Application of sugar in the bioethanol industry
This report is about the sugar used in the bioethanol industry
The global market
Present global alcohol production is in the region of 35 billion litres, 60% of which is used as fuel. Brazil and the United States are the principal producers and consumers.
World market for ethanol (in billions of litres)
| Beverages | 4,6 |
| Industrial | 7,3 |
| Fuel | 22,5 |
| TOTAL | 34,4 |
The United States already has a fleet of over one and a half million flexi-fuel vehicles. The prohibition of Methanol (gasoline extender), due to the contamination of the water table caused by this petroleum derivative, should substantially increase the use of ethanol mixed with petrol.
Most fuel ethanol produced in the U.S. is derived from corn - latest figures indicate that just over 10% of the U.S. corn crop is dedicated to ethanol production. In Brazil, the world's leading producer of ethanol, sugar is the primary feedstock.
Australia, Thailand, Mexico, Sweden, the EU, Canada, Colombia, India, China and Japan are all testing ethanol programmes.
WORLD ETHANOL PRODUCTION (THOUSAND TONNES) - BASELINE PROJECTION
| Region | 1990 | 1995 | 2000 | 2006 | 2010 | Growth rate 1990/2000 | Growth rate 2000/2010 |
| World total | 18391 | 19418 | 19284 | 25192 | 26768 | 0.4% | 3.0% |
| Brazil | 12028 | 12700 | 10900 | 14268 | 14017 | -0.9% | 2.3% |
| OECD countries total | 3487 | 3789 | 5129 | 7214 | 8790 | 3.6% | 5.0% |
| United States | 2216 | 2540 | 3999 | 5905 | 7359 | 5.5% | 5.7% |
| EU 15 | 1144 | 1121 | 1002 | 1174 | 1293 | -1.2% | 2.3% |
| Mexico | 126 | 128 | 128 | 135 | 137 | 0.1% | 0.7% |
| India | 1175 | 1434 | 1985 | 2290 | 2434 | 4.9% | 1.9% |
| China, Mainland | 43 | 125 | 200 | 212 | 200 | 15.1% | 0.9% |
| ACP countries | 14 | 18 | 21 | 24 | 26 | 3.8% | 1.8% |
| Thailand | 77 | 86 | 90 | 94 | 97 | 1.4% | 0.7% |
| Former USSR | 191 | 393 | 263 | 286 | 302 | 2.9% | 1.3% |
| Rest of World | 1377 | 873 | 697 | 803 | 881 | -6.0% | 2.2% |
Source: FAOSTAT (1990, 1995, 2000)
WORLD ETHANOL CONSUMPTION (THOUSAND TONNES) - BASELINE PROJECTION
| Region | 1990 | 1995 | 2000 | 2006 | 2010 | Growth rate 1990/2000 | Growth rate 2000/2010 |
| World total | 18509 | 19873 | 19269 | 25192 | 26768 | 0.4% | 3.0% |
| Brazil | 12676 | 13575 | 10769 | 14083 | 13779 | -1.5% | 2.3% |
| OECD countries total | 3311 | 3968 | 5923 | 8160 | 9851 | 5.4% | 4.7% |
| United States | 1974 | 2269 | 4211 | 6300 | 7857 | 7.1% | 5.8% |
| EU 15 | 814 | 1009 | 879 | 969 | 1032 | 0.7% | 1.5% |
| Mexico | 134 | 146 | 255 | 266 | 285 | 6.0% | 1.0% |
| Japan | 320 | 418 | 420 | 440 | 470 | 2.5% | 1.0% |
| Korea Republic | 69 | 127 | 158 | 186 | 207 | 7.8% | 2.5% |
| India | 1152 | 1434 | 1916 | 2219 | 2360 | 4.7% | 1.9% |
| China, Mainland | 22 | 101 | 48 | 51 | 53 | 7.4% | 0.9% |
| ACP countries | 18 | 14 | 46 | 53 | 58 | 8.9% | 2.1% |
| Thailand | 40 | 27 | 12 | 13 | 13 | -10.1% | 0.6% |
| Former USSR | 61 | 187 | 227 | 249 | 264 | 12.6% | 1.4% |
| Rest of World | 1229 | 567 | 327 | 363 | 389 | -11.3% | 1.6% |
Source: FAOSTAT (1990, 1995, 2002)
WORLD ETHANOL EXPORTS (THOUSAND TONNES) - BASELINE PROJECTION
| Region | 1990 | 1995 | 2000 | 2006 | 2010 | Growth rate 1990/2000 | Growth rate 2000/2010 |
| World total | 1990 | 3211 | 2343 | 2509 | 2649 | 1.5% | 1.1% |
| Brazil | 30 | 256 | 182 | 229 | 277 | 17.9% | 3.9% |
| OECD countries total | 1369 | 1813 | 1155 | 1181 | 1209 | -1.5% | 0.4% |
| United States | 648 | 909 | 414 | 333 | 295 | -4.0% | -3.0% |
| EU 15 | 719 | 862 | 738 | 835 | 901 | 0.2% | 1.8% |
| Mexico | 0.1 | 35 | 0 | 10 | 10 | - | - |
| Japan | 0.1 | 1 | - | - | - | - | - |
| Korea Republic | 1 | 6 | 3 | 3 | 3 | 5.5% | -0.1% |
| India | 23 | 2 | 69 | 71 | 74 | 10.4% | 0.7% |
| China, Mainland | 21 | 33 | 152 | 162 | 168 | 19.9% | 0.9% |
| ACP countries | 0.17 | 8 | 29 | 32 | 35 | 59.4% | 1.8% |
| Thailand | 37 | 60 | 80 | 85 | 88 | 7.3% | 0.9% |
| Former USSR | 130 | 516 | 40 | 42 | 44 | -10.2% | 0.8% |
