Sugaronline Editorial - The question of price vs. morals By Meghan Sapp
Published: 08/18/2017, 1:06:00 PM
Sooner or later, a choice has to be made.
The old saying goes that everyone has a price. No matter how strict their ethics, how lofty their moral beliefs, at some point you’re going to get down to a number. That’s the debate going on in several countries at the moment when it comes to biofuels.
Ethanol is a perfect example of this conundrum. Sugarcane is recognised as the most efficient feedstock for ethanol production when it comes to production per hectare, greenhouse gas emissions reductions upwards of 80% and, in many cases, the lowest price. But that low price also means that millers will often choose to produce sugar instead of ethanol, leaving supplies limited and imports necessary.
The largest ethanol producer in the world is the United States, currently pumping out more than a million barrels of product per day, on average. Though the domestic market consumes much of that fuel, there’s about a billion gallons or so that needs to go elsewhere and the number is rising. That ethanol is produced from maize, making it the cheapest and therefore very attractive in the international market, but the environmental performance of the fuel isn’t always as impressive as sugarcane, often with less than 40% GHG emissions reductions.
The US even considers sugarcane ethanol an “advanced biofuel” because of its environmental performance but due to the corn ethanol industry’s continued reliance on fossil fuels for processing and the extensive amount of fieldwork and fertilizers required for maize production, the GHG emissions numbers often can’t compare.
But when Brazilian sugar mills choose sugar over ethanol production, demand still requires a minimum volume of 27% ethanol for blending into gasoline making imports necessary. That has been the case during the interharvest season between January and April for many years, but due to higher sugar prices those imports have extended well into the middle of the year. For that reason the country is looking to introduce an import quota and tariff.
It’s the environmental question that has to be looked at, however. Brazil has made strong commitments to reducing the drivers of climate change and is using its ethanol credentials as one of those tools, looking to push production and consumption even further through RenovaBio. But importing hundreds of millions of litres of arguably less environmentally friendly ethanol doesn’t help that goal very much.
Colombia is now beginning to suffer the same moral dilemma. Does it import from the US, which often offers ethanol cheaper than its own and forsake some of its commitments to the Paris climate change agreement, or does it keep its market more or less closed and focus on domestic production from its year-round sugarcane production, even if it’s more expensive? Heavy rains forced the country to boost imports more than 100% this year while reducing its blending mandate due to lack of supplies, but the question is now on the table for the future.
The question of biodiesel feedstocks is also on the table in the Philippines. Traditionally the country’s 2% blending mandate was supplied by coconut oil, and the industry wants that to double in order to boost demand. But the domestic palm oil industry wants in on the biodiesel market, saying that it is half the cost of coconut oil and deserves a piece of the pie. The country’s palm oil industry hasn’t suffered from the bad reputation that Malaysia and Indonesia’s have in terms of their environmental impacts, ones that led to a ban in Norway and potentially one in Europe, but it could also mean the Philippines’ industry hasn’t been as closely scrutinised either.
So where’s the line? And how does one measure? It’s a debate that must be had.