respectively) and from 2003 to 2005 subsidies is prompting some policy rethinking.
ten countries did not use either biodiesel or bioethanol as a
substitute. The two countries with higher proportions in 2005 3.5. Perspectives in Japan
were Germany (3.75%) and Sweden (2.23%) [39].
The EU Biofuels Directive has left individual Member States Japan is one the main consumers of gasoline in the world and
(MS) to decide on policies and measures needed to reach the is heavily dependent on imported oil. The country has
target, as well as biofuels mix strategies most beneficial to considered large-scale use of fuel ethanol, or ETBE, targeting
each country. This degree of flexibility makes it very difficult its energy security and GHG emissions reduction to accom-
to estimate the long-term potential penetration of biofuels at plish its Kyoto obligations. Since 2005 the use of E3 is not
EU-wide level. In the Energy Policy Document, published in mandatory and ethanol blends are used in some regions; an
January 2007, the EU has adopted a more conservative E3 mandate should be defined nationwide and expanded to
estimate for 2020 of 10% based on current trends rather than E10 by 2010. However, there is some resistance due to the low
the 20% suggested in previous documents. However, many number of large-scale ethanol suppliers and to the interests
believe that even 10% is unrealistic and are calling for a lower of oil companies that prefer gasoline blends with ETBE rather
percentage for biofuels. than with fuel ethanol [43].
In the EU only a small fraction of ethanol is used as fuel. Japan is an important producer of synthetic ethanol but
Total ethanol production (all grades) in the EU is concentrated lacks the conditions to produce ethanol from biomass in large
in some countries and covered about 6% of the world scale. In 2005 the country was the second largest importer of
production in 2005 (2.7 Gl) [31]. The main players of fuel ethanol (more than 500 Ml) [31] used primarily as fuel. If
ethanol in Europe are Germany, Spain, France, Poland and mandates are finally implemented, including ETBE blends,
Sweden, representing about 90% of the production in 2006 Japan will become one of the main markets for fuel ethanol in
(1592 Ml) [40]. Coincidentally, two of the main European the world.
producers—France and Spain—consume gasoline blended
with ETBE (8–10%). ETBE production is partially renewable 3.6. Other countries
when bioethanol is used.
The capacity of fuel ethanol production in Europe in mid- More than 40 countries worldwide have shown interest on
2007 was estimated as 3.3 Gl, distributed in 14 countries, ethanol fuel. This section looks briefly to some of the most
France being the largest (1150 Ml), followed by Germany important markets.
(706 Ml), Spain (521 Ml) and Italy (302 Ml). An additional new China is currently the world’s third largest producer of
production capacity is estimated as 4.0 Gl, distributed in 15 ethanol and is the focus of considerable attention given the
countries; larger capacity is in France (550 Ml), Germany potential size of its market. In 2005 the ethanol production
(480 Ml), Netherlands (480 Ml), Belgium (435 Ml), Spain capacity (all grades) was estimated as 3.8 Gl [44] while the fuel
(420 Ml), UK (400 Ml) and Czech Republic (339 Ml) [40]. ethanol consumption reached about 1 Gl [45]. There are four
The feedstocks used in the EU for ethanol production are state-designated fuel ethanol enterprises in China with a
sugar beet and wheat; some units under construction combined production capacity of 1.3 Gl/year, although there
will use corn, mainly in new MS. Lately, surpluses of wine are other plants which are operating [44]. There are three new
have been converted to fuel ethanol. Feedstock cost is a major plants under construction with a combined capacity of 1.5
limiting factor in the EU with prices ranging from 0.74 $/l for Gl/year [46]. In China, more than 80% of ethanol is made from
wheat to 0.85 $/l from sugar beet, compared to 0.21 $/l in grains (corn, rice, etc.); ethanol production from sugarcane
Brazil [41]. The short- to mid-term perspective is that represents about 10% [46].
production costs could be reduced 15–20% [24]. The energy Total capacity could reach 2.5 Gl in 2010 and up to 12.6 Gl in
ratio of ethanol production from wheat or sugar beet is 2020 [45]. Given land constraints, there is a policy of
estimated as around 2 [24]. diversifying the feedstock such as cellulose. There are at
Given the constraints of ethanol production from the least two pilot plants in operation producing ethanol through
current available technologies and feedstocks, EU is putting acid and enzymatic hydrolysis of sawdust, rice straw and
a considerable effort in developing second generation of from the stalks of sweet sorghum [47].
biofuels, based on cellulosic materials. The conversion of So far it is mandatory to use E10 in nine provinces that
ligno-cellulosic material to ethanol has received particular account for about one-sixth of that country’s vehicles. There
attention in Sweden and to a lesser extent in UK, Spain and are various reasons for supporting ethanol fuel, e.g., reducing
the Netherlands. In addition, other routes based on biomass oil dependency, improving air quality in big cities, stabilizing
gasification for syngas production and subsequent conversion grain prices and improving farmer’s income. In summary, it
to biofuels (i.e., methanol, dimethylether (DME)-, Fisher- can be said China plans to develop fuel ethanol step-by-step,
ARTICLE IN PRESS
and will prioritize ethanol production from non-food-related In Japan gasoline demand is expected to grow by less than
crops [46]. 0.5% annually over 2006–2011 due to a combination of factors,
India is the world’s second sugarcane producer and a large e.g., demand for less, smaller and more efficient vehicles
producer of ethanol, mostly used as a chemical feedstock. (due to high taxes, aging population, etc.) [50].
However, most of the sugarcane production is still aimed at On the contrary, in China due its rapid economic
its huge domestic sugar market [48]. Recently, India has been development, the demand for vehicles is expected to
seriously considering fuel ethanol production and a mandate increase enormously. To reduce gasoline demand, the
for E10 blends, currently effective in 13 states, will be Chinese government is taxing larger vehicles at higher
introduced countrywide by 2010 [44]. levels than smaller ones. The prospects are that Chinese
India has the potential to be a large-scale fuel ethanol transport sector will continue to grow rapidly and so the
producer from sugarcane but land constraints could be a demand for gasoline; an estimate is that annual energy
major limiting factor. In addition, contrary to Brazil, sugar- demand would increase by 5–7% [50] in the next few years.
cane is produced by many small farmers and cost reduction Road transport is the primary factor in China’s economic
will be more difficult. development [32].
Thailand imports 90% of its oil consumption, costing 13% of In India it is estimated that the demand for road transport
the country’s GDP. Thai government is pursuing a policy of fuels would expand by over 5% annually from 2006 to 2011.
domestic production and consumption of biodiesel and fuel Currently India’s demand on transportation fuels is about 40%
ethanol. The withdrawal of MTBE increased ethanol con- of China’s current demand [4].
sumption to 340 Ml in 2006 [44]. The main feedstock is cassava The IEA [4] estimates that from 2006 to 2011 the world
as the country is one of the world largest producers. Long demand in the transport sector will grow by approximately
