Perspectives on fuel ethanol consumption and trade

Since the year 2000 or so there has been a rapid growth on fuel ethanol production and consumption, particularly in US and Brazil. Ethanol trade represented about 10% of world consumption in 2005, Brazil being the main exporter. The most important consumer markets—US and European Union (EU)—have trade regimes that constrained the comparative advantages of the most efficient producers, such as Brazil. This paper evaluates the fuel ethanol market up to 2030 together with the potential for international biotrade. Based on forecasts of gasoline consumption and on targets and mandates of fuel ethanol use, it is estimated that demand could reach 272 Gl in 2030, displacing 10% of the estimated demand of gasoline (Scenario 1), or even 566 Gl in the same year, displacing about 20% of the gasoline demand (Scenario 2). The analysis considers fuel ethanol consumption and production in US, EU-25, Japan, China, Brazil and the rest of the world (ROW-BR). Without significant production of ethanol from cellulosic materials in this period, displacing 10% of the gasoline demand in 2030, at reasonable cost, can only be accomplished by fostering fuel ethanol production in developing countries and enhancing ethanol trade. If the US and EU-25 reach their full production potential (based on conventional routes), the minimum amount that could be traded in 2030 would be about 34 Gl. Displacing 20% of the gasoline demand by 2030 will require the combined development of second-generation technologies and large-scale international trade in ethanol fuel. Without second-generation technologies, Scenario 2 could become a reality only with large-scale production of ethanol from sugarcane in developing countries, e.g., Brazil and ROW-BR could be able to export at least 14.5 Gl in 2010, 73.9 Gl in 2020 and 71.8 Gl in 2030.