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Clearing up a few myths about Brazilian biofuels trade

By Leticia Phillips posted Sep 18, 2013
The late U.S. Senator Daniel Patrick Moynihan is often credited for quipping that everyone is entitled to their own opinions, but not to their own facts. Fresh export data from Brazil reminded me of that saying because it will come as an unwelcome reality check for naysayers of sugarcane ethanol. Let’s turn to the facts to debunk two leading myths circulating around Washington, D.C. about Brazilian sugarcane ethanol.

The late U.S. Senator Daniel Patrick Moynihan is often credited for quipping that everyone is entitled to their own opinions, but not to their own facts. 

Fresh export data from Brazil reminded me of that saying because it will come as an unwelcome reality check for naysayers of sugarcane ethanol.  Let’s turn to the facts to debunk two leading myths circulating around Washington, D.C. about Brazilian sugarcane ethanol.

Myth #1:  Brazil can’t supply sufficient sugarcane ethanol to meet America’s needs.

Reality: Brazilian sugarcane ethanol is on track to not only meet, but could exceed the amount regulators projected necessary to comply with the Renewable Fuels Standard (RFS) 2013 targets for advanced biofuels.

The U.S. Environmental Protection Agency (EPA) has forecast that the U.S. will need almost 600 million gallons of sugarcane ethanol to meet RFS requirements this year. As of August 31, Brazil’s sugarcane ethanol producers have shipped about 330 million gallons to U.S. markets, compared to 267 million gallons during the same period in 2012.  (For those keeping track of the imports and RINs after reading Sunday’s New York Times, just look at EPA’s data online to see that over 250 million gallons worth of RINs have been generated from imported advanced biofuels like sugarcane ethanol.)

Sugarcane Ethanol Graph

Some simple arithmetic shows Brazil’s exports year-to-date are only slightly more than half what’s needed for the year. Bad news, right?  With eight months down and just four to go, rumors are circulating that sugarcane ethanol imports won’t supply the necessary gallons. 

But those naysayers forget Brazil’s sugarcane harvest starts in April, meaning ethanol exports tend to start slow in the first half of each year before hitting high gear in the second half. In fact, American imports of sugarcane ethanol during the second half of each year have historically been three to five times higher than imports in the first half of each year. 

Compare the first half of 2013 with other historical data[i] and it’s clear that Brazil is easily on target to meet EPA’s expectations:

Imported Ethanol Graph

But don’t just take my word for it. In the agency’s final 2013 RFS rule, EPA notes that sugarcane ethanol imports this year have increased by 110% to 147% compared to 2012.  EPA then observes: “[t]his increase, combined with the fact that the majority of Brazilian ethanol exports to the United States have historically occurred in the second half of the calendar year, suggests that Brazilian ethanol exports to the U.S. are on a trajectory that would readily enable Brazil to supply 580 million gallons to the U.S. in 2013.”

Of course, the real driver of imports is U.S. demand. And here we have to again tell the RFS naysayers to check their facts. Despite the doom and gloom of some special interests, the biofuels industry has delivered the gallons. Not just conventional biofuels, like corn ethanol, but also the advanced biofuels, from biodiesel to sugarcane ethanol. In fact, thanks to robust growth in advanced biofuel production in the past few months, the U.S. may not demand the level of imports that EPA expected earlier this year. That’s more proof that the RFS is working.

Myth #2: The “ethanol shuffle” that sends corn ethanol to Brazil and sugarcane ethanol to the U.S. doesn’t help the economy or environment of either country.

Reality: The 2011 shuffle was a one-time event, and Brazil is a net-exporter of biofuels.

Brazil is committed to helping America meet its renewable fuels goals, and production has expanded over time to meet rising U.S. demand. Ethanol production so far in 2013 is up 7 percent compared to first-half August 2012, and 8 percent compared to second-half August 2012.

Growing sugarcane ethanol production and export levels also put to rest any fears of another “ethanol shuffle” between Brazil and the U.S. This term refers to the one-year anomaly experienced in 2011 when America exported a comparable amount of corn ethanol to Brazil as the volume of sugarcane ethanol imported from Brazil.  

