Jason Barton

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Archive for the ‘Ethanol’ tag

Is There An “Oooops” In US Ethanol Policy?

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People here in Brazil in the setor sucroenergia, or sugar and energy sector, are very hopeful that the new EPA ruling discussed in the article below as well as other recent posts on this site, will open the door for reduction of the tariff of US$0.54 per gallon on imported ethanol. The U.S. is already the largest importer of Brazilian ethanol, though it makes up only a small fraction of our ethanol use, and a similarly small fraction of Brazil’s production. There is some room for growth in the domestic market here, as flex fuel vehicles account for about 90% of new car sales, increasing Brazilians’ use of sugarcane ethanol, but the vast majority of the projected 100% increase in Brazilian ethanol production in the next 10-15 years will come for the demand by importers such as Europe, China, and, possibly, the U.S.

My job is to figure out how that would be for Brazil, who would gain, and how it would impact land use. People keep asking me my responses to these questions, and, truthfully, I really don’t have one at this point, which is part of what makes the work so interesting.

03/24/2010 08:25AM

Brazil will be one of the beneficiaries of the EPA finding that greenhouse gases will be reduced by ethanol, soy-diesel, and ethanol made from sugarcane. While the decision is good for US corn and soybean producers, questions are being raised why US biofuels want both a mandate for use as well as tax credits and import tariffs. US biofuels policy is being taken to the woodshed.

Read the entire article here.

Brazil Keeps Import Tariff on Ethanol at Least Until July

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There has been some talk that poor sugarcane harvests amidst increasing demand for ethanol in Brazil would cause the country to lower its tariffs on imported ethanol, allowing the U.S. to export corn ethanol. This is quite an ironic twist since the U.S. is the leading importer of Brazilian ethanol, which is much more efficient in terms of energy ratio and land use. Almost all of the talk on international trade in biofuels, and there has been much talk, has been about trade going the other direction.

It looks like it will continue in that direction for the time being, but it will definitely be interesting to watch how this develops in the coming months.

Brazzil Mag

Trying to understand Brazil since 1989

Friday, 12 February 2010 20:48

As announced by the Brazilian minister of Agriculture, Reinhold Stephanes, the reduction of the import tariff on ethanol has been postponed until July. Upon leaving the meeting of the Foreign Trade Board (Camex), he informed that the tariff reduction has been removed from the guidelines and will only be discussed again in five months.

According to the minister, the beginning of the sugarcane crop, in March, would render an eventual reduction of the import tax ineffective. “If we were to eliminate the tariff now, nothing would change with regard to fuel prices, because the sugarcane crop is going to start and prices would drop anyway.”

[…]

Presently, ethanol pays a 20% import tariff in order to enter Brazil. According to Stephanes, the tariff’s elimination, which should occur in the second half, will have diplomatic objectives.

“We are going to scrap the tax in order to pressure the United States into not taxing our ethanol on their market,” said the minister.

Read the entire article here.

Brazil hopes Shell-Cosan can boost ethanol exports

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Inae Riveras – Analysis
SAO PAULO
Wed Feb 3, 2010 1:42pm EST

A worker shows a gas tank cover of Fiat flex car on the assembly line at the company's Betim Plant near Belo Horizonte October 20, 2009. REUTERS/Washington Alves

A worker shows a gas tank cover of Fiat flex car on the assembly line at the company’s Betim Plant near Belo Horizonte October 20, 2009.

Credit: Reuters/Washington Alves

SAO PAULO (Reuters) – Brazil’s ethanol industry, which invested heavily to boost output of the cane-based biofuel, is counting on a tie-up between sugar and ethanol producer Cosan and Royal Dutch Shell Plc to revive its prospects after exports fell short of expectations.

The $21-billion-a-year ethanol joint venture announced by the two companies on Monday will enable Cosan, Brazil’s biggest ethanol maker, to move product more efficiently thanks to Shell’s global fuel distribution and retail system.

[…]

But whether that happens will depend largely on outside factors: whether oil is costly enough to make ethanol competitive; whether Brazil’s mills can provide a steady stream of biofuel; and whether key markets such as the United States will be more open to ethanol imports.

