Development & Aid, Economy & Trade, Environment, Headlines, Latin America & the Caribbean

ENERGY-LATIN AMERICA: Ethanol Is All the Rage

Patricia Grogg

HAVANA, Jun 23 2006 (IPS) - The countries of Latin America are turning more and more to plans for the use and development of ethanol, or alcohol made from sugar cane, as they are feeling an ever-pressing need to diversify their sources of energy for economic and environmental reasons.

Colombia, one of the countries most advanced in this respect after Brazil, the region’s undisputed leader, now produces between 900,000 and one million litres a day of ethanol. In 60 percent of the national territory, the petrol sold is a mandatory blend containing 10 percent ethanol.

“The idea is to extend that to the entire country,” Julio César Vera, director of hydrocarbons in the Colombian Ministry of Mines and Energy, told IPS. “We have already begun to carry out studies for raising the proportion of alcohol in petrol to 20 percent over the next five to 10 years.”

To meet domestic demand, sugar mills in Colombia would have to produce 1.5 million litres a day of the biofuel, although the aim is to boost output even further, in order to export to the United States, Central America and other markets.

Currently, Colombia produces 520,000 barrels a day of oil, of which it refines 300,000 and exports 220,000. “But in five years, if new oil fields are not discovered, the country would not only have to stop exporting, but would no longer even be able to cover domestic needs,” said Vera.

In his view, increased consumption of fuels of which there is greater abundance, like natural gas and biofuels, instead of crude oil and its by-products, will contribute to “prolonging Colombia’s self-sufficiency in oil.”


The government’s plan includes two additional projects for ethanol production, based on yucca roots – whose harvest will be ready next February – and beets – which several investors are already interested in, said Vera.

The official, who took part this week in an international congress on sugar and its derivatives in Havana, said Colombia’s biofuel programme puts the country “in the vanguard,” but that “in the near future, all countries will necessarily be getting involved in the market.”

He said the main reason for that are the record high oil prices of around 70 dollars a barrel. Poor countries “cannot continue to spend a large part of their gross domestic product (GDP) on their oil bills. It is necessary to develop new plans,” said Vera..

One illustration of that situation was outlined during the meeting in the Cuban capital by an expert from Costa Rica, a country that imported 998 million dollars in oil last year – nearly equivalent to total national revenues from exports of pineapple, coffee, bananas, sugar and palm hearts.

“Our country needs to counteract the heavy impact of high oil prices by coming up with alternative sources of energy,” said Marco Chávez, head of the sugar cane agribusiness association in that Central American country.

According to a study produced for the Economic Commission for Latin America and the Caribbean (ECLAC) by consultant Luiz Augusto Horta Nogueira, there is already a relatively significant installed capacity for production of ethanol in Central America, especially in Guatemala, El Salvador and Costa Rica.

Efforts are underway in all of the countries of Central America to promote local production and use of fuel ethanol, involving government agencies, the sugar cane industry and civil society groups, says the report. It adds that specific regulations and laws are also being debated, with an eye to the adoption of biofuels.

Cuba, which set out on a drastic restructuring of its once-powerful sugar industry in 2002 due to the low sugar prices of the time, with the closure of 71 of the country’s 156 sugar mills – 40 more were closed down last year, although some only temporarily – now has ambitious projects to take advantage of the boom in biofuels.

Luis Gálvez, director of the Cuban Research Institute for Sugar Cane Derivatives, which organised this week’s conference, reported that the plans include the modernisation of 11 of the country’s 17 distilleries.

The current capacity of Cuba’s ethanol industry is between 100 and 150 million litres a year.

In addition, seven new distilleries are to be built, mainly for the production of ethanol fuel.

Gálvez said that between 100 and 150 million dollars in investment are needed for the project, which could be ready in three years. The programme would raise the country’s ethanol output to 500 million litres a year.

The biofuel would basically be produced for export, although it could also be used for national blends with the aim of “freeing up petrol” and “benefiting us from exports of the blended fuel, which would fetch a higher price,” he said.

The official said the manufacturing of fuel alcohol is “inevitable” for all players in the sugar industry, including sugar cane growers as well as sugar mills. “They cannot turn their back on this, because if they do, they will be left behind in the sugar economy,” he said.

Brazil and the United States account for more than 75 percent of global ethanol production, which could climb to 38.7 billion litres this year, according to Peter Baron, president of the London-based International Sugar Organisation.

Baron, who inaugurated the Havana meeting on Tuesday, said global output could double by 2010.

Venezuela also plans to produce ethanol, which it presently imports, mainly from Brazil. The project will involve the construction of 15 distilleries and the planting of some 300,000 hectares of sugar cane.

Cuban advisers will assist the project, and parts from sugar mills that were dismantled in Cuba’s restructuring process will be sent to Venezuela. Caracas will also import parts from Brazil, Britain, Germany and India.

In eastern Venezuela, petrol is currently blended with 10 percent ethanol, to replace methyl tert-butyl ether (MTBE), a highly polluting additive used in unleaded fuel.

 
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