Ethanol: world fuel

Ž‘—¿‚S

World Fuel Ethanol
Analysis and Outlook
Prepared for METI By Dr. Christoph Berg, F.O. Licht

1

World Fuel Ethanol
Some basic concepts

•By production route:
Fermentation vs. Synthetic • By composition: Anhydrous vs. Hydrous • By end-use: Beverage, Industrial, Fuel

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World Fuel Ethanol
The production route

•Synthetic ethanol:
Ethylene, coal; non-renewable •Fermentation ethanol: Grains, sugar crops, tapioca, wood etc; renewable
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World Fuel Ethanol
The largest synthetic producers
Aprechim Chempetrol Neftochim Jilin Chemicals Japan Ethanol Mossgas Sodes Equistar BP SADAF Sasol 0 50 100 150 200 250 300 350 400

Capacity (1000 tonnes/y)

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World Fuel Ethanol
Share of synthetic ethanol

Fermentation 95% Synthetic 5%

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World FuelEthanol
Composition

•Anhydrous:
99•‹ pure, may be used in fuel blends. • Hydrous: 96•‹ pure, may be used as 100% fuel substitute.
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World Fuel Ethanol
Fuel alcohol in Brazil
16000 14000 12000

mln litres

10000 8000 6000 4000 2000 0 1970 1980 Hydrous 1990 Anhydrous 2000
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World Fuel Ethanol
End use

•Beverage alcohol:
Alcoholic spirits: vodka, shochu etc.

•Industrial alcohol:Cosmetics, paints, inks.

•Fuel alcohol:
Blends or pure form.
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World Fuel Ethanol
Ethanol production by type
80000 70000 60000
in mln litres

50000 40000 30000 20000 10000 0 1975 1980 Industrial 1985 1990 Beverage 1995 2000 Fuel 2005 2010
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World Fuel Ethanol 1993 World Fuel Ethanol 1993

Grains Grains Sugar Sugar
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World Fuel Ethanol 2003

Grains Sugar
11

WorldFuel Ethanol 2013

Grains Sugar
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World Fuel Ethanol
The drivers of growth I

• Ethanol is good for the environment (Kyoto) • good for rural areas • reduces dependence on oil imports • enhances technological knowledge base
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World Fuel Ethanol
The drivers of growth II

• Demand is virtually unlimited.
• Cost reduction potential is huge.

• A tried and tested technology.
14World Fuel Ethanol
Success factors for biofuels

• Feedstocks
• Technology

• Policy
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World Fuel Ethanol
World fuel ethanol production by feedstock

Sugar crops 61%

Grains 39%
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World Fuel Ethanol
Ethanol yields per ha

USA (corn)

Brazil (cane)

France (beet)

0

1000

2000

3000

4000

5000

6000

7000

Production (litres/ha)

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WorldFuel Ethanol
Ethanol yields per tonne of feedstock

USA (corn)

Brazil (cane)

France (beet)

0

50

100

150

200

250

300

350

400

Production (litres/tonne)

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World Fuel Ethanol
Gross feedstock costs per litre of fuel ethanol

USA (corn)

Brazil (cane)

France (beet)

0

5

10 Costs (US Cents/litre)

15

20

25

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World FuelEthanol
Energy balance by feedstock
RME (Biodiesel) Wheat US corn Sugar beet Biomass Sugar cane 0 1 2 3 4 5 6 7 8

Energy output/Energy input

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World Fuel Ethanol
The case for political support

• Ethanol may serve socially desirable goals but it...
• is more expensive than gasoline • faces an unfavourable opportunity cost structure

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World Fuel Ethanol
Production cost reducingsubsidies

• Feedstock price support.
• Capital cost support.

• Income tax concessions.
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World Fuel Ethanol
Income enhancing subsidies

• Excise tax concessions.
• Guaranteed (captive) markets.

• Price guarantees. • Direct price support
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World Fuel Ethanol
Ethanol in Brazil
100 80

in per cent

60 40 20 0 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 1982 19841986 1988 1990 1992 1994 1996 1998 2000 2002 Ethanol Gasoline
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World Fuel Ethanol
Brazil – ethanol vs. gasoline economics
70 60 50
in %

40 30 20
1998 1999 2000 2001 2002 2003
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Price advantage of alcohol over gasoline

World Fuel Ethanol
Brazil‘s ethanol/methanol trade
2500 2000 1500
mln litres

1000 500 0 -500 -1000 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001...