[…]

Some analysts say any growth in ethanol exports will depend on oil prices more than other factor.

[…]

Futures markets for ethanol have been incapable of minimizing producers’ risks. Deals are largely done on a spot basis — both in and outside Brazil. This makes it difficult for buyers and sellers to hedge against market volatility.

Read the entire article here.

Obama pushes energy plan that GOP may support

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Obama seeks GOP support for energy plan that includes coal, more drilling, nuclear power

By PHILIP ELLIOTT and MATTHEW DALY Associated Press Writer
WASHINGTON February 3, 2010 (AP)
The Associated Press

Looking for a political and policy victory, President Barack Obama on Wednesday pushed energy proposals designed to attract allies and opponents alike, calling for increased ethanol production and new technology to limit pollution from the use of coal.

[…]

He spoke as the White House released presidential task force recommendations calling on both Washington and the private sector to spend more money on biofuels like ethanol. The group said the nation likely will fall short of goals Congress has set for creating more environmentally friendly energy.

At the same time, the Environmental Protection Agency issued a new rule requiring U.S. companies to produce at least 13 billion gallons of renewable fuels this year, up from about 11.1 billion gallons in 2009. Thirteen billion gallons is about 9 percent of overall U.S. fuel consumption. Congress has set a goal of 36 billion gallons of renewable fuel by 2022.

[…]

In his meeting with the governors, Obama also announced a new task force to study ways to increase the use of coal in meeting the nation’s energy needs without increasing the pollution that contributes to global warming.

“It’s been said that the United States is the Saudi Arabia of coal, and that’s because … it’s one of our most abundant energy resources,” Obama said. “If we can develop the technology to capture the carbon pollution released by coal, it can create jobs and provide energy well into the future.”

Read the entire article here.

US ethanol imports could temper rising prices in Brazil

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Whoa. The idea of the U.S. exporting it’s much less efficient corn ethanol to Brazil, so they can temper rising prices in sugarcane ethanol, well, it strikes me as odd. Of course, this could just be hearsay, as Petrobras claims there will be no imports of U.S. ethanol. Since the U.S. has been the largest importer of Brazilian ethanol for years, this would be inefficient to trade these fuels, especially considering the amount of energy needed to transport ethanol.

Published: Monday, January 25, 2010 16:08 (GMT -0400)

Imported corn-based ethanol from the US could help ease ethanol prices in Brazil that have been rising because of increasing demand and heavy rains that have delayed the sugarcane harvest, Julio Maria Borges, a director at sugar and ethanol industry consultancy Job Economia e Planejamento, told BNamericas.

[…]

Brazilian sugarcane and ethanol industry association Unica has already asked the government to scrap the 20% tariff imposed on imported ethanol.

Brazil should set an example for the world by removing tariffs in order to stimulate other countries to do the same, the association said in a statement.

[…]

“It is a risk for the importer to ship ethanol from the US now, in a moment when prices will probably begin to fall because of lower demand and the start of a promising harvest year in March,” Borges added.

Read the entire article here.

Written by Jason

January 30th, 2010 at 1:51 pm

Brazil’s Lula Inaugurates World’s First Ethanol Power Plant

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Brazil’s ethanol refineries have already been generating electricity from the biomass, sometimes called “trash” or “bagasse,” left over after extracting the sugar from the cane. These refineries perform two different types of processes: biological, fermenting the sugar to produce ethanol; and thermal, burning the biomass to generate heat and steam to run the turbines to produce electricity. They’ve now taken that in a different direction by using the ethanol itself to generate the electricity. The thermal processes have been used by other companies, such as Community Power Corporation of Colorado, discussed in an earlier post. The second generation, cellulosic technology we’ve been hearing about involves using biomass such as left over sugarcane bagasse or corn stalks, called stover, or even grasses such as switchgrass or miscanthus that require very little water or fertilizers. Rather than burning that green matter to generate electricity, research is underway to access the 5 and 6 carbon sugars in the cellulose for fermentation into ethanol or other fuels such as butanol, or even creating a virtual replacement for gasoline.

