The United States now leads Brazil in the export of ethanol, according to Hart Energy’s newly released study, US & Brazil Ethanol Outlook to 2022.
The study also dismisses the notion that goals of two programs in the US can be achieved. Biofuels volumes required by the federal Renewable Fuel Standard (RFS) and California's Low Carbon Fuel Standard (LCFS) do not match with the realities of commercialization and availability, Hart Energy maintains, and changes in these policies will be necessary in the next few years.
Much of the focus has been on the ‘blend wall,’ biodiesel, and cellulosic biofuels targets of the RFS program in the public forum. But what’s so striking to us is that Brazilian ethanol is needed to meet targets under those programs—and our forecast shows it will not be available at critical points in the study period. Brazilian ethanol will also be in high demand in other parts of the world, especially Europe, and will be a key part of the strategy for increasing octane and meeting renewable targets globally.—Tammy Klein, assistant vice president of Hart Energy
The study examines the public policies, market developments, and economics of the ethanol industry in the two countries which produce 80% of the world’s supply. The Outlook contends renewable fuel mandates in the U.S. will also create opportunities for increased production of corn-based ethanol and biodiesel.
Hart Energy projects Brazilian ethanol exports will see wide fluctuations and only return to their 2008 peak in 2019. A combination of factors hinders the Brazil, including insufficient investment in its sugarcane sector which has contributed to below-average recent harvests. Attractive world sugar prices will, at times, draw a significant portion of the country’s harvest away from ethanol production.