tradition, high productivity and experience with this crop, 2.5%/year, with relatively smaller growth rates for gasoline
together with the high price of sugar in the domestic market, than for diesel. By 2050 the IEA estimates that world gasoline
makes it unlikely that sugarcane will become a major consumption can reach 2760 Gl according to a baseline
feedstock for large-scale ethanol production. By the end of scenario, with an average growth of 1.84%/year [50].
2009 there could be at least 24 ethanol plants in operation,
with a total production capacity of 1.7 and 1.8 Gl by the end of 4.2. Estimates of fuel ethanol consumption
2011 [31].
Sugarcane is a traditional crop in many Latin America 4.2.1. Motor gasoline consumption
countries and the potential for ethanol production is quite To evaluate fuel ethanol consumption by 2030, a simple
significant in this region. In Central America and Caribbean forecast model was developed based on historical data of
all major producers of sugarcane are considering the fuel motor gasoline consumption of main consuming countries
ethanol option in order to modernize and diversify the and regions, e.g., US, EU-25, Japan, China, Brazil and the rest
sugarcane industry; unlike in most other countries, the main of the World. Although Brazil is not a major gasoline
target it to export to the US [48] (see Sections 5.1 and 5.2). The consumer, it can become the world’s largest exporter of fuel
US and Brazil have recently signed a partnership to promote ethanol. The group ‘‘Rest of the World—Brazil’’ (ROW-BR)
the production of ethanol throughout the region. The US comprises a large number of countries with heterogeneous
market is also the main target in Peru, where ethanol features regarding their importance as gasoline consumer
production has a strong political connotation as new cane and as fuel ethanol producers.
plantations are aimed at replacing coca crops. In Colombia a Motor gasoline consumption data were taken from [51–53]
national programme was launched in 2001 where gasoli- while complementary information for Brazil was taken from
ne–ethanol blends are compulsory in cities with over 500,000 [28]. Total motor gasoline consumption was estimated as
inhabitants. Five new ethanol distilleries from sugarcane 1213 Gl in 2005 (see Table 3).
were established between 2005 and 2006, with a production The forecast procedure is based on extrapolation of
capacity of about 200 Ml/year [49]. trends of gasoline consumption in each country/region;
when available, estimates of future consumption were
added to better reflect the expected trends. Complementary
4. Future ethanol markets data of gasoline consumption are presented in Table 2.
For Brazil a different procedure was used as gasoline
4.1. Trends on gasoline consumption consumption is strongly influenced by the market success
of FFVs. Firstly, was estimated the energy demand for
The demand for ethanol will be affected by an unbalanced light-duty vehicles and then deducted from the results
situation between refining capacity, refining structure and the the predicted amount of ethanol demand. Estimates
production of gasoline and diesel. For example, in the EU the of the ethanol market were used for the period 2010–2015
demand for diesel continues to grow at the expense of (Table 2). Consumption of fuel ethanol was finally adjusted to
gasoline, induced by lower taxes on diesel. The diesel fleet the value presented in the National Energy Plan 2030 (50 Gl of
could rise from 30% in 2005 to 43% in 2011 and, as a fuel ethanol in 2030) [55]. Due to the competition between
consequence, gasoline demand is expected to decline by gasoline and ethanol, the hypothesis assumed by [55] is that
17.4–23.2 Gl from 2006 to 2011 [4]. On the contrary, in US, with the share of ethanol on energy transportation demand will
the largest market of gasoline in the world, the short-term reach almost 55% (volume basis) in 2020 and stabilize
forecast is that the demand will continue to rise [32]. thereafter.
ARTICLE IN PRESS
As illustrated, Fig. 3 shows the estimated gasoline con- 4.2.2. Fuel ethanol consumption
sumption in US and EU-25 from 2006 to 2030. In short- to mid-term, fuel ethanol consumption will be
Table 3 summarizes estimated gasoline consumption in induced by mandates in all countries, except in Brazil. In this
2030; for comparison, other estimates from literature are also paper fuel ethanol consumption for the period 2006–2030 was
presented. It is predicted that within 25 years the bulk of evaluated based on estimates of gasoline consumption,
gasoline consumption will move from developed countries presented above, and on targets of ethanol use in different
(US, Japan, EU-25) to developing nations. Consequently, countries. Two scenarios are proposed, with the main
developing countries could have both an important role as difference between them being the hypothesis that ethanol
producers and also as consumers of fuel ethanol. Fig. 4 shows cellulosic materials will be possible to a large extent from
the estimated evolution of gasoline consumption for the 2020 to 2030. Scenario 1 is more conservative and is based on
period 2006–2030. the targets formerly defined by US administration for the
years 2012 and 2030. In this scenario the growth of US ethanol
consumption would be constrained by domestic production
capacity, considering that large-scale ethanol production
from cellulosic materials would be feasible towards the end
Table 2 – Additional information used to forecast gaso- of the period (2030).
line consumption Scenario 2 is based on the targets of ethanol production
defined by US government by early 2007, i.e., consumption of
Country/ Information Sources about 132 Gl by 2017. This target can only be achieved if large-
region scale ethanol production from cellulosic materials becomes
feasible in short- to mid-term. As a consequence of the
US Motor gasoline consumption ¼ 675 Gl [54]
in 2020a
commercial availability of such technologies, ethanol con-
US Motor gasoline consumption ¼ 745 Gl [32] sumption would grow more after 2017–2020, both in US and in
in 2030 other countries. Only for US and EU-25 there are differences
EU 25 Motor gasoline consumption should [4] between Scenarios 1 and 2 on the whole period; for the other
drop 20 Gl over 2006–2011 countries (China, Japan and ROW-BR) Scenarios 1 and 2 are
EU 25 Motor gasoline consumption ¼ 134 Gl [54]
different just after 2020. There is just one scenario for Brazil.
in 2020a
The hypotheses considered in both scenarios are presented in
Japan Gasoline consumption must grow just [4]
0.5%/year over2006–2011 Table 4.
China Gasoline consumption must grow [4] Relative efficiencies between vehicles fuelled with gasoline
5–7%/year over 2006–2011 (E0) and those fuelled with any gasoline–ethanol blend are
Brazil Fuel ethanol consumption must reach [12] required in order to estimate fuel ethanol consumption.
19 Gl (2010) and 28.7 Gl (2015) Except for Brazil, it was assumed that until 2010 fuel
World Projected motor gasoline consumption [50]
efficiency would be 1% lower than an E0 vehicle (i.e., relative
close to 2760 Gl in 2050
efficiency ¼ 99%). Until 2020, and for any fuel blend, relative
a efficiency would be equal to 100%. Finally, it was assumed
The original estimates take into account the participation of
biofuels: 10% in the case of USA and 6% in Europe.
800 250
700
200
Gasoline consumption [Gl]
600
500
150
400
100
300
200
50
100 US
EU 25
0 0
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
2023
2026
2029
Fig. 3 – Gasoline consumption in US and EU-25—estimated in the period 2006–2030.

