World Energy Outlook 2006

international sugar prices (in part, a result of the increasing amount of sugar
used for ethanol production). This prompted the government to lower the
minimum ethanol content in gasoline blends from 25% to 20% to prevent an
ethanol shortage. Gasoline without ethanol can no longer be marketed in
Brazil.
Exports of ethanol have increased sharply in recent years, from little more than
200 ktoe (7 kb/d) in 2000 to over 1.3 Mtoe (41 kb/d) in 2005. Buyers include
the United States, India, Venezuela, Nigeria, China, Korea and Europe. Japan
is negotiating a deal to import Brazilian ethanol to help meet its commitments
to limit greenhouse-gas emissions under the Kyoto Protocol and to replace
MTBE, which is being phased out.
The Brazilian government has set a goal of raising ethanol production by 40%
between 2005 and 2010. Investment plans suggest that this target is likely to
be met, though how much capacity is actually utilised will depend on the ratio
of ethanol prices to both gasoline and sugar prices. Logistical constraints may
also limit how quickly production can be raised. A major increase in exports
will call for large-scale investments in new ports, storage and loading facilities,
as well as railway and waterway links between the main producing regions
and the ports (see Chapter 16).
United States
US biofuels consumption is projected to surge to more than three times its
current level by 2030 in the Reference Scenario and over six times in the
Alternative Policy Scenario. In these scenarios, biofuels meet respectively 3.4%
and 7.3% of total road-transport fuel needs in 2030. In the Reference
Scenario, the United States is the world’s second-largest consumer of biofuels;
in the Alternative Policy Scenario, it is the biggest.
US ethanol output, which is derived almost entirely from corn, reached
7.5 Mtoe (254 kb/d) in 2005, supplemented by a small volume of imported
fuel. It has more than doubled since 2000. The United States is thought to have
overtaken Brazil in 2006 to become the world’s largest producer of ethanol, as a
number of new plants have come on stream (Table 14.4). By mid-2006,
102 ethanol plants were in operation and another 43 were under construction.
Most of them are dry mills, which produce ethanol as the primary output; wet
mills are designed to produce a range of products alongside ethanol, including
maize oil, syrup and animal feed. Most of the ethanol is used in low-percentage
gasoline blends, but sales of high-percentage blends are rising. About 6 million
flex-fuel vehicles are now running on E85. The United States also produces a
small volume of biodiesel, mainly from soybeans; output totalled 220 ktoe
(5 kb/d) in 2005 – less than half of one per cent of that of ethanol – though
production capacity is growing rapidly.
Chapter 14 - The Outlook for Biofuels
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