As of the end of August, Brazil had only imported 31 million gallons of corn ethanol from America – which is less than 10% of the sugarcane ethanol Brazil has exported to the U.S. during the comparable period. Unfortunately for some critics, the music’s stopped on the ethanol shuffle, and the phenomenon is clearly not happening again in 2013.

Reality: A Committed Partnership On Renewable Fuels

Add it all up, and Brazil is far and away a net exporter of ethanol to the U.S. – a role that’s helping encourage innovation and expanding advanced biofuels use among American drivers.

Brazil’s sugarcane producers look forward to working with EPA to find the right advanced biofuels requirements under the RFS for 2014 and beyond, and stand ready to help America meet its growing goals for low-emission transportation options.

I think that even by Senator Moynihan’s high standards, we might all agree these observations are facts worth keeping in mind the next time an unfounded opinion gets in the way of reality.

 


[i] All data courtesy of the Brazilian Ministry of Trade & Development’s Secretary of Foreign Trade online database.

European Parliament Vote on Biofuels: the EU continues Search for a Resolution

By Géraldine Kutas posted Sep 12, 2013

A mixed bag from Wednesday’s full European Parliament vote on biofuels and that issue of indirect land use change, ILUC, after months of debate in the parliament.

The bad news is that the EP, as expected, voted to approve a cap on first generation biofuels, although the cap was approved at 6%, not the 5% that environmentalists were foaming at the mouth for. If approved by EU Member States, the cap would effectively lower the 10% renewables-in-transport target for 2020 that the EU set a few years back; that target is expected to be achieved largely by the use of biofuels.

The better news is that some positive amendments in UNICA’s interests were adopted, such as a 7.5% sub-target for ethanol and a sub-target of 2.5% for advanced biofuels, which includes bagasse and straw. And, proposals were rejected that would have applied protectionist and discriminatory measures and made it difficult, if not impossible, for sustainable, EU-compliant biofuels produced in non-European Union nations to be legally counted toward meeting EU renewable energy and fuel quality requirements.   

Much to the environmentalists’ irritation, this whole issue now goes to the EU’s 28 Member States, who are less enthusiastic about the ILUC issue than Members of the European Parliament. Member States will try to come up with their own position on the biofuel/ILUC topic – which must then, time-consumingly, go back to the Parliament to be reviewed and debated.

What’s all this mean?? Delay, Delay, Delay. That is not ideal, but at least this situation raises the prospect of a better deal coming from Member States—or maybe no deal at all, should Member States fail to agree on a common position.

So stay tuned. A lot more to come on this from Brussels.

Some of the coverage from yesterday’s vote via Reuters, BusinessGreen, The Guardian, BBC News,  Wall Street Journal, and Euractiv.

Another Study Puts “Food vs Fuel” into Much-Needed Perspective

By Géraldine Kutas posted Sep 09, 2013
Another interesting report out last week on biofuels. This one is entitled, “Biofuels play minor role in local food prices,” and was produced by Ecofys, a Dutch consulting firm that does work regularly for the European Commission and sometimes for NGOs and the biofuels industry.

Another interesting report out last week on biofuels. This one is entitled, “Biofuels play minor role in local food prices,” and was produced by Ecofys, a Dutch consulting firm that does work regularly for the European Commission and sometimes for NGOs and the biofuels industry.

The key takeaway from the Ecofys report (found here: http://www.ecofys.com/en/news/report-biofuels-play-minor-role-in-local-food-prices/)

“The historic impact of EU biofuels demand until 2010 increased world grain prices by about 1-2% and, without any cap on  crop-based biofuel production may lead to another 1% increase through 2020.”  

Additionally: “Systemic factors, like reduced reserves, food waste, speculation, transportation issues, storage costs and problems, and hoarding play a much larger role in local food prices” than biofuels, Ecofys concluded.

