In 2006, the United States, Brazil and the European Union set the stage for what many consider to be a wildly successful year for ethanol production worldwide. The veterans are being closely watched by new players from around the globe who hope to expand their roles in the growing industry.
Gord Laschinger, CEO of Toronto-based Northern Ethanol, a proposed plant that could be the largest corn dry mill in Canada, has lent his voice to the chorus of industry leaders who consider this year a turning point for the ethanol industry. With the United States leading the way, 2006 was the year ethanol gained global strength and recognition, he says.
"When the government of the United States came out quite publicly and said they had some concerns about the extent of which the U.S. relied on imported oil—particularly imported oil from countries that sometimes would use oil as an economic weapon—and as a consequence, the United States needed to do more to reduce its reliance on those regions from which it acquired oil currently … I think that gave the industry quite a bit of backbone in terms of moving forward," Laschinger says.
Indeed, the U.S. ethanol industry had a big year in the policy, production and technology sectors on its way to overcoming its "oil addiction," as President Bush put it in his State of the Union address this year. However, it was inevitable that other countries would also continue along the path of fuel independence.
Canada's Role
Canada continued to be on the leading edge of cellulosic ethanol production through advancements at Ottawa-based Iogen Corp., a biotechnology firm that develops, manufactures and markets enzymes for a number of industries. Iogen also operates a demonstration plant where it converts straw, corn stalks and switchgrass into ethanol. In June, it announced plans to build the world's first commercial-scale cellulosic ethanol plant in Idaho, taking advantage of U.S. loan guarantees. Executive Vice President Jeff Passmore said Iogen would start construction of the commercial facility in the summer of 2007; production would ideally start by 2009. It would most likely take in barley and wheat straw as a feedstock.
The Canadian government also repealed a tariff that was set in place at the end of 2005 to combat what the Canadian Corn Producers called U.S. corn dumping. The tariff added $1.65 to every bushel of corn imported from the United States, and Canadian ethanol start-ups began worrying about future feedstock costs. This put many Canadian corn-to-ethanol projects on hold until the issue was resolved. In April, the Canadian International Trade Tribunal (CITT) ruled that U.S. corn imports weren't harmful to the Canadian corn market, and the tariff was removed (see June EPM for complete story).
Had the tariff remained in place, Laschinger says Northern Ethanol would have moved one of its two planned 409 million litre per year (108 MMgy) Ontario facilities south of the border. In the end, the company chose to move forward with construction in Ontario, certain that the duty wouldn't hold. While some who waited for the CITT's final ruling have since picked up the pieces and moved forward, others have not, Laschinger says. During the four months the tariff was in effect, it caused some feed and alcohol producers to reflect on their businesses, and some actually shut down temporarily, causing an ironic effect, Laschinger says. "What happened was the demand for corn slackened off, and the price of corn actually went lower when the tariff was put in place than it was before," Laschinger says. "So, it really didn't do anything substantive, except be a bit of a wake-up call to the corn industry and agricultural community that tariffs aren't necessarily a good thing."
The Canadian tariff dispute appeared to be an isolated incident as key barriers to global trade of biofuels still exist, according to Suzanne Hunt, biofuels project manager for WI. WI expects this will change in years ahead as those countries that consume large quantities of transportation fuels run short of land available to grow biomass feedstock.
Elsewhere
As the global ethanol industry develops, a considerable number of government policies are being implemented in several countries relating to biofuels, Hunt says. Australia implemented an E10 mandate in its New South Wales province, effective in 2011. The Netherlands and Belgium both set ambitious countrywide goals in order to align with the biofuels standards set for members of the European Union. Both countries lifted their excise tax on ethanol that is blended with gasoline at more than 7 percent. Strong incentives also boosted ethanol production in such countries as Thailand, Philippines, Colombia, Dominican Republic and Malawi (see August EPM).
On a multinational scale, as a result of the G8 Summit held in Gleneagles, Scotland, in 2005, the Global Bioenergy Partnership (GBEP) was formed in May at the United Nations (UN) Commission for Sustainable Development in New York City. The secretariat of the GBEP opened for business in September at the Rome headquarters of the Food and Agriculture Organization (FAO) of the UN headquarters. The GBEP's overall goal is to respond to the growing need to develop renewable energy sources in the wake of high oil prices, global warming and growing concerns over diminishing fossil fuel reserves. Current partners include all G8 countries (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States), as well as China, Mexico, the International Energy Agency, the UN Foundation, the European Biomass Industry Association and FAO.
Although not a GBEP partner, Brazil continued to lead the world in per capita biofuels consumption with more than 75 percent of new vehicles manufactured in the country in 2006 powered by ethanol blends. The country's entrenched ethanol infrastructure has led several car manufacturers to introduce even more flexible fuel vehicles (FFVs) this year. Volkswagen Brazil halted production of gasoline-only models to focus solely on the production of FFVs. Honda introduced a new FFV system to be sold in Brazil late this year, American Honda Representative Gunner Lindstrom says. Toyota Motor Corp. also announced plans to introduce FFVs in Brazil in 2008. It was certainly an exciting year, and it will be interesting to see what the car companies are going to do in the year to come, Hunt says.
China is nipping at Canada's heels in cellulosic ethanol production by announcing the country's $2 billion investment in a cellulosic research project with Novozymes and SunOpta Inc. The country is fast-tracking renewable fuel development, as its insatiable appetite for gasoline grows. Professor Yuan Zhenhong, general secretary of the China Biomass Development Center, predicted at this year's World Biofuels Symposium in Beijing that China's oil demand will reach 370 million metric tons by 2020, up from 224 million metric tons in 2000.
There are countless numbers of new production facilities planned around the world, and new biofuels policy goals are being set forth for discussion and eventual implementation. Doors for international trade are opening up, and consumption of biofuels is consistently rising across the board. Fledgling ethanol industries are popping up in countries such as Cuba, which is beginning to make major investments and developments in the renewable fuel in hopes of revitalizing its economy.
"I think the market has picked up its own momentum, and now it's just a matter of directing it," Hunt says. "Now we have to think about how we want this industry to develop ideally, so that it can reach its maximum potential. Dealing with some of the sustainability issues—environmentally and otherwise—is going to be key to the industry's development and growth."
Lindsey Irwin is an
Ethanol Producer Magazine staff writer. Reach her at
lirwin@bbibiofuels.com or (701) 746-8385.