| Rest of World | 381 | 523 | 637 | 707 | 754 | 4.8% | 1.6% |
Source: FAOSTAT (1990, 1995, 2000)
Since the relatively high domestic and international prices of ethanol stimulate its production, world ethanol consumption is projected to increase by an average of 3% per annum from 2000 to 2010. The world ethanol market is heavily influenced by Brazil's ethanol market.
As a result of the switch from methanol to ethanol in the United States fuel market, US ethanol consumption is projected to show a significant increase.
The projected world ethanol price is reported on a basis of an artificially created price index. The world ethanol price is predicted to increase in a fluctuating manner by 0.91 to 1.14 percent in the period 2000-2010 and is estimated to reach 1.05 in 2010.
Development of ethanol industry
Ethanol has been used in the transport industry for about 30 years around the world as both neat ethanol and as a blending agent/oxygenate in petrol. A 10% ethanol blend in petrol contains about 97% of the energy of pure petrol, but this is compensated by increases in combustion efficiency of ethanol blends leading to similar volumetric efficiency. If ethanol blends are increased to > 20%, a higher compression ratio is needed to produce similar power to that of a same size petrol engine. Alternatively, ethanol could be converted to the ether ETBE (Ethyl Tertiary Butyl Ether). ETBE is produced by mixing ethanol and isobutylene and mixing them with heat using a catalyst.
ETBE can be used as a direct replacement for MTBE (Methyl Tertiary Butyl Ether). MTBE blends of up to 15% are allowed under EU and UK regulations but MTBE is only used in smaller percentages in the UK.
Ethanol production from sugar beet and wheat can also potentially lead to a number of valuable co-products such as animal feed, co-generation of heat and electricity as well as secondary plant compounds and oils for the cosmetics and pharmaceutical industries. In the case of ethanol from lignocellulosic feedstock, possible co-productions include heat and electricity.
The efficiency of fermentation and distillation of sugars obtained from crops such as sugar beet is nearing its ceiling, although recent developments in membrane distillation may produce some energy and emission savings. Recent R&D has concentrated on starch and cellulose hydrolysis to produce simple sugars followed by their fermentation using existing technology. Ethanol produced from starch is a commercial process today. Developments have focused on ways to reduce energy requirements and to increase yields aimed at improving the energy ratio. However, ethanol production from lignocelluloses biomass is still at trialling stage.
The ethanol industry in Europe
The market has an enormous potential, due to the following factors:
- The worldwide fight against the greenhouse effect and pollution (which has led to the substitution of toxic additives in petrol).
- Additional value placed on energy safety.
- The quest for autonomy through the diversification of sources of energy used.
- The increase in agricultural activities (which allows the creation of employment and economic decentralisation)
Unlike their counter parts in the US, Brazil or Canada, the EU lacks a coherent biofuels strategy, which many believe, is a major reason for the industry not reaching its true potential. However, even though bioethanol plays a smaller role than in the Americas, it is likely to grow with several projects under way.
Spain was the largest bioethanol producer in the EU in 2004.
The favourable tax arrangements paved the way for the Spanish company Abengoa to open a plant in 2000 in Cartagena for processing barley and wheat into fuel ethanol. Its capacity is 1 million hl/year.
In October 2002, a similar plant was opened near La Coruna in Galicia (1.26 million hl/year). Two more Spanish fuel ethanol plants are planned to be ready by 2005, including a 2 million hl plant in Salamanca.
