Friday, June 10, 2005

Brazil and Ethanol

In the course of a week I ran into articles about Brazil and ethanol in 3 places: Wired, Foreign Exchange and the Economist. And today I have to add a fourth with this history of ethanol and Brazil from the BBC. So I decided I needed to look into this a little further. It got kind of out of hand and I ended up reading a lot. So this is full of "footnotes" which are links to the underlying source on the web.

Turns out that Brazil got into the ethanol as fuel business back in the 70s as a reaction to the Middle East Oil Crisis. They have had mixed success with ethanol since then (read the BBC article for background) but now with oil prices again rising and the ethanol technology maturing they are the world leaders with it.

Today they produce 3,989 million gallons of ethanol a year, slightly more than the US at 3,535 (1). This replaces about 40% of the fuel that would be needed to run the fleet on gasoline alone (2). It is a lower percentage of total oil usage due to diesel and other oil by products. I estimate it at 10% of total oil, but I could be off. See total oil demand here and ethanol number above. They sell ethanol at "gas pumps" both directly (at 94 per cent ethanol, 6 per cent water) and as gasohol (76 per cent gasoline, 24 per cent ethanol, ie all "gasoline" is 22% ethanol) (3). On a world basis, Brazil produced about 40% of total ethanol. In oil terms total ethanol produced worldwide is about 500,000 barrels a day or 2% of gasoline use (4) or .5% of the 82 million barrels of oil used daily.

In order to have a car run directly on ethanol, it needs to be modified slightly.

Equipping a vehicle to run on ethanol is a matter of toughening some hoses and installing a computer device to sense the amount of alcohol in the fuel so it can mix with the correct amount of air for combustion. Such adjustments cost less than $160 per vehicle, Shosteck said.

An unmodified car or truck could run on ethanol but is likely to have problems starting in cold weather because of the fuel-air mix, Lampert said. Also, unmodified hoses and other engine parts could degrade from the high alcohol content. (5)

Another thing that sets flex-fuel autos apart from their ethanol-only predecessors, which are notoriously slow to warm up on cold days, is a small gas tank under the hood that is used to start the car in chilly weather. Once the engine is running, the car automatically switches back to ethanol or whatever is in the main tank.(6)

While in the 80s Brazil sold cars that ran just on ethanol, they now sell Flex-Fuel cars that will run on either ethanol, gasoline or gasohol. These cars are getting popular.
Brazilians bought almost 220,000 of these hybrid vehicles in the first nine months of the year, representing 24 percent of all new-car sales in the country.(6)
Currently ethanol is selling at about 1/2 the price of gasoline at the pump (6) or about $.60/gallon (7) (The US has a $.54 tariff per gallon on ethanol, which is why we can't import it cheaply from Brazil and use it). Ethanol has 1/3 less energy per gallon as gasoline (84,400 Btu vs. 125,000 Btu (8)), but I was unable to ascertain how this translates to in terms of MPG. I bet it is somewhere between 25-33% less than gasoline. So even taking this into account ethanol is a cheaper substitute for drivers. I took a look into the underlying economics to see if government subsidies accounted for this cheapness, but it does not appear so. They were subsidized in the 80s, but this has been discontinued. Such economic analysis is tricky because there are a lot of hidden environmental and health costs in both oil and agriculture, but there is no obvious subsidies that is making ethanol cheaper.

Brazil has even gone crazy and made an airplane that runs on ethanol.

The ethanol in Brazil is made from sugar cane. This appears to be much more efficient in terms of gallons per acre and therefore cheaper than corn ethanol in the US. 60% of the sugar grown in Brazil is used for ethanol (3). Brazil has 5.45 million hectacres (1 hectacre = 2.47 acres) in sugarcane cultivation (9) (Wikipedia puts it at 45,000 km^2, which is a little less). Each ha produces about 75.3 tonnes of sugar cane a year(9). Each tonne produces 75 litres or 19 gallons of ethanol(10). Do the math and it comes pretty close to that 60% number (actually 54%, but close enough).
The alcohol industry, entirely private, was invested heavily in crop improvement and agricultural techniques. As a result, average yearly ethanol yield increased steadily from 300 to 550 m³/km² between 1978 and 2000, or about 3.5% per year.(2)
There is more energy that can be extracted from the sugar cane as well.
One ton (1,000 kg) of harvested sugarcane, as shipped to the processing plant, contains about 145 kg of dry fiber (bagasse) and 138 kg of sucrose. Of that, 112 kg can be extracted as sugar, leaving 23 kg in low-valued molasses. If the cane is processed for alcohol, all the sucrose is used, yielding 72 liters of ethanol. Burning the bagasse produces heat for distillation and drying, and (through low-pressure boilers and turbines) about 288 MJ of electricity, of which 180 MJ is used by the plant itself and 108 MJ sold to utilities.

Sucrose accounts for little more than 30% of the chemical energy stored in the mature plant; 35% is in the leaves and stem tips, which are left in the fields during harvest, and 35% are in the fibrous material (bagasse) left over from pressing.(2)
I think this could be a model for a new "alcohol economy". But there are some downsides to this as well.

First, the land could be used to make food for people rather than cars, especially in Brazil with a substantial under nourished population. Although I just saw a show that said Brazil creates 3,000 calories of crops per capita, so they do have extra to be used. But, in a global food economy, this food could be exported to other countries with undernourished people.

Second, this increases the demand for land and in Brazil when you need more land for agriculture you cut down the Amazon rainforest.
The government said on Wednesday that deforestation jumped to its second highest level on record in 2003-2004, to 10,088 square miles (26,130 sq km) -- an area nearly the size of Belgium and slightly bigger than the U.S. state of New Hampshire.

Just under 20 percent of the world's largest tropical forest, which is home to an estimated 30 percent of the world's animal and plant species, has now been destroyed.

High world prices for Brazil's leading farm goods, such as soy which fetched around $10 billion in exports last year, are making farming very attractive in Brazil.(10)
So, maybe it would be better to use oil and save the Amazon, than use ethanol and cut it down. Though, from this report it appears has to do more with soybeans for exports than sugar cane (I am personally doing my part on this issue by boycotting all soyburgers and going for the real thing. :) Oh, what the soybeans are exported for use as cattle feed, and it takes many pounds of soybeans to create a pound of beef. Damn.).

Third, a major issue I have with oil is that it causes bad governments and retards the growth of economies. See previous post Saving Iraq from its Oil. But as part of that report states:
According to economic historians, this pattern explains the very different ways North and South America developed. In the latter, large plantations of sugar allowed landed elites to maintain concentrated economic and political control, and these elites resisted democratic reforms and the institution of property rights. In North America, by contrast, the cultivation of wheat and corn on small farms led tdispersiontion of economic power and more favorable conditions for democratization and institutional development.
So, maybe we will just be switching from big oil to big sugar.

Overall though, I think the downsides can be mitigated and this alcohol economy will be sustainable and possible to do with today's technology.


viral said...

great research, and very interesting info ...

right before link 1 in the post, i think you mean millions of gallons ...

and would be interested to see how the calculations you came up with regarding switchgrass would be different with the usage of sugarcane

Anonymous said...

I am actually doing a speech on the pro's and con's of ethanol and out of all the research I've done, I have found your website to be the most helpful! You explained everything really well for those of us who aren't ordinarily into economic issues

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