free html hit counter Peak Oil Debunked: 56. SUGAR CANE ETHANOL

Thursday, August 25, 2005

56. SUGAR CANE ETHANOL

There was an interesting cover story in Newsweek (Aug. 8, 2005) about sugar cane ethanol from Brazil. After reading it, I am convinced that ethanol (like gas-to-liquids) is a serious contender for replacing crude oil in motor fuels.

1) Brazilian sugar cane ethanol is much cheaper than oil. From the article: "Super-efficient Brazil now sells ethanol at the equivalent of $25 dollars a barrel, less than half the cost of crude." So I think we can dispense with the incorrect notion that no other form of energy is as cheap and convenient as oil (see #37). Brazilian sugar cane ethanol is cheaper than oil, just as convenient, and environmentally superior because it does not increase CO2 levels. ("In terms of price, the average cost of fuel ethanol production in the country (Brazil) is around 50 cents per gallon" Source)

2) Serious money is being invested: "To keep up with demand, local sugar barons and giant multinationals will invest some $6 billion in new plantations and distilleries over the next five years." This is on a par with Shell's $6 billion GTL (Gas-to-Liquids) facility in Qatar.

3) Ethanol production is booming. The growth rate is about 9% per year (click for a clearer picture, source):

4) World production of ethanol in 2004 was 10.77 billion gallons (=40.8 billion liters), which comes out to roughly 700,000 barrels/day. The heat content of ethanol is 3.5MMbtu/barrel (source), so energy production from ethanol is 2,450,000 MMbtus/day. Gasoline, on the other hand, has a heat content of 5.3MMbtu/barrel (same as previous source), and thus ethanol production is equivalent to gasoline production of about 460,000barrels/day.
On the average there are 19.5 gallons of gasoline in a barrel of crude oil (Source), so ethanol is providing the gasoline equivalent of 1 million barrels/day of conventionally refined crude oil. For comparison, Indonesia produced 1.2mbd of crude oil in 2003(source). Ethanol is as big a factor in the world gasoline market as Indonesia.

5) There's weird goings-on in the global sugar market:
9 August, 2005
Sugar prices 'to rise'

LONDON: Sugar prices, the highest for nearly five years, are entering unchartered territory as investment funds show a record interest in the commodity which traders see as increasingly tied to energy markets.Source

6) This is my favorite part:
A global biofuel economy, with a division of labor favoring the most efficient producers, is key to developing biofuels as a viable alternative to oil. For many developing countries, year-round growing seasons and cheap farm labor are a valuable competitive advantage over cold, high-cost northern countries. Super-efficient Brazil now sells ethanol at the equivalent of $25 a barrel, less than half the cost of crude. (Source: Newsweek, cited above)

The beauty of this plan is that it transfers money to tropical and sub-tropical developing nations, who can use the money to develop, and pass through the demographic transition. It's a good way to crack first world agricultural subsidies and tariffs which keep the developing world poor.

7) Interesting fact: The EIA classifies ethanol as "oil".
Total oil production (including crude, natural gas liquids, ethanol and refinery gain) has been rising steadily since the early 1990s... Source

18 Comments:

At Thursday, August 25, 2005 at 10:42:00 AM PDT, Blogger James said...

Who thinks Brazil could move toward 1st world status because of this? If they play their cards right, they will be rich off of this.

Just don't cut down too much of the rainforest, the world needs oxygen more than Ethanol!

 
At Friday, August 26, 2005 at 12:01:00 PM PDT, Blogger skyemoor said...

Interestingly, some on this blog will jump at the slightest promise of an alternative, claiming Peak Oil is overblown.

Just how much acreage would be required for the US to replace it's petroleum use with ethanol?

 
At Friday, August 26, 2005 at 1:12:00 PM PDT, Blogger James said...

It's not about a silver bullet solution. I find it funny when the PO doomers say "well, you've have to do this to replace all the oil". Even replacing 5 - 10% of the oil supply with ethanol, biofuels, electricity, etc would stabilize or slightly lower prices IMO, giving us time to reduce watseful consumption. We are not out of oil, we're just out of cheap oil.

 
At Friday, August 26, 2005 at 10:06:00 PM PDT, Blogger JD said...

Just how much acreage would be required for the US to replace it's petroleum use with ethanol?

