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Biofuel industry growing internationally

Despite the controversy over crop production for food versus fuel and the shock of the financial credit squeeze, the biofuel industry is recording steady growth in many countr ies, the Canadian Renewable Fuel Summit was told in early December.

But it has a long way to go before it reaches the level of global petroleum sales, says Joel Velasco, chief representative in North America for the Brazilian sugar cane marketing association. “About 100 countries are producing biofuels compared to 20 countries producing oil yet renewable fuels amount to only one per cent of petroleum sales. There’s not enough international demand to make ethanol a bigger export industry.”

Only 10 per cent of current biofuel production is traded internationally but that figure should rise with the growth of car ownership in Brazil, China and India, he added. Because of the widespread availability of ethanol, “about 90 per cent of new car sales in Brazil are for fuel flex vehicles. Ethanol is half the price of gasoline and demand for it has outstripped gasoline sales.”

In addition to being a major exporter of ethanol, members of the Brazilian group are branching out into electricity generation and hope to move into plastics as well, he said. “We aim to supply 16 per cent of Brazil’s electricity,” he said.

Despite complaints about the loss of rainforest to biofuel production, two-thirds of it comes from southeast Brazil, about 2,500 kilometres from the rainforest, he said.

He said the attacks on biofuels over food shortages and perceived environmental pollution are challenges “that have been asked of the petroleum industry.” Based on his country’s experience, Velasco said, “You have to build a strong domestic industry first so you are immune from a global slowdown.”

Carlos St. James, president of the Argentine Renewable Energies Association, said his country is trying to be to biodiesel what Brazil is to ethanol mainly through oilseed crops. “We should be able to start exporting by 2010 but it will depend a lot on what the demand is for biodiesel in our country.”

While ethanol development in Mexico has been hung up by that country’s dependence on corn as a dietary staple, Colombia, using palm oil, and Paraguay and Uruguay through animal fats, are also becoming big biodiesel producers.

“All the Latin American countries can be low-cost producers but we’re nervous about the opposition to biofuels in Europe. As a result we’re looking into growth prospects in Asia.”

Bob Dineen, president and CEO of the U. S. Renewable Fuels Association, said the drop in oil prices has stalled the development of new ethanol plants. “We are also facing a challenging atmosphere of negative media publicity.”

There are 160 plants currently producing nine billion gallons of ethanol with another 30 planned that would raise production to 13 billion gallons a year. “They will provide 260,000 jobs to the rural economy and provide eight per cent of the country’s fuel supply.” The long term goal is to produce 32 billion gallons annually.

“It will not be just a grain-based industry,” Dineen said. “We will make a lot more use of cellulosic ethanol and other second-generation technologies will be brought in.”

The industry also has a good story to tell in terms of reducing green house gas emissions, he said. “Most plants have moved away from natural gas to operating with biomass gas. We have to hit back at unfounded attacks that could undermine our industry. The spike in grain prices we were blamed for has been shown to be driven by speculators. We were vindicated.”

He said president-elect Barrack Obama has supported the biofuel industry and talked of boosting its output to 60 billion gallons a year.

Joe Jobe, CEO of the National Biodiesel Board, said his sector has faced a concerted attack from grocery product manufacturers who are blaming it for higher food prices. At the same time, biodiesel makers have been hit hard by a doubling in vegetable oil prices during the last 18 months. “We are credit dependent so the current situation is very serious for us.”

The industry has been working on improving the quality of its product and “90 per cent of our product meets all the specs,” he said.

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