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Table 3 – World gasoline consumption (data for 2005 and estimates for 2030)
Country/ Growth rates (%) Consumption (Gl) in Consumption (Gl) in

region 2005 2030
2006–2011 2003–2030
Estimated Reference Estimated Reference
USA 1.75 1.40 528 (43.5%) 746 (38.8%)

EU-25 2.71 1.19 164 (13.5%) 126 (6.6%)
Japan 0.50 0.63 61 (5.0%) 71 (3.7%)
China 6.00 5–7.0a 4.10 3.90b 53 (5.2%) 166 (8.7%)
ROW-BR 3.26 2.76 378 (31.2%) 771 (40.0%)
Brazil 2.62 3.50 3.50c 18 (1.5%) 43 (2.2%)
World 1.91 1.80 1.84d 1213 1924
Sources: a[50], b[32] over 2003–2030, c[55], d[50] over 2003–2050.
2500
Brazil
ROW-BR
China
2000 Japan
EU 25
Gasoline consumption [Gl]
USA
1500
1000
500
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Fig. 4 – Estimated consumption of motor gasoline up to 2030.
that after 2020 relative efficiency would be 101% vis-à-vis an are shown in Figs. 6 and 7, for Scenarios 1 and 2, respectively.
E0 vehicle. In Scenario 1 consumption of fuel ethanol could reach
The ratio between the relative efficiency and the volume of 272 Gl in 2030 (from 33 Gl in 2005), allowing the displace-
ethanol required to displace a given volume of gasoline was ment of almost 10% of the estimated demand of
taken from [14]. The far right point in each of the lines shown gasoline (displacement of 190 Gl vis-à-vis estimated
in Fig. 5 corresponds to the estimates of the performance of consumption of 1924 Gl) (see Fig. 8). In Scenario 2 the
Brazilian vehicles hypothetically running on E5 and E10. consumption of fuel ethanol reaches 566 Gl in 2030,
Typical specific consumption (volume basis) of Brazilian displacing more than 20% of the demand of gasoline (almost
vehicles running on E22 is 5.5% higher than a similar E0 400 Gl) (Fig. 8).
model and in case of an E100 model specific consumption is Table 5 shows a comparison between consumptions and
29.4% higher [18]. As can be seen in Fig. 5, running with E5 and their annual growth rates for the different countries and
in case of relative efficiency 99%, 8.6 l of fuel ethanol would be regions for both scenarios. In case of EU-25 (both scenarios)
required to displace 5 l of gasoline; running with E10 and in and US (Scenario 2), the high level of ethanol consumption by
case of relative efficiency 100%, 13 l of fuel ethanol would be 2030 (in EU-25 28.5% and 39.3% by volume in Scenarios 1 and
required to displace 10 l of gasoline. 2, respectively, and in US 35% by volume in Scenario 2) could
According to the hypotheses presented above, the only be reached with a significant share of FFVs or even neat
estimated ethanol consumption in the period 2006–2030 ethanol vehicles.
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Table 4 – Targets and assumptions of fuel ethanol consumption from 2006 to 2030 (EU-25 targets in energy basis)
Country Scenario 1 Scenario 2 Assumptions/comments
US 27 Gl by 2012, equivalent to Hypothesis assumed by the authors: 95% of the target of 28.4 Gl of
4.6% (volume) biofuels defined by the Energy Policy Act of 2005
55.3 Gl by 2030, equivalent Volume of ethanol estimated by US DOE [32]
to 7.4% (volume)
70 Gl by 2012 Scenario assumed by [38] in accordance with the target defined by
2017
132.5 Gl by 2017 Target defined by US government in January 2007; large-scale
imports and/or ethanol production from ligno-cellulosic
materials would be necessary
263.7 Gl by 2030 Hypothesis assumed by the authors in accordance with the
results achieved up to 2017, considering that ethanol would
displace 35% of the estimated gasoline consumption by 2030
EU-25 2.5% by 2010 (energy basis), Conservative hypothesis assumed by the authors vis-à-vis the EC
that corresponds to 3.6% Directive on Biofuels (5.75% by 2010—energy basis)
(volume)
10% by 2020 (energy basis), EU target defined in January 2007 by the EC Directive on Biofuels
that corresponds to 14.4% [56]
(volume)
20% by 2030 (energy basis), Hypothesis assumed by the authors considering that ethanol
that corresponds to 28.5% would displace 20% of the estimated gasoline consumption by
(volume) 2030 (energy basis)
5.75% by 2010 (energy Target of EU Directive on biofuels [57]
basis)
14% by 2020 (energy Share feasible to be reached, according to EC [56]
basis)
27.5% by 2030 (energy Assumed by the authors considering that ethanol production
basis) from ligno-cellulosic materials would be feasible and that ethanol
would displace 27.5% of estimated gasoline consumption by 2030
(energy basis)
Japan 10% (volume basis) 2015 Hypothesis assumed by the authors

