fredag 18. juli 2008

ethanol. back to basics...

I could not resist... so here is an excerpt of the paper Michele Ferreti and I are writing together about oil companies...: 

the ethanol production in Brazil began early - during the oil crisis in the 70s - at a time when the country had to import over 80% of its domestic oil consumption. Since it was first launched in 1975, the Brazilian Ethanol Programme remains to date the largest commercial application of biomass for energy production and use in the world. It succeeded in demonstrating the technical feasibility of large-scale ethanol production from sugar cane and its use to fuel car engines. Since 1979, 5.4 million ethanol-powered cars have been manufactured in Brazil. 


After oil prices sharply decreased in the eighties, the major benefit of the Ethanol Programme was 

its contribution to curbing the increase of air pollution in Brazilian cities and of the greenhouse effect. In 1999, the production cost of alcohol was still higher than petrol manufactured from imported petroleum priced at just below US$ 20 per barrel (bbl), approximately equal to half of its international price in 1980 when the second phase of the Ethanol Programme was launched. The relatively high price of ethanol is the main reason of the financial difficulties faced by the programme from 1986 to 1999. However, considering the double impact of petroleum price hikes and of productivity gains in the production of alcohol and its by-products (especially through the introduction of improved fermentation technologies and the use of bagasse for power generation surplus to be injected in the national grid), sugar cane ethanol gained a new momentum in 2007. 


Brazil currently leads the market with 25% of the total of the production and with most competitive product: the carbon released in the atmosphere when bagasse and ethanol are consumed for fuel is more than compensated by an equivalent quantity of carbon absorbed by sugar cane during its growth. Brazilian government announced that aims to raise to 2% the participation of biofuels in the national energy consumption (ISA, 2007).  


(Unterstell&Ferreti, 2008 - working paper)

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