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Mar 1, 2007 | 21:36 GMT

4 mins read

Brazil, U.S.: The Ethanol Solution -- Accompanied by Problems

Summary
Brazilian state-owned oil company Petroleo Brasileiro said Feb. 27 that it hopes to build an ethanol pipeline to industrialize export of the alternative fuel. This plan to build a fundamentally new piece of infrastructure highlights the barriers that must be overcome before ethanol can become a major part of the U.S. energy fuel mix.
Petroleo Brasileiro (Petrobras), Brazil's state-owned oil company, hopes to build a new piece of infrastructure that will allow Brazil to better export ethanol into the world market. The company announced Feb. 27 that if deals with the Japanese government to add ethanol to the Japanese gasoline mix are realized, Petrobras will build an ethanol pipeline connecting the city of Senador Canedo in Goias state — a receiving point for the ethanol produced in Brazil's central-west region — to San Sebastiao on Brazil's Atlantic coast. Fundamentally new pipelines are needed to move ethanol efficiently from one point to another. Some of ethanol's chemical quirks — like its ability to suck up water at incredible rates — cause massive corrosion when it is loaded into existing multipurpose lines. However, pipelines made from metal containing high levels of nickel and tin, though more expensive to put together, are far more resistant to this corrosion than most of the transport and distribution lines currently in place in the United States. Such a fresh pipeline network likely will be built sometime in the United States, where there is a firm government movement afoot to replace as much as possible of the gasoline the country uses — predominately produced by refining imported oil — with ethanol. When this happens, ethanol refineries will be able to expand the market for their product beyond the neighborhood in which it is currently limited: the upper Midwest (predominately Iowa). Right now it is not economically viable to ship ethanol via pipe, so it must be transported via truck, railcar or barge, drastically limiting the fuel's geographic reach. Many states already mandate the use of a 10 percent ethanol mix in gasoline, and "flexfuel" vehicles that can use up to an 85 percent mix are beginning to pop up as well. Pipelines aside, ethanol must conquer another obstacle before it can become the United States' new fuel of choice. With current technology ethanol can only be easily created by using corn (in the United States) or sugar cane (in Brazil), which puts pressure on the broader food supply chain. Specifically, only the edible portion of the corn plant — about 2 percent of the total bulk of the corn plant — can be used. This niggling drawback is the primary reason behind the doubling of corn prices in 2006 and, the corrosion issue aside, represents the single biggest technical barrier to ethanol evolving into a meaningful percentage of the U.S. fuel mix. Researchers are attempting to get around this issue by going after something called cellulosic ethanol. In layman's terms that means engineering enzymes (or more likely bacteria that produce enzymes) that will break down a larger proportion of the corn plant — or perhaps using something altogether different, such as sawgrass. Should such techniques be perfected, ethanol refiners will be able to make drastically more ethanol from drastically less corn, driving the price of production down while largely relieving the effects on food supplies. This technological barrier is no minor one. Right now cellulosic ethanol costs about $2.25 per gallon to produce, suggesting that while it could be used to substitute for crude-oil based gasoline, doing so would cost the equivalent of about $120 a barrel. Thus, the federal government has earmarked $3.6 billion to aid research into the development of economically viable cellulosic ethanol technologies and is providing financing for the construction of a raft of ethanol refineries. The Bush administration's goal is to bring total ethanol production in the United States to 96 million gallons per day by 2017. The U.S. Energy Information Administration projects that without cracking the cellulosic problem, output at that time will only be 31 million gallons per day, with that requiring — as now — substantial subsidies to stimulate what would otherwise be noneconomic production. And even though U.S. ethanol production has shot up by a factor of four in less than two years, as of November 2006 U.S. output averaged only about 15 million gallons per day — barely enough to substitute for about 4 percent of the 370 million gallons of gasoline Americans normally use.

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