Brazil struggles to keep up with ethanol demand; supply thin
Energy experts say problem reveals limits of program; fuel program an unreliable source
Jack Chang - Knight Ridder Newspapers
Issue date: 5/1/08 Section: Nation & World News
RIO DE JANEIRO, Brazil (MCT) - Brazil's booming ethanol industry has won international acclaim, but recent supply and pricing problems suggest that it's not the grand solution to tight oil supplies and ever-rising prices that had been hoped.
Brazilian ethanol producers are struggling to keep up with domestic demand for ethanol, which is projected to grow by 50 percent over the next five years. Yet a 15 percent jump in prices earlier this year sparked a sharp drop in consumption. Even so, suppliers are struggling to plant enough fields of new sugar cane, from which ethanol is produced here, to keep up with the anticipated growth in demand.
Some energy experts say this has revealed the limits of Brazil's ethanol program and that it is an unreliable energy source, one that can't be depended on to make much of a dent in worldwide use of fossil fuels.
"Here is the classic dilemma of biofuels," said Tad Patzek, geoengineering professor and biofuels expert at the University of California at Berkeley. "They fight for space in the environment, they fight food production and they fight consumption trends. They are not the answer to the energy crisis."
Brazil's problems this year started after growers of sugar cane upped sugar production rather than ethanol to take advantage of rising world prices for the sweetener.
Rising consumption of ethanol had already stretched supplies thin. Prices recently have fallen, but only after the government lowered the required percentage of ethanol mixed with gasoline from 25 to 20 percent, reducing demand. This month's beginning of the sugar cane harvest also boosted ethanol supplies and lowered prices.
"This showed ethanol can help but it cannot replace fossil fuels, at least right now," said Jed Bailey, Latin American director of Cambridge Energy Research Associates, a U.S. consulting firm. "There's a lot more development that's needed."
Government and industry leaders in Brazil, already the world's largest producer of both sugar and ethanol, say they can satisfy growing demand for ethanol by producing more sugar cane.
"There is a lot of room to grow more sugar cane," said Fernando Moreira Ribeiro, secretary general of the country's largest sugar and ethanol group.
But with more than 13 million acres already growing sugar cane, such words worry environmentalists, who fear expansion will come at the cost of rainforests and savannah in Brazil's northern states, where there is little sugar production. Sugar cane production expanded by only two percent last year in the country's southern and central states, where most sugar is grown.
Brazilian ethanol producers are struggling to keep up with domestic demand for ethanol, which is projected to grow by 50 percent over the next five years. Yet a 15 percent jump in prices earlier this year sparked a sharp drop in consumption. Even so, suppliers are struggling to plant enough fields of new sugar cane, from which ethanol is produced here, to keep up with the anticipated growth in demand.
Some energy experts say this has revealed the limits of Brazil's ethanol program and that it is an unreliable energy source, one that can't be depended on to make much of a dent in worldwide use of fossil fuels.
"Here is the classic dilemma of biofuels," said Tad Patzek, geoengineering professor and biofuels expert at the University of California at Berkeley. "They fight for space in the environment, they fight food production and they fight consumption trends. They are not the answer to the energy crisis."
Brazil's problems this year started after growers of sugar cane upped sugar production rather than ethanol to take advantage of rising world prices for the sweetener.
Rising consumption of ethanol had already stretched supplies thin. Prices recently have fallen, but only after the government lowered the required percentage of ethanol mixed with gasoline from 25 to 20 percent, reducing demand. This month's beginning of the sugar cane harvest also boosted ethanol supplies and lowered prices.
"This showed ethanol can help but it cannot replace fossil fuels, at least right now," said Jed Bailey, Latin American director of Cambridge Energy Research Associates, a U.S. consulting firm. "There's a lot more development that's needed."
Government and industry leaders in Brazil, already the world's largest producer of both sugar and ethanol, say they can satisfy growing demand for ethanol by producing more sugar cane.
"There is a lot of room to grow more sugar cane," said Fernando Moreira Ribeiro, secretary general of the country's largest sugar and ethanol group.
But with more than 13 million acres already growing sugar cane, such words worry environmentalists, who fear expansion will come at the cost of rainforests and savannah in Brazil's northern states, where there is little sugar production. Sugar cane production expanded by only two percent last year in the country's southern and central states, where most sugar is grown.
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