onwards
15% (volume basis) to be Based on the hypothesis that ethanol production from ligno-
reached by 2030 cellulosic materials would be feasible
China 2.5 Gl by 2010, that Production targets on fuel ethanol; in this case China would be
corresponds to 3% (volume) self-sufficient by 2010 [45]
12.6 Gl by 2020, that Production targets on fuel ethanol; in this case China would be
corresponds to 10% self-sufficient by 2020 [45]
(volume)
2020 onwards—10% Target defined by the Chinese government [46]
(volume) of gasoline
displaced by ethanol
Same hypotheses up to Based on the hypothesis that ethanol production from ligno-
2030. By 2030, 15% cellulosic materials would be feasible
(volume basis)
ROW-BR 1% (volume) of gasoline Hypothesis assumed by the authors

displaced by 2010
10% (volume) of gasoline Hypothesis assumed by the authors
displaced 2020 onwards
Same hypotheses up to Based on the hypothesis that ethanol production from ligno-
2030. By 2030, 15% cellulosic materials would be feasible
(volume basis)
In the case of US, Scenario 1 consumption in 2030 (based on proposed for 2017. In this case, US would remain the main
[32]) seems to be very conservative based on the current market of fuel ethanol in the world.
consumption and support policies trends to increase domes- To comply with the EU Biofuels Directive by 2010
tic production. The result of Scenario 2—consumption almost (Scenario 2) will require a considerable effort to increase
five times higher than in Scenario 1—is induced by the target ethanol consumption in the short term in Europe. Results of
ARTICLE IN PRESS
18%
16%
14%
Volume required (ethanol)
12%
10%
8%
6%
4% E5
E10
2%
0%
98% 99% 100% 101% 102% 103% 104%
Relative efficiency
Fig. 5 – Volume of ethanol required as a function of the relative efficiency regarding E0.
300
Brazil
ROW-BR
China
250
Fuel ethanol consumption [Gl]
Japan
EU 25
USA
200
150
100
50
0
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Fig. 6 – Estimated consumption of fuel ethanol in the 2006–2030 period—Scenario 1.
Scenario 2 are on average 40% higher than results of Scenario competitive market (induced by a large fleet of FFVs) fuel
1 in the whole period. According to Scenario 2, ethanol ethanol consumption could be higher than 55–60% vis-à-vis
consumption in EU-25 by 2030 would be equivalent to the the total fuel consumption (volume basis).
consumption in Brazil in the same year. Based on present trends, even the estimate of Scenario 1
For China, Japan and ROW-BR, differences between Scenar- seems very optimistic. It is clear that on a global scale,
ios 1 and 2 exist only after 2020. The hypothesis is that fuel displacing 10% of gasoline by ethanol in 2030 will be a
ethanol consumption will be equivalent to E10 or E15 by 2030, considerable achievement.
respectively, leading in both cases to a dramatic growth on
consumption, especially in the ROW-BR region. Consequently, 4.3. Evaluating fuel ethanol production and trade
the estimated annual growth rates of consumption are very
large, mainly in very short term. Future fuel ethanol production in a specific country will
For Brazil, fuel ethanol consumption has been estimated depend on a set of circumstances, such as supportive policies
close of its maximum. It seems very improbable that in a to local farmers, concerns with energy dependence, food
ARTICLE IN PRESS
600
Brazil
ROW-BR
China
500 Japan
Fuel ethanol consumption [Gl] EU 25
USA
400
300
200
100
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Fig. 7 – Estimated consumption of fuel ethanol in the 2006–2030 period—Scenario 2.
25%
Scenario 2
20%
Share of gasoline displaced
15%
Scenario 1
10%
5%
0%
2000 2005 2010 2015 2020 2025 2030 2035
Fig. 8 – Estimated share of gasoline displaced due to fuel ethanol use.
supply, future costs of oil and ethanol production, availability projections were done for each region/country in order to
of land, environment and so forth. estimate the capacities in 2030. In some cases projections
Assessing the magnitude of fuel ethanol trade in the short- were also carried out for 2020. Although uncertain, the
to mid-term with any degree of accuracy is a difficult task due estimates of ethanol production capacity based on conven-
to the large number of variables involved and lack of reliable tional feedstocks and technologies are more accurate than in
data. The evaluation presented in this paper is based on the case of production from cellulosic-based materials. In
comparing ethanol consumption (previously presented) and case of Japan it was assumed as a way of simplification that
estimates of domestic production capacity. no conditions exist to produce ethanol from biomass; this
Production capacity was evaluated according to the hypothesis is reasonable in case of ethanol production from
following procedure. Firstly, we evaluated the capacity for conventional feedstocks, but this is not necessarily the case
fuel ethanol production in 2005. Secondly, the production of cellulose-based ethanol. The estimates of production
capacity in 2020 was estimated based on trends of increasing capacity of fuel ethanol from 2005 to 2030 are presented in
capacity and estimates available in the literature. Finally, Table 6.
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Table 5 – World fuel ethanol consumption in 2005 (data and estimates) and 2030 (estimates)
Country/ Consumption Scenario 1 Scenario 2