Does these conclusions sound familiar? They should. Here’s a list of other studies from other reputable institutions -- including the European Commission, the European Union’s executive -- that have reached similar conclusions like what Ecofys has just churned out:

·  World Bank (Baffes and Dennis), 2013, "Long-term drivers of food prices"http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469382&menuPK=64166093&entityID=000158349_20130521131725

·  The European Commission report on the implementation of the EU Renewable Energy Directive (see p.12) http://ec.europa.eu/energy/renewables/reports/doc/com_2013_0175_res_en.pdf

·  The Institute for International Trade Negotiations (ICONE) in Brazil http://www.iconebrasil.com.br/publication/study/details/568 

Back to Work Making the Case for Advanced Biofuels

By Leticia Phillips posted Sep 03, 2013

No American city enjoys its August vacations more than Washington. With Congress away on recess, most Washingtonians skip town for at least a week to rest and prepare for renewed policymaking in the fall. I’ll certainly confess to enjoying the sand between my toes last month!

But editorial writers did not take a similar holiday, and a trio of leading newspapers each opined in recent weeks that it is time for the federal Renewable Fuels Standard (RFS) to go. These editorials in The Washington Post, USA Today and The Wall Street Journal (subscription required) focused primarily on concerns with corn ethanol, and the difficulty blending more than 10 percent ethanol into gasoline – the so-called “blend wall.” The editorial boards at each paper largely ignored how the RFS has spurred innovation and encouraged production of cleaner alternatives to both gasoline and conventional biofuels.

With Labor Day behind us, sugarcane ethanol producers will renew our conversations with lawmakers, reporters and opinion leaders, reminding them that:

  • The RFS has successfully encouraged more advanced biofuel use in the United States. Yes, cellulosic biofuels have been slower to develop than Congress anticipated. Fortunately, other advanced renewable fuels like sugarcane ethanol and biodiesel are taking up the slack. Last year, Americans consumed 1.8 billion gallons of advanced biofuels, and the Environmental Protection Agency (EPA) expects consumption will rise to 2.75 billion gallons of ethanol equivalent in 2013 – the precise volumes called for by the RFS.
  • Advanced biofuels are cleaner and better for the environment than gasoline. EPA determines which fuels qualify as advanced biofuels, and a key condition for this designation is reducing lifecycle greenhouse gas emissions by at least 50 percent compared to fossil fuels. EPA named Brazilian sugarcane ethanol an advanced biofuel in 2010 after determining it reduces greenhouse gases by 61 percent.
  • Sugarcane ethanol plays a modest but important role supplying the U.S. with advanced biofuels. Last year, it comprised only 3 percent of all renewable fuel consumed by Americans, but sugarcane ethanol provided nearly one-quarter of the U.S. supply of advanced biofuels in 2012.
  • The RFS is fostering innovation, and more advanced biofuels are on the way. A new report from Environmental Entrepreneurs (E2), a project of the Natural Resources Defense Council, finds steady improvements in technology and production capacity. It estimates a sufficient supply of advanced biofuels will be available to meet current RFS requirements through 2016. That’s the case for sugarcane ethanol. Brazilian sugarcane producers are making investments to expand production, and Americans can depend on more advanced biofuel from sugarcane.

These vital facts about the contributions of Brazilian sugarcane biofuels can get lost in the debate over renewable fuels in Washington, but we think they’re important as our two countries work together to make transportation more sustainable. So vacation is over, and it’s time to get back to work.

Our Authors

 

Géraldine Kutas, Head of International Affairs & Senior International Adviser to the President of UNICA Géraldine Kutas
Head of International Affairs & Senior International Adviser to the President

 

Leticia Phillips, Representative-North AmericaLeticia Phillips
Representative, North America

 

Sugarcane Solutions Blog

Unintended Consequences from EPA Proposal Could Limit U.S. Access to Advanced Biofuels

The U.S. Environmental Protection Agency (EPA) has accepted comments on a proposal that would allow, among other things, biofuel producers to partially process renewable feedstocks at one facility and further process them into renewable fuels at another facility. EPA intends this broad rule to increase the economics and efficiency of producing biofuels, particularly advanced and cellulosic biofuels, a goal Brazil’s sugarcane biofuel producers broadly support.

Read on

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