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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.

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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

 

 
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