As noted in the original post, the US climate (except Hawaii and Florida) is a competitive disadvantage for producing sugar cane ethanol. Countries like Brazil are better adapted to producing ethanol, and can do it on less acreage because they can grow multiple crops in one year.

 
At Saturday, August 27, 2005 at 6:14:00 PM PDT, Anonymous Dan Bloomquist said...

Two rather misleading premises here.

First is to compare a gallon of ethanol to gallon of gasoline. Gasoline has almost twice the heating value of ethanol.

Second is to portray a barrel of oil as 20 gallons of gasoline. A barrel of oil is cracked to half gasoline because that is what the market demands. The heating value of that barrel of oil is what counts because the rest is still fuel.

So, now I'll quote you:
"World production of ethanol in 2004 was 10.77 billion gallons (=40.8 billion liters). On the average there are 19.5 gallons of gasoline in a barrel of crude oil (Source), so ethanol is providing the equivalent of 1.5 million barrels/day of crude oil."

Lets see. 11E9gallons * 64000 btu / 365 days/year = 2E12 btu/day.

Or the equivalent of 300,000 barrels a day of crude.

Growing even at 10%/year from there doesn't sound like timly mitigation.

Best, Dan.

 
At Saturday, August 27, 2005 at 10:15:00 PM PDT, Blogger JD said...

Thank you Dan, your calculation is right, and I have corrected the post to reflect your criticism.

You are also correct that oil is cracked to reflect market demand, but (on the average) oil is cracked to a ratio of 19.5/42 gasoline, so I believe my point about the impact of ethanol on the world gasoline market remains valid.

Growing even at 10%/year from there doesn't sound like timly mitigation.

That depends on various factors:
1) The degree of conservation
2) The date of the peak

If the early peak hypothesis is incorrect, and conservation efforts are solid, ethanol has good potential for mitigation with regard to gasoline.

 
At Monday, August 29, 2005 at 9:46:00 AM PDT, Anonymous Dan Bloomquist said...

jd:
If the early peak hypothesis is incorrect...

Dan:
Don't you think it would be in the best interest of mankind that we know the true state of world reserves?

Best, Dan.

 
At Thursday, March 16, 2006 at 1:53:00 PM PST, Blogger getalife said...

JD,

I live in sugar cane country in Louisana, not far from a sugar refinery.

I am wondering if there can be a ethanol refinery here.

 
At Monday, April 3, 2006 at 11:23:00 PM PDT, Blogger ozbauie said...

How much do you think a new plant will cost for a production capacity of 100k tonne ethanol in Brazil compared to Australia?

 
At Tuesday, August 22, 2006 at 6:44:00 PM PDT, Blogger harts4all said...

I noticed that no one picked up on the off-hand remarkabout Hawaii. This state quite growing sugar and closed the refineries because it was no longer economical. On average over almost 100 years they were producing about 1M Tons of sugar annually. Now convert that to ethanol.

 
At Wednesday, November 22, 2006 at 10:05:00 AM PST, Blogger mike said...

... interesting that you seek to debunk peak oil when you agree with their major point that conservation is essential, with or without ethanol.

Energy is needed not just for big piggy cars, but for heat and electricity. I hope you're not saying it is acceptable to let the demand for SUV fuel drive up the cost of oil until ethanol can step in, while the poor have to choose between heating and eating?

I don't see conservation happening, only talk.

If you want to debunk something, have you considered the "hydrogen economy"?

 
At Sunday, April 29, 2007 at 1:31:00 PM PDT, Blogger stan said...

