MercoPress. South Atlantic News Agency

Global production of bio-fuels increased 17% last year reaching 105 billion litres

US and Brazil remain the world’s leading producers of ethanol

Global production of bio-fuels increased 17% in 2010 to reach an all-time high of 105 billion liters, up from 90 billion liters in 2009.

High oil prices, a global economic rebound and new laws and mandates in Argentina, Brazil, Canada, China and the US, among other countries, are all factors behind the surge in production, according to research conducted by the Worldwatch Institute's climate and energy program for the website Vital Signs Online.

The US and Brazil remain the two largest producers of ethanol. In 2010, the US generated 49 billion liters, or 57% of global output, and Brazil produced 28 billion liters, – 33% of the total. Corn is the primary feedstock for US ethanol, and sugarcane is the dominant source of ethanol in Brazil.

“In the US, the record production of bio-fuels is attributed in part to high oil prices, which encouraged several large fuel companies, including Sunoco, Valero, Flint Hills and Murphy Oil, to enter the ethanol industry” says Alexander Ochs, director of Worldwatch's climate and energy program.

High oil prices were also a factor in Brazil, where every third car-owner drives a “flex-fuel” vehicle that can run on either fossil or bio-based fuels. Many Brazilian drivers have switched to sugarcane ethanol because it is cheaper than gasoline.

“Although the US and Brazil are the world leaders in ethanol, the largest producer of bio-diesel is the European Union, which generated 53% of all bio-diesel in 2010,” says Ochs.

“However, we may see some European countries switch from bio-diesel to ethanol because a recent report from the European Commission states that ethanol crops have a higher energy content than bio-diesel crops, making them more efficient sources of fuel.”

Vital Signs authors Sam Shrank, a Worldwatch MAP Sustainable Energy fellow, and Farhad Farahmand, a climate and energy research intern, also explored how new mandates in Argentina, Brazil, Canada and China have altered the bio-fuel industries in these countries.

“In Argentina, the biodiesel industry grew not only because of favorable conditions for growing soybeans, but also in response to a new B7 blending mandate, which requires the fuel to be 7% bio-diesel and 93% diesel.” Accordingly, bio-diesel producers in Argentina are investing heavily in facilities to increase production.

In the United States, however, the Environment and Protection Agency (EPA) made the decision to dramatically lower the country's production target for cellulose ethanol, a bio-fuel that is made from woody plants or crop waste and that can be converted to ethanol much more efficiently than conventional ethanol, resulting in lower associated greenhouse gas emissions.

“The EPA's target reduction reflects the technical challenges and high costs of commercializing so-called second generation bio-fuels” says Shrank. “Instead of the 950 million liters required initially under the 2007 Energy Independence and Security Act, the final target will be as much as 25 million liters smaller”.

Proposed legislation in the US Senate would cut current ethanol production subsidies while maintaining tax credits for related infrastructure such as refilling stations. If supports like subsidies and tariffs are removed in the United States, sugarcane ethanol from Brazil will likely become more prevalent. Although sugarcane ethanol has the benefit of being cheaper and more efficient to produce, there are concerns that increased production will speed deforestation in Brazil as more land is cleared for feedstock cultivation.