France is the second largest EU producer of biodiesel after Germany, and the second largest EU producer of bioethanol after Spain. However, due to an increasing number (nearly 70% in 2002) of cars and trucks that use diesel fuel in France, biodiesel programs are more promising than bioethanol programs. In May 2003, the EU Commission adopted a new biofuels promotion Directive. The French government has expressed considerable interest in biofuels since 1993 by applying significant reductions in national "excise" tax.
Up to now, biofuel plants in France were granted tax exemptions on the grounds that these were pilot projects that developed more environmentally friendly fuels. However, the Courts ruled that the plants benefiting from the lower rates were operating established processes, and that the aid was thus for economic and industrial rather than technological purposes. In this case, lower duties could only have been approved by unanimous Ministerial agreement, it claimed. However, the industry is confident that the dispute will be settled soon and that the sector will continue to expand.
Biodiesel production in Germany is set to increase 400,000 metric tons this year, to 1.5 million metric tons. Beginning last year, Germany exempted biodiesel from excise tax duties and will last until December the 31st 2009, which is the reason for the surge in production. By 2006, German biodiesel production is expected to reach 2 million metric tons, which would help the country meet its goal for the European Union's non-binding biofuels directive, calling for 2% of transport fuels in 2005 and 5.75% by 2010 to be biofuels. Last year, Germany laid out its plan for meeting the directive.
In Italy, production will fall due to the exit of a market leader in the molasses alcohol sector, as well as lower wine alcohol production.
Production in central and Eastern Europe is expected to grow only marginally.
At present, the Russian ethanol market is geared towards alcohol for human consumption. However, the potential for non-food production of ethanol is quite high and, if an ethanol fuel market develops, and the Russian government's ethanol policy is finalised, Russian ethanol production for transport purposes could increase substantially.
Although Russia dominates the ethanol market, other Eastern and Central European countries, as well as the Baltic States have taken an interest in ethanol production for fuel purposes. Poland is well ahead and has already invested in ethanol production for fuel purposes. In addition to Poland, Hungary, the Czech Republic and Estonia are interested in investing in ethanol production but no concrete projects have materialised yet.
Poland has stipulated ethyl alcohol use as a leaded and unleaded petrol component (ethanol 4.5% - 5%) by lowering the excise tax. Due to this initiative, the market share of petrol containing ethanol is now almost 30%.
In the Ukraine, the government is trying to put the industry on a sounder footing. A fuel alcohol program was implemented in summer 2000, but so far production has remained below expectations.
The UK
Bioethanol is currently a "hot topic" in political debates and nearly all political parties in this year's General Election agree that its development should be encouraged.
Bioethanol is in use in many countries, but not currently in the UK. However, Britain could be a future producer as they have included in its 2002 Finance Act provision for a tax exemption on ethanol used in pilot projects. The excise duty is still considered too small to make any ethanol project economically viable.
Present-day commercial production is based upon hydrolysis and fermentation of starch and sugar crops, which in the UK are mainly wheat and sugar beet. Hydrolysis technology is currently at the demonstration stage, which in the future would allow the use of more widely available resources such as wood and straw.
Possible feedstock for ethanol production in the UK are sugar beet, wheat, straw, wood and energy grasses such as miscanthus. Other possible sources are corn (mainly used in the US), sugarcane (mainly used in Brazil) and sweet sorghum.
Recently Tesco has become the first of the big petrol retailers to sell petrol with bioethanol in the UK. The bioethanol used by Tesco comes from sugar cane grown in Brazil. However, the chain is in talks with the National Farmers' Union about using crops grown in UK instead.
British Sugar decision to go ahead and build the plant at Wissington has not been finalised but would have a production capacity of 50,000 to 60,000 tonnes of ethanol. A decision is expected in September 2005.
Costs of production
Ethanol production costs from sugar beet and from wheat grain are estimated to be similar at about £15 per GJ EtOH (Per GigaJoule from Ethanol), equivalent to 32p/l, excluding co-products credits. The cost of sugar beet and wheat grain feedstock is estimated to be about £9 per GJ EtOH, conversion process costs are estimated at about £5 per GJ EtOH, and transportation at about £0.6 per GJ EtOH. However, in some cases transport costs as high as £3.41 per GJ EtOH have been quoted, including margin.
The influence of co-products on the price of ethanol could be significant, with the potential value of the co-products estimated to range between £2.5 and £4.5 per GJ EtOH.
The production costs vary with feedstock costs and with the scale of production. In general, though, estimating the cost of ethanol is complicated because of the large number of specific factors involved.
