Ethanol able to meet third of global gasoline demand by 2050: IEA

London (Platts)--26May2005

Global ethanol production from mostly sugar cane has the potential to replace
a third of the world's gasoline demand by 2050 if cane producers such as
Brazil plan a rapid increase in their crops, according to a study by the
International Energy Agency. Speaking to a refining conference in Brussels
this week, IEA's transport energy specialist Lew Fulton said, under a "maximum
expansion" scenario, ethanol could become a leading alterative transport fuel
in the medium term, offering better CO2 saving properties than biodiesel.

Citing figures from the UN's Food and Agriculture Organization, Felton said
sufficient under-used agricultural land exists for a rapid expansion in sugar
cane crops in warm counties, even taking into account the need for food crops.
The scenario assumes a 5-10%/yr increase in cane planting levels with Brazil
leading the way. Brazil, currently the world leader in ethanol production from
cane, would provide 40% of the world ethanol under the scenario making it "the
Saudi Arabia of ethanol," Felton said.

The environmental benefits of ethanol would be even greater when sourced from
cellulosic crops such as wood and grass or from cellulose waste in the longer
term, he said. Ethanol can be currently blended to at least 10% in vehicles in
OECD countries and is already blended up to 25% in Brazil. But outside Brazil,
ethanol is mostly converted as a feedstock for the gasoline oxygenate ethyl
tertiary butyl ether and most refiners are not keen on directly blending
ethanol into gasoline. 

Felton said the IEA has extrapolated a recent upswing in global ethanol
production helped by growing output from corn and seed-based sources in the US
and Canada. He said, at current levels, the IEA believes ethanol's share of
the global gasoline market could reach around 6%, or 120-bil liters, by 2020.
"It would take a very ambitious ramping up, and very ambitious policies around
the world, but that is the recent trend that we've gone on and its unclear if
that's going to continue right now," Felton said.

Fulton's scenario drew criticism from some conference participants, however,
who claimed the higher costs of producing ethanol would hamper its uptake and
said doubts exist over the availability of agricultural lands as world food
demand continues to grow. Others pointed out that, as energy is consumed
during the manufacture of ethanol, it can provide only marginal net C02
emission savings over standard gasoline when blending up to 10%. A shift in
dependence to Brazil for 40% of the world's ethanol production would also be a
setback for policies attempting to diversify global energy sources, some
participants said. The Paris-based IEA, which represents the world's leading
oil consuming nations, has said a 20% biofuels share worldwide is possible for
2030 with global bioethanol production seen growing by 2.3% a year to 2020.

This story was originally published in Platts Petrochemical Alert
http://www.petrochemcialalert.platts.com

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