region (Gl) in 2005
Consumption Annual Annual Consumption Annual Annual
(Gl) in 2030 growth growth (Gl) in 2030 growth growth
rates rates rates rates
2005–2010 2005–2030 2005–2010 2005–2030
(%) (%) (%) (%)
USA 15.3 (46.4%)a 55.3 (20.3%) 8.4 5.3 263.7 (46.6%) 26.7 12.1
EU-25 1.6 (4.9%)b 36.0 (13.2%) 26.0 13.2 49.6 (8.8%) 59.9 14.7
Japan 0.5 (1.5%)c 9.3 (3.4%) 34.3 12.5 14.3 (2.5%) 34.3 14.5
China 1.0 (3.0%)d 21.6 (7.9%) 20.4 13.1 33.5 (5.9%) 20.4 15.1
ROW-BR 1.3 (3.9%)e 100.2 (36.8%) 60.8 19.0 154.9 (27.4%) 60.8 21.1
Brazil 13.3 (40.3%)f 50.0 (18.3%) 8.6 5.4 50.0 (8.8%) 8.6 5.4
World 33.0 272.4 15.1 8.8 566.0 26.1 12.0
a
[27].
b
Consumption estimated as the domestic production of about 900 Ml [40] plus the imports of 700 Ml [31].
c
Consumption in 2005 estimated equivalent to the net volume of imported undenatured ethanol [31].
d
[45].
e
Consumption calculated per difference, considering the world fuel ethanol consumption equal to 33 Gl.
f
[28].
Average annual growth rates on the production capacity are expansion could take place. The maximum capacity in Brazil
presented in Table 6 (see also notes). In all cases the growth in 2010 (21 Gl) estimated by [60] is lower than the figure
percentages are reduced along the period, reflecting con- presented by the Brazilian government (25–26 Gl) and, thus,
straints on fuel ethanol production based on conventional 21 Gl was not considered a constraint.
feedstocks and conversion process. In this sense, the The comparison between Tables 6 and 7 indicates that the
assumptions are not ambitious. Considering global produc- estimated production in EU-25 by 2030 (40 Gl; see Table 6) is
tion capacity, average annual growth rates fall from 17.2% well above the maximum possible from conventional tech-
from 2005 to 2010 to 5.5% from 2010 to 2020 and to 2.85% from nology (27.3 Gl) (Table 7). Thus, 27.3 Gl is the limit to be
2020 to 2030. In contrast, the average annual growth considered once this production is achieved between 2020
percentages are very high in the case of fuel ethanol from and 2030.
cellulosic materials (34.8% and 35.7% for US and the World, In case ethanol from cellulosic materials is available only
respectively, in the period 2020–2030). This is a very ambitious toward the end of the period, US DOE [32] estimated for 2030
target and it is clear from these results that to achieve this about 4 Gl of ethanol would be produced in US, increasing the
level of ethanol production from cellulosic material is going to maximum production capacity from 63 Gl (Table 6) to 67 Gl.
be a major challenge. For the EU it was also assumed that the production of 4 Gl
A complementary step was taken to verify whether it would from cellulosic material by 2030, pushes its maximum
be possible to reach the estimated production capacities capacity to 31.3 Gl. For China, only ethanol from sugarcane
(e.g., land availability could be a serious constraint). Results has been considered by Fulton [60] and here it was assumed
presented by [60] were used for this purpose. The study that the difference would be produced from other feedstocks.
considers that up to 2020 only current commercial technol- The estimated capacity of ethanol from conventional feed-
ogies of ethanol production would be available (from sugar- stocks along the period is shown in Fig. 9, which could reach
cane, grain, beet, etc.) and that after 2020 some ethanol plants 180 Gl in 2030. Roughly, one third of the estimated capacity
will start using cellulosic material. This hypothesis is on-line would be in US, one third in Brazil and another third in the
with Scenario 1 of ethanol consumption, but not with rest of the world. As mentioned, a further 8 Gl from cellulosic
Scenario 2. The evaluation carried out by [60] considers materials could be expected by 2030.
constraints on land availability (food crops and biodiesel It is worth noticing that from 2020 onwards the estimated
production), evolution and limits on yields and a steady and production capacity through conventional feedstocks would
feasible growth of ethanol fuel production capacity. Table 7 be close to its maximum in EU-25 and China. Thus, without
presents the estimated limits of fuel ethanol production ethanol production from cellulose and significant imports,
based on current commercial technologies for the main this tight situation could result in risky shortage and high
regions/countries according to [60]. In case of US and EU, costs. In the US in the same period the production capacity
the maximum capacity of ethanol production using tradi- will be close to 55 Gl, the maximum can be produced from
tional technologies and feedstocks would be 68.2 and 27.3 Gl, corn according to some experts (e.g., [38]). In Brazil, by 2030
respectively. Once these targets are achieved, no further the production capacity would be about 50% of its possible
ARTICLE IN PRESS
Table 6 – Estimates of production capacity—fuel ethanol would have to be met by imports) and EU-25 (2.3 Gl also to be
(Gl) imported), but positive for US and Brazil. The balance in EU-
25 is also negative in 2020 (2.0 Gl) and in 2030 (4.7 Gl), even
Region/country 2005 2010 2020 2030 considering the maximum possible production from grains
and sugar beet, and including the production of 4 Gl of
Conventional feedstocks ethanol from cellulose (in 2030). In China the balance is still
US 16.21 45.0a 58.0b 63.0b
zero in 2020, but negative in 2030 (3.4 Gl). Japan would have to
EU-25 2.12 9.5c 24.8d 40.0d
China 1.33 2.54 12.64 18.2e
import about 9.3 Gl in 2030.
ROW-BRf 1.0 2.5 6.0 10.3 In the case of US, in Scenario 1 fuel ethanol consumption in
Brazil 18.05 26.06 44.7g 62.0g 2030 corresponds to an average consumption lower than E10.