SAO PAULO – Brazilian President Luiz Inacio Lula da Silva has inaugurated a power plant that represents the world’s first use of sugarcane-based ethanol to produce electricity on a commercial scale.

“The developed world is going to have to look at ethanol with new eyes. I think when it comes to fulfilling our commitments and complying with the Kyoto Protocol, to reducing emissions of greenhouse gases, ethanol is going to have to come into the equation,” Lula said during the inauguration on Tuesday.

Read the entire article here.

Brazil’s Cosan Rises as Sugar, Ethanol Prices Climb

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By Paulo Winterstein

Dec. 28 (Bloomberg) — Cosan SA Industria & Comercio, the world’s biggest sugar-cane processor, gained to a 15-month high as the price of the sweetener rose in New York and demand for fuel pushed up ethanol prices in Chicago.

Cosan rose 3 percent to 24.40 reais in Sao Paulo trading, the highest level since September 2008.

Read the entire article here.

Written by Jason

December 29th, 2009 at 8:49 am

Brazil’s Petrobras In Ethanol Cooperative Pact With Petrochina

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The triangle of resource and labor exchanges between China, Brazil, and the United States merits close monitoring. When I began my PhD three and a half years ago, an unrealized goal was to learn Mandarin. Learning the languages of math, biology, physics, and chemistry, while continuing with Portuguese and Spanish, took a bit too much time for learning another language, which is fine as I already do more than enough traveling. Bringing biofuels to China even further into that mix adds an interesting dimension. The possibility of technology transfer and information sharing would be a much more efficient use of energy than China importing Brazilian ethanol.

DECEMBER 23, 2009, 11:06 A.M. ET

RIO DE JANEIRO (Dow Jones)–Brazil oil giant Petrobras and its biofuels subsidiary Petrobras Biocombustivel have signed a memorandum of understanding, or MOU,, with China’s Petrochina International Co. Ltd. (PTR) to cooperate in the ethanol sector.

Read the entire article here.

Written by Jason

December 24th, 2009 at 12:28 pm

Ethanol Recovery Faces Oversupply Repeat

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A sad but probably inevitable reality not mentioned in this story is that many of those “smaller producers” to be “flushed out” if this glut does occur, are those refineries owned by farmers and/or farmer cooperatives. Valero and ADM have more than enough cushion to ride out those downturns until profits return, which is almost assured as the Renewable Fuel Standards call for increasing amounts of ethanol use, up to 36 billion gallons in 2022. Groups of farmers who band together to build a small refinery to maintain more of the profits from value added products such as ethanol have a larger positive impact on the local economy in terms of job creation and revenue generation[1], but have less capital to continue operating when times get tough, as they did late in 2008, and may do again next year according to this article.

DECEMBER 21, 2009

By MARA LEMOS STEIN

With ethanol margins staging a recovery this year, it was only a matter of time before producers were encouraged to restart idled facilities and expand output to join the bonanza.

The latest addition to the supply flow—Valero Energy, which announced last week that it will bring three facilities back online—adds to concerns that if too many people come to the party some of them will find the punch bowl emptying out fast.

“There are significant volumes of both idled and under-construction assets, and if operators are emboldened by the recent ethanol margins, we could see less-than-optimal assets begin to be reintroduced to production,” Ian Horowitz, an analyst at New York-based securities brokerage firm Rafferty Capital Markets, said in a recent report. “Bottom line: we are concerned that we could possibly see oversupply of ethanol in the second half of 2010.”

Steady ethanol prices and relatively low corn and natural-gas prices are putting producers in the black for the first time since mid-2008. The fact that various producers in financial distress suspended production since then has supported ethanol prices even as demand for gasoline, in which ethanol is blended at a 10% rate in the U.S., dropped during the economic slowdown.

Read the entire article here.


[1] Low and Isserman, 2008. “Ethanol and the Local Economy: Industry Trends, Location Factors, Economic Impacts, and Risks.” Econ. Dev’t Quarterly.

Written by Jason

December 21st, 2009 at 8:14 am