dCane is able, corn is table.
Talk about reducing the ethanol debate to a bumper sticker, that about covers it. Sugar cane is able to provide ethanol for the “hamburger helper” benefit - stretching available gasoline when blended, 10 to 85 percent - and at a remarkable 8 to 1 energy profit. Invest one unit of energy to distill an alcohol product that gives you 8 units for your trouble.
Corn, agra-economists calculate, yields a disappointing 30 percent gain. That is, when you consume a unit of energy to grow corn to distill into ethanol, you get 1.3 units back. Pretty lame. And when you understand the nightmare of incentives and taxpayer subsidies and import duties combined to allow farmers to grow that corn, you lose any economic justification for growing that corn.
And we haven’t even mentioned the table issue. When you tinker with the free market to put corn in at the head of the line to make ethanol, you raise the price of corn for corn flakes, cornbread, corn meal, and of course, tortillas. Prices for basic food products have doubled as a result of government corn-ethanol policy.
So, logically, let cane be able and leave corn to the table.
If only.
If only ethanol production issues could be settled in free market, Adam Smith-type competition in the marketplace.
Ever hear of the farm lobby and the 55-cents a gallon duty on imported ethanol? Ever hear of politics? Ever hear of the farm vote and the billions upon billions of agriculture subsidies that are woven into the growing business fabric before that crushing import tax is even considered?
Cane is able, corn is for the table, so let’s leave the subsidies in place to help farmers if we must, but simply tell congress to end the 55 cents a gallon import duty on imported ethanol and begin to live energy independently ever after.
Dream on.
Or we can insist on some pragmatism and negotiation.
We, the ethanol from cane producers, will open by conceding a point: reducing the ethanol duty from 55 cents to zero right now would pull the rug on a lot of corn production planned for ethanol. That would hurt farmers who have planted a lot of corn.
We want to help people, not hurt people.
So let’s reduce the import by a nickel this year, a dime next year and a dime ever after until corn politics stops hurting our energy independence march, picking our pockets, and taking food off the table.
You want a figure? Imported ethanol costs about $1 a gallon before the duty. To get it up to the price of corn ethanol - $1.50 a gallon, the cane ethanol producers are forced to pay a 55 cvents duty which they must pass to you, the guy with the nozzle in the tank watching the numbers spin.
Stan Cotton www.joinfoil.org

 
At Monday, May 14, 2007 at 2:37:00 PM PDT, Blogger Freeloader said...

Thanks to the Andean Free Trade agreement, Peru is able to export agricultural products tariff free to the US. This has made way for a Dallas based company, Maple Cos. to build a self sufficient ethanol plant and ship the product to the US. Corn ethanol is still too expensive and sugar cane ethanol is supposed to provide more energy... http://e85.whipnet.net/news/sugar.cane.html

 
At Sunday, March 30, 2008 at 4:51:00 PM PDT, Anonymous Anonymous said...

Yes, but consider the unexpected factors.

Farmers change crops all from time to time based on demand for their current crops. If more E85 cars become available along with more E85 at the consumer pumps, then demand for ethanol might increase. If corn-based ethanol demand puts pressure on food products, then Hawaii and other states might see more profitability in growing sugar cane.

In addition, if electric race cars can be built that outperform fuel-based cars (in speed), then electric harvestors can be built with enough power to chop down cane, perhaps from batteries charged from solar panels. If processing mills can be built on-site at the farms using solar,wind, and sugar cane waste materials, maybe the cost of processing can be lowered enough to increase profitability.

If solar electric machines are possible, then my 1 hour round-trip to work can be done with no fuel at all. Small dashboard-sized solar panels are already available to charge a standard car battery through the cigarette lighter plug. Why not a slightly larger one to charge up some lithium-ion or newer technology batteries while I'm at work? Then I might be good to go for the ride home and next morning back to work.

Yes, I'm merely supposing, without any engineering or scientific data as backup. I'm just saying that we should not underestimate the power of economic change to drive clever new engineering ideas. The future does not always follow the predictions made from current technological or economic conditions.

 
At Sunday, March 30, 2008 at 5:04:00 PM PDT, Anonymous Anonymous said...

In short, I naysay on any of your facts and figures that "prove" it can't be done. If it needs to be done, it will be.

Please hold your applause until my Nobel speech. :)

 
At Tuesday, June 24, 2008 at 10:14:00 AM PDT, Anonymous Anonymous said...

"Anonymous" poster above:

Touche" "Cant" is a word I dont particularly care for either. The masses laughed at a couple brothers who had the crazy idea they could fly. With vision and perspiration, nothing is impossible.

 
At Tuesday, June 24, 2008 at 11:55:00 AM PDT, Anonymous R. Neuhaus said...

An acre of sugar cane yields about 30 gal of ethanol. That equates to 1.67 million acres of land to produce 50 million gallons of ethanol. That's about 10% of our gasoline consumption per day. Now if you multiply that out by 365 days, then you would need 608 million acres of land or 950000 square miles. Anyone out there know where that land is coming from? R. Neuhaus

 
At Wednesday, September 3, 2008 at 1:43:00 PM PDT, Anonymous Anonymous said...

R. Neuhaus stating 1 acre of sugarcane yielding 30 gallons of ethanol is incorrect! Please check your source ...

 

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