Cleantech Market Intelligence
Sugar Cane Could Sweeten Ethanol Mix
The government is considering raising the allowable mixture of ethanol in gasoline to 15 percent for two reasons: to meet stated goals for consumption of the biofuel, and to aid the agriculture industry.
Ethanol prices have fluctuated wildly, mostly in response to petroleum prices since a fair amount of petroleum is required to produce and transport it. The ethanol processing industry went into freefall as production dropped and facilities were shuttered when gasoline prices dipped. Raising the limit to 15 percent would boost the price of ethanol (and possibly corn as well), which would be acceptable to most folks unless the price of gasoline skyrockets again, and then we’re back in the same boat.
All of this wild swinging back and forth isn’t good for farmers, investors, or the environment. But when you consider the greenhouse gas emissions, sugar cane is a better choice until cellulosic ethanol is widely available. Sugar cane reduces GHGs by approximately 90 percent when compared with gasoline according to the Brazilian Sugarcane Industry Association ; corn ethanol saves about 20 percent.
The group recently sent a letter to the California Air Resources Board, claiming that the organization’s methodology for estimating carbon intensity was outdated and did not account for the reduction of the field burning of sugar cane or the cogeneration of electricity from heat. The group says that adding sugar cane ethanol to gasoline could enable the combined fuel to meet the state’s proposed low carbon fuel standard.
Sugar cane growers are also dealing with the impact of low prices due to decreased demand. The southeastern United States has favorable conditions for growing sugar cane, and the labor and technical expertise to make it happen if demand can be stabilized.
Also, if the government is serious about climate change and national security, filling up those millions of flex-fuel vehicles that primarily fill up with gasoline makes sense, certainly with government-owned vehicles. Lifting the U.S. tariff on imported ethanol (54 cents per gallon) would also reduce the demand for (and in theory the price of) oil. When you consider all of the social costs and risks of importing oil from less-than-friendly countries, Brazilian ethanol looks like a bargain.
If a carbon cap is put into place, we should see demand for biofuels that would expand the markets for both corn and sugar cane ethanol. The economics against oil would be much less desirable, making ethanol seem like a bargain. The big picture is ethanol versus oil, not sugar versus corn versus cellulose.