Other benefits
Biodiesel and bioethanol could provide considerable employment opportunities in the UK, in the growing of feedstock and the processing of the resultant fuels. The European Commission estimates that a biofuel contribution of just 1% of total EU fossil fuels consumption would create between 45,000 and 75,000 jobs, mainly in rural areas. The government should ensure that as many of these jobs as possible are located in the UK: if no action is taken there is a real danger that the UK will export a potentially large industry.
Bioethanol has been shown to reduce CO2 emissions by 50% compared with gasoline. In the UK, for example, which is committed to tough Kyoto and domestic emissions targets, even a 5% inclusion level in petrol would save over 2.3 million tonnes of CO2 every year.
Biodiesel and bioethanol could be widely available from UK crops within two years. Discussions with industry suggest that they can adapt existing plant to produce biofuels in an 18-month timescale, and growers can deliver the crop well within that timescale.
Crucially, liquid biofuels can be used in the existing fleet of cars and buses, and can be distributed through the existing road fuel infrastructure.
The use of sugar in bioethanol
Ethanol can be produced from crops such as maize sorghum, wheat (like in the USA), and other agricultural feedstock, but the main product used worldwide for ethanol production is sugar.
World sugar and ethanol markets operate by having strong mutual relationships because most of the sugarcane goes to ethanol production and only between 35 to 47.2% goes to sugar production. Among the major sugar producing countries, Brazil is the world's largest producer of sugarcane based ethanol. Hence, development in Brazil may have considerable implications on the situation of the world sugar and ethanol markets.
The ethanol model
A world sugar and ethanol model has been developed in order to analyse how an ethanol energy or environmental policy in major producing countries will affect not only the ethanol market but also the domestic and world sugar markets. The world sugar market consists of 14 major producing countries while there are 11 major country markets in the world ethanol market. In the model, two markets are linked together through the Brazilian sugar and ethanol markets. In the Brazilian market, a "sugarcane allocation ratio variable" is defined. This allocation ratio of sugarcane determines what portion of sugarcane goes to both sugar and ethanol. The main driving factor that determines the level of sugar and ethanol production is the relationship between the domestic sugar and ethanol price.
The reaction of producers to a change in market price is replicated in the model through the introduced allocation ratio variable to allow the instantaneous ethanol and sugar production adjustment to change the relative sugar-ethanol price ratio. Each country market consists of the production, consumption, export, import and final stock activities. The sugar market activities are defined on a raw sugar equivalent basis. Because several country markets are operated under strong governmental intervention, country market clearing prices are found using country market clearing identities, while the trade market price is found using the trade market clearing price.
Among the 14 sugar country markets, two country and regional market prices are almost totally shielded from the trade market price movements. These specified market intervention prices guide market supply and consumption activities while trade takes place to fill the resultant supply-demand gaps in these cases. Among the EU's sugar production and trade programmes, the model takes into account the sugar production quotas, intervention price, export subsidies and preferential treatments for specified countries.
Sugarcane is not the only source of ethanol production. The United States' ethanol production, for example, is based mostly on maize. Ideally, the model specification should be extended to cover those related agricultural commodity markets. However, at this stage of model development, relevant markets are worked out approximately by the provided market prices. Ethanol consumption is specified as the sum of transportation use and other uses. Transportation usage is defined as a factor of ethanol and petrol prices, which is further explained by the crude oil price, and the number of vehicles.
Bioethanol legislation
The European Commission has taken a keen interest in the development of biofuels, most recently by proposing new Directives. The first of these will set indicative targets for member states to use minimum levels of biofuels by a certain date. The Commission will closely monitor developments through regular reporting with member states, and may also have the power to set mandatory targets if it feels that inadequate progress is being made.
The second Directive will allow member states to implement fuel duty reductions for biofuels much more quickly and easily than is the case at the moment.
The net effect of this new legislation will be to add yet more impetus to the debate, and to accelerate the development of biofuels in Europe.
Conclusion
The events of 9/11 further underlined the problems of excessive reliance on a single type of energy, petroleum, producing sources for which are in unstable political regions - the trend in growth of political and military costs to ensure the product's supply is assured. Apart from this, the scientific community claims that petroleum has already entered its "depletion" period, characterised by demand far exceeding existing reserves. This opens the way for clean and renewable energy from sources such as biomass from sugarcane and other plants to be transformed into one of the principal sources of energy in the 21st century.
Sources:
FAO commodity and Trade Policy Research Working Paper (June 2003). The Brazilian ethanol programme: Impacts on world ethanol and sugar markets.
UK International Priorities - The Energy Strategy - October 2004. The department of Trade and Industry.
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