World 38.6 85.5 146.1 193.5 In this case the surplus capacity would be sizeable (21 Gl in
2020 and 12.2 Gl in 2030) and at least partially the most
Cellulosic materials
US – – 9.0h 178.07 expensive production could be avoided. But in case of E10
World – – 9.6i 203.08 blend, even with 4 Gl of ethanol from cellulose the supply
deficit would be significant (9.3 Gl in 2020 and 16.6 Gl in 2030).
Sources: 1[27], 2[40], 3[44], 4[45,46], 5[28], 6[58], 7[59], 8[60]. The results show that Brazil can export 12 Gl in 2030,
a
Assumed by the authors based on predicted production capacity although the export potential is much larger. In 2006 the
of 40–42 Gl by 2009 [25]. average ethanol production was 5609 l/ha [29]; based on a
b
Calculated by the authors based on an adjusted logistic function
growth rate yield of 0.9%/year [60], producing 62 Gl in 2030
to the recent data of production capacity [25], considering the
would require less than 9 Mha, compared to 3.1 Mha in 2006
estimate by 2010 and the hypothesis that ethanol production from
corn must reach 55 Gl by 2017. The annual growth rates on [29]. About 90 Mha surplus lands can be used in Brazil without
production capacity would be 2.57% from 2010 to 2020 and 0.83% displacing food production or preserved areas. Thus, to
from 2020 to 2030. As comparison, the annual growth rates from produce 100 Gl (50 Gl for domestic consumption and 50 Gl for
2004 to 2007 were 21%. exports) 14.4 Mha would be required of which 11.3 Mha would
c
Authors assumptions based on predicted production capacity of be new lands.
7.7 Gl by the end of 2008 [40]. The average annual growth rate from
For the ROW-BR case, large deficits of fuel ethanol supply
2007 to 2010 would be slightly larger than 27%, while the predicted
annual growth rate on production capacity from 2005 to 2007 was
can be observed in Fig. 11, ranging from 11 Gl in 2010 to 90 Gl
48% [40]. in 2030. However, the potential for ethanol production in this
d
Authors calculations based on an adjusted linear function region is high as India alone could produce between 6 Gl in
[3072.5+1.53 (year)] to the current production capacity and 2010 and 50 Gl in 2030 from sugarcane [60]. Fig. 11 also
considering estimate capacities in the years to come [40]. Average compares the deficits estimated in this paper with the
annual growth rates would be 10% from 2010 to 2020 and 4.9% from potential estimated by [60] for ethanol production from
2020 to 2030.
e sugarcane. Depending on the year, 45–65% of the potential
Authors calculations based on a polynomial function
[13,94214.185 (year)+3.6 103 (year)2] adjusted to the data of
ethanol production capacity from sugarcane would be enough
previous years. Average annual growth rates would be 17.6% from to match the estimated demand, except Brazil.
2010 to 2020 and 3.7% from 2020 to 2030. According to the estimates presented in Table 6, it will be
f
Authors estimates. Average annual growth rates would be 20.1% impossible to match the consumption predicted in Scenario 2.
from 2005 to 2010, 9.1% from 2010 to 2020 and 5.6% from 2020 to Table 8 presents the balance between demand and supply in
2030.
g
US and in the rest of the world, bearing in mind the evolution
Authors estimates based on an adjusted function to previous
of ethanol from cellulosic materials as presented in Table 6. In
years. Average annual growth rates from 2005 to 2010 are 7.6%.
From 2010 to 2020 it was estimated to 5.7%, and 3.3% from 2020 to case it would not be possible to accelerate and increase
2030. ethanol production from second generation, the only way to
h,i
Authors calculations based on an exponential function adjusted make Scenario 2 a reality (displacement of about 20% of
to the production capacity by 2030 estimated by [59,60], supposing predicted gasoline consumption by 2030) would be large-scale
the commercial production at 1 Gl scale will start in 2012. production of ethanol from sugarcane in developing coun-
tries. To match the demand predicted in Scenario 2, Brazil and
ROW-BR would have to export at least 14.5 Gl in 2010, 73.9 Gl
in 2020 and 71.8 Gl in 2030, i.e., 13% (2030) to 25% (2020) of the
maximum [60]. For ROW-BR the adopted procedure leads to a whole ethanol demand.
very low production capacity (10.3 Gl) in 2030 compared to the In case no significant cellulose ethanol production occurs in
estimated potential capacity (ca. 172 Gl of which 161 Gl would this the period, if US goes for E10 in 2030 (Scenario 1 for other
be from sugarcane). The potential of ethanol production in countries), and based on the optimistic assumption that US
ROW-BR is huge and should be the object of further studies. and EU-25 can reach their full ethanol production potential,
Finally, the comparison between the estimated consump- the amount of fuel ethanol that could be traded to match
tion of fuel ethanol over the period 2005–2030—according to demand in 2020 (in US, EU-25, Japan and China) is estimated
Scenario 1 (see Section 4.2)—and the results of production at about 21 Gl, and close to 34 Gl in 2030, i.e., 24% and 28%,
capacity shown in Fig. 9 allow the evaluation of deficits and respectively, of their combined consumption. In this case
surpluses in each region/country, as illustrated in Fig. 10. local production in US and EU would be very expensive.
In the short term (2010), as can be seen, the balance is In case of no significant production of ethanol from
basically zero for China, negative for Japan (2.1 Gl which cellulosic materials, an alternative scenario assumes that
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Table 7 – Limits on fuel ethanol production—2010–2030 (Gl)
Region/country Comments 2010 2020 2030
USa Ethanol produced from corn 28.9 68.2 68.2

EU-25 Production from grain+beet 12.1 27.3 27.3
China Ethanol produced from sugarcane 1.9 7.6 16.0
ROW-BRb From different feedstocks 22.4 96.1 171.9
Brazil Ethanol produced from sugarcane 21.0 61.3 121.2
Worldc 86.3 260.5 404.6
Source: [60].
a
Information from [60] corresponds to the maximum production in North America, that was used here as a proxy of the maximum production
capacity in US.
b
Calculated as a difference.
c
Calculated from the total estimated maximum production capacity minus the estimated production capacity from cellulosic material.
200
Brazil
180 RW-BR
Fuel ethanol production capacity [Gl]
China
160
EU-25
140 USA
120
100
80
60
40
20
0
2005 2010 2015 2020 2025 2030
Fig. 9 – Estimated capacity of production of fuel ethanol without significant production from cellulosic materials.
25
USA(E7.4)
20 USA(E10)
EU-25
15 Japan
China
Brazil
Supply/demand [Gl]
10
-5
-10
-15
-20
2010 2020 2030
Fig. 10 – Estimated balance between potential supply and demand (Scenario 1) of fuel ethanol [Gl].
ARTICLE IN PRESS
60
40
20
Supply/demand [Gl] 0
-20
-40
ROW-BR
India
-60 LA-BR
Africa
Asia-CN
-80
-100
2010 2020 2030
Fig. 11 – Estimated balance between potential supply and demand of fuel ethanol [Gl]—ROW-BR. Source: The potential supply
[60].
Table 8 – Balance Demand–Supply according to consumption predicted in Scenario 2—2010–2030 (Gl)
Comments 2010 2020 2030
US Considering production of cellulosic ethanol from 2012 onwards (see Table 6) 5.0 95.8 22.7
World Considering production of cellulosic ethanol from 2012 onwards (see Table 6) 19.9 146.7 182.2
World Considering production of ethanol from cellulose and large-scale production from sugarcanea 0.0 4.3 16.4
a
Production of 26 Gl in Brazil and 22.4 Gl in ROW-BR in 2010; 61.3 Gl in Brazil and 96.1 Gl in ROW-BR in 2020; and of 121.2 Gl in Brazil and 171.9 Gl
in ROW-BR in 2030.
US and EU would impose quotas for imports to avoid Fuel ethanol trade is still in its infancy and there are still
expensive supply. If these quotas were 30% of their domestic many barriers which, unless removed or changed, will hinder
market in 2030, the traded volume required to meet the the development of bioenergy in countries with comparative
combined demand of US, EU, Japan and China is estimated as advantages and encourage the development of biofuels
about 46 Gl (38% of the estimated consumption in Scenario 1). production where it is more expensive [3].
In this case US would have to import 22.4 Gl and EU 10.8 Gl.
The relatively modest target to displace 10% of the gasoline 5.1. Recent trade flows
demand in 2030 (Scenario 1), at reasonable cost, can only be
accomplished fostering fuel ethanol production in developing Ethanol trade data are imprecise due to various potential uses
countries and, most importantly, enhancing ethanol trade. An and lack of proper codes for biofuels in the Harmonized
even greater challenge will be to replace 20% of the gasoline System Commodity Description and Coding System (HS) [62].
demand by 2030; this will require the development of second- Estimates [31] indicate that ethanol trade (all grades) has
generation technologies and a considerable expansion of grown steadily from about 3 Gl in 2000 to 6 Gl in 2005 (i.e.,
international trade. about 13% of the world production, estimated as 44.9 Gl).
From 1995 to 2002 this varied between 2.8 and 3.8 Gl;
assuming that the rise in recent years was primarily fuel
ethanol, it is reasonable to estimate that in 2005 about 10% of
5. Fuel ethanol trade the fuel ethanol consumption was traded.
Fuel ethanol is traded under HS code 2207, which covers
Traditional trade theory argues that economies gain from denatured and undenatured alcohol. Both can be used as fuel
trade by specialising in products where they have a compara- but denatured ethanol is often used as a solvent [62]. In this
tive advantage [61]. Thus, those who produce at lower costs case a chemical substance is added to make ethanol
and with higher quality should have trade advantages. In undrinkable and its removal is expensive [48]. From the 6 Gl
practice, however, this is not the case because countries traded in 2005, 4.7 Gl (almost 80%) was undenatured ethanol
impose trade barriers to protect local production. with at least 80 degrees strength [31]. Denatured ethanol,
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20% of the traded volume in 2005, remained basically significant amount of ethanol (mostly from US and South
unchanged during 2000–2004 [62]. Africa) which in most cases was of poor quality.
FO Licht data [31] show the origin of 5.5 Gl exported in 2005 From 2002 to 2005 US imported small quantities of ethanol
and the destination of 4.5 Gl imported, i.e., roughly 92% and 75% mainly from Central America and Caribbean countries.
of the volume traded (all grades), respectively. Brazil was by far However, in 2006 US imported almost 2.5 Gl (about 12% of
the main exporter (48%), followed by US, France and South the fuel consumption) [25], 1642 Ml from Brazil and 628 Ml
Africa (6% each). US was the main importer with 18%, followed from Jamaica, Costa Rica, El Salvador and Trinidad Tobago, of
by Japan (11%), India, Germany and Netherlands (8% each). which at least 480 Ml (76%) was also originally from Brazil [12].
Almost 97% of the Brazilian exports in 2005 were undena- Up to 7% of the US ethanol demand may be imported duty-
tured ethanol with high-degree strength, of which about 96% free under the Caribbean Basin Initiative (CBI), even if the
was fuel ethanol. In 2005 Brazil exported to 47 countries but ethanol comes from outside these countries [62].
the bulk of the trade was with just 12 countries (almost 92% of
the total volume) [12]. The increase on Brazilian exports from 5.2. Trade regimes on biofuels
2003 to 2004 was 1.6 Gl, that was almost the whole expansion
of world trade. The growth was much lower from 2004 to 2005 In 2005, the net amount of ethanol imported by US was
(190 Ml vis-à-vis an increase of about 1 Gl on trade); South estimated as 600 Ml or about 5% of domestic consumption.
Africa presented an increase of 871 Ml on its exports from Net imports by EU-25 in 2005 were equivalent, or 19% of total
2004 to 2005 [63]. Table 9 shows exports of ethanol from Brazil consumption [31].
from 2004 to 2006. US impose most-favoured nations (MFNs) import duties of
Fig. 12 shows the evolution of Brazilian exports/imports of 142.7 US$/m3 plus a 2.5% ad valorem (according to value) tariff
fuel ethanol from 1980 to 2006. In the 1990s, during a critical on ethanol. MFN basically means normal trade rules, with no
period of ethanol production, Brazil was forced to import a special advantage and no special constraint. In many cases
Table 9 – Brazilian exports of ethanol (all grades), 2004–2006
2006 2005 2004

3 3
Country (Ml) US$/m Country (Ml) US$/m Country (Ml) US$/m3
US 1749.2 504.43 India 414.2 278.07 India 478.6 194.24

Netherlands 344.5 439.35 Japan 317.9 292.75 US 424.6 189.46
Japan 227.7 418.15 Netherlands 264.3 301.01 S. Korea 278.4 201.19
Sweden 201.3 394.04 US 260.6 297.28 Japan 223.2 198.73
El Salvador 182.7 439.41 Sweden 245.1 286.03 Sweden 193.4 238.98
Total/avg 3416.6 469.69 Total/avg 2598.5 294.29 Total/avg 2408.3 206.68
Source: [12].
4000
Imports
Exports
3000
Ethanol trade flows [Ml]
2000
1000
-1000
-2000
-3000
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Fig. 12 – Brazilian trade flows of fuel ethanol—1980–2006. Source: [28].

ARTICLE IN PRESS
this tariff offsets lower production costs and imposes a will have a direct impact on international ethanol trade as it
significant barrier to imports. An argument seldom presented is vital to establish agreed fuel characteristics (e.g., maximum
in US is that these tariffs ensure that the benefits of the water content, aldehydes, flash point, explosion limits, pH,
domestic US ethanol tax credit do not accrue to foreign etc.). For example, even EU MS do not have harmonized
producers [64]. standards on ethanol which complicates trade (currently a
US gives special treatment under the CBI agreement but the specification often used is that of Swedish company Sekab
amount traded under this regime has been far below the 7% [66]). The EU is currently developing an ethanol fuel standard
cap (e.g., about 3% in 2005). However, the situation may along the lines of the American Society of Technical Material
change as new investment is going into ethanol plants in (ASTM) D4806 (Standard Specification for Denatured Fuel
Caribbean [62]. Ethanol for Blending with Gasoline) adopted in many US
Despite the small market, duty-free treatment of ethanol in states [66].
US has raised some concerns. Some experts believe that trade In Brazil, the National Petroleum Agency (ANP) is respon-
liberalization would induce modernization of the US industry sible for specifying and supervising the quality of all
and could act as safeguard against supply disruptions. None- commercial fuels, including biofuels. Other agencies, e.g.,
theless, an attempt to get rid to the MFN import duties on the National Institute of Metrology, Standardization and
ethanol in 2006 failed due to strong opposition from the Industrial Quality (INMETRO), are developing methods and
Midwest senators [31]. In addition, the numerous state-level procedures for quality testing of ethanol. An important aim of
subsidies provide so many incentives to domestic production the agreement signed between US and Brazil in 2007 is to set
that barriers to imports would remain even if the import standards for ethanol. Brazilian INMETRO and ASTM are
tariffs were to be removed [62]. responsible for this task.
The economic impacts of full ethanol trade liberalization in
US were analysed by Elobeid and Tokgoz [65]. Their conclu-
sions are that in US the consumption should increase by 3.2% 5.3.2. Sustainability and certification
(about 500 Ml in 2005), with 7.5% reduction of the domestic Certification schemes can play a key role in the future to
production and 14.1% decrease of the domestic prices. Net ensure fuel ethanol is sustainable, particularly in EU where
ethanol imports to US should increase 192.8% (about 1.2 Gl, consumers tend to be more sensitive to environmental and
based on imports figures in 2005). The authors also evaluated social issues [62] and where some initiatives are being
the impacts on Brazilian ethanol production and estimated investigated [67–69].
that it could lead to an increase of 8.8% (1.4 Gl) and about 62% Despite divergences, most experts agree that the following
increase on exports (1.6 Gl) and a 3.2% reduction in the issues should be considered to ensure the sustainability of
domestic consumption (425 Ml in 2005). biofuels [67]: (i) a minimum reduction of GHG emissions
Based on the European Commission [31], 45% of the ethanol should be reached vis-à-vis life cycle of conventional fuels;
imported by EU in 2005 was under the MFN regime; 29% under (ii) biofuels production should not jeopardize food production
reduced duty regimes and 26% was duty-free. Under MFN or contribute to significant raise of food prices; (iii) production
regime EU imposes a duty of 192 Euro/m3 on undenatured of biofuels should not impact negatively on natural eco-
alcohol (102 Euro/m3 in case of denatured alcohol); e.g., all logical systems or contribute to the reduction of water
import from Brazil are under MFN rules. Reduced duty and availability; (iv) biofuels production should not cause
duty-free regimes operate under preferential trade arrange- any important impact on soil and water bodies as conse-
ments between EU and developing countries. Many countries quence of the large-scale use of agrochemicals; (v) biofuels
of Africa, South and Central America and Asia are included in production should impact positively in the region where they
these preferential trade arrangements that aim at drug are produced; and (vi) biofuels production should have a
diversion, sustainable development and good governance positively social impact on the employees and the local
[62]. population.
Other countries, such Australia and Canada, have MFN Certification issue is rather complex, firstly because the
duties on ethanol imports, and even Brazil, which often diversity of views on sustainability, and secondly because
complains against trade duties imposed by US and EU, there is a growing perception in many developing countries
imposes a tariff of 60 Euro/m3 on imported ethanol. that certification schemes could end up as technical barriers
Part of the difficulties of biofuels trade liberalization has to international trade. At this stage it is not clear what will be
roots in agricultural policies and the need to protect farmers, the impacts of certification schemes on production costs and
e.g., ethanol is internationally classified as an agricultural trade of biofuels. There is a danger that stringent certification
product, but biodiesel is classified as industrial [62]. After the will hinder rather than enhance the biofuels industry, which
failure of the Doha Round, in 2006, opportunities for trade is being subjected to unprecedented scrutiny. It is crucial that
agreements have subsided and confined primarily to bilateral sustainability criteria are widely agreed among producers and
agreements. consumers. Smeets et al. (this issue) provide some insights
for ethanol from sugarcane under Brazilian conditions.
5.3. Market requirements Given the importance of GHG emissions reduction and
concerns with food prices [70], certification of biofuels
5.3.1. Standardization of the final product production could impact negatively on ethanol produced
One of the current constraints for fuel ethanol trade is the from corn and cereals and provide some advantage to ethanol
lack of an internationally agreed standard. Standardization from sugarcane and lingo-cellulosic materials.
ARTICLE IN PRESS
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Ethanol Consumption and Trade

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ARTICLE IN PRESS

BIOMASS AND BIOENERGY 32 (2008) 730 – 748

Perspectives on fuel ethanol consumption and trade

Arnaldo Waltera,, Frank Rosillo-Calleb, Paulo Dolzana, Erik Piacentea,

1. Introduction improving access to commercial energy [2]. In addition, the

Biofuels can positively impact on the socio-economic devel-

Fuel ethanol production [Gl]

Table 1 – World fuel ethanol production (Gl) and average

Ethanol production Ml 12000

Fig. 3 – Gasoline consumption in US and EU-25—estimated in the period 2006–2030.

Country/ Growth rates (%) Consumption (Gl) in Consumption (Gl) in

Estimated Reference Estimated Reference

USA 1.75 1.40 528 (43.5%) 746 (38.8%)

Sources: a[50], b[32] over 2003–2030, c[55], d[50] over 2003–2050.

Fig. 4 – Estimated consumption of motor gasoline up to 2030.

Country Scenario 1 Scenario 2 Assumptions/comments

Japan 10% (volume basis) 2015 Hypothesis assumed by the authors

ROW-BR 1% (volume) of gasoline Hypothesis assumed by the authors

Fig. 6 – Estimated consumption of fuel ethanol in the 2006–2030 period—Scenario 1.

Fig. 8 – Estimated share of gasoline displaced due to fuel ethanol use.

Country/ Consumption Scenario 1 Scenario 2

Table 7 – Limits on fuel ethanol production—2010–2030 (Gl)

Region/country Comments 2010 2020 2030

USa Ethanol produced from corn 28.9 68.2 68.2

Table 8 – Balance Demand–Supply according to consumption predicted in Scenario 2—2010–2030 (Gl)

Comments 2010 2020 2030

Table 9 – Brazilian exports of ethanol (all grades), 2004–2006

2006 2005 2004

US 1749.2 504.43 India 414.2 278.07 India 478.6 194.24

Fig. 12 – Brazilian trade flows of fuel ethanol—1980–2006. Source: [28].

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