Ethanol trade undermines U.S. biofuels policy

by Ali Morrow and Alex Plough | Thomson Reuters Foundation
Wednesday, 3 July 2013 10:45 GMT

An ethanol fuel pump is seen at a UPI Energy gas station in Chatham, Ontario, Canada, on April 11, 2008. REUTERS/Mark Blinch

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U.S. policy to boost the use of fuel from renewable sources is leading to growing ethanol trade between the United States and Brazil - something that is raising rather than lowering emissions, research shows

WASHINGTON (Thomson Reuters Foundation) – U.S. policy to boost the use of fuel from renewable sources is generating additional greenhouse gas emissions due to rising trade in ethanol between the United States and Brazil, rather than lowering emissions as intended, research by Thomson Reuters Foundation shows.

Washington created the Renewable Fuel Standard (RFS) in 2005, requiring 10 percent of every gallon of gasoline to be derived from biofuels. An update to the RFS, which took effect in July 2010, stipulates that a proportion of the mandate must be met by fuels with lower greenhouse gas emissions than corn ethanol, which is home-grown and plentiful.

This policy change created an incentive for U.S. companies to import sugarcane ethanol from Brazil, a major producer, as it produces fewer emissions. At the same time, more corn ethanol made in the United States is now being exported to Brazil, as U.S. demand has dropped.

As a result, since the start of 2011, the United States and Brazil have shipped over 1 billion gallons of ethanol back and forth – more than 500 million gallons each way. The emissions generated by the shipping have worsened the carbon footprint of both fuels.

Thomson Reuters Foundation found that this overseas trade has produced more than 312,000 tonnes of carbon dioxide (CO2) since the start of 2011, based on an industry method used to calculate greenhouse gas emissions from shipping. This equals a ratio of one tonne of CO2 emitted for every 10 tonnes of ethanol transported between the two countries.

To absorb that amount of carbon dioxide out of the atmosphere, 8 million tree seedlings would need to be grown over 10 years, according to a U.S. Environmental Protection Agency (EPA) emissions calculator.

According to U.S. customs data, the average tanker carries 11,265 tonnes of Brazilian sugarcane ethanol per trip, emitting an estimated 1,269 tonnes of CO2 by the time it reaches the United States.

Thomson Reuters Foundation worked out the emissions using a formula from the European Chemical Transport Association (ECTA) and the European Chemical Industry Council (Cefic).


The two-way trade in ethanol raises questions about the environmental impact of the hotly debated U.S. biofuels policy.

“Swapping of ethanol with Brazil results in twice as many transportation-related greenhouse gas emissions, undermining the objective of the policy,” said Geoff Cooper, vice-president of research and analysis at the Renewable Fuels Association (RFA), a Washington, D.C.-based industry organisation. 

Cooper said the trade amounts to an increase in greenhouse gas emissions, over and above the saving that comes from using sugarcane ethanol instead of fossil fuels, because of the way the ethanol is shunted between the two countries.

“In 2011 and 2012, there were ships passing in the night,” said Wally Tyner, professor of agricultural economics and co-director of the Purdue Center for Research on Energy Systems and Policy.

“The sugar crop in Brazil was short, but it was so profitable for Brazil to export to the U.S., they did so. And (they) bought corn ethanol from the U.S. to make up their shortage in ethanol,” he explained. 

This “ethanol shuffle” between U.S. and Brazilian ports is set to expand if U.S. policy remains unchanged, the RFA’s Cooper warned. “We’re definitely seeing increased volumes of sugarcane (ethanol) because of the Renewable Fuel Standard,” he said.

Further consternation was sparked when Washington removed the tariff on sugarcane ethanol in 2012, along with a subsidy for U.S.-produced ethanol. These two measures made sugarcane ethanol cheaper and more attractive for gasoline producers required to fulfill the RFS mandate.

Since then, sugarcane ethanol has flowed into the United States, while corn ethanol has been shipped to Brazil to meet demand there. More than 90 percent of new cars sold in Brazil are flexible fuel vehicles, which can run on ethanol, gasoline or a combination of the two. Brazil has been blending ethanol into its gasoline since 1976, and now requires that a quarter of every gallon of gasoline should be ethanol.  


The debate heated up again in February this year when the Environmental Protection Agency – the U.S. government department responsible for the RFS – decided not to reduce the overall requirement for new-generation biofuels (including sugarcane ethanol), which emit less greenhouse gases than corn ethanol.

Without a substantial homemade alternative, the 2.75 billion gallons of new-generation biofuels that U.S. gasoline firms are required to blend into gasoline in 2014 will have to come largely from two sources: bio-diesel from vegetable oil or animal fat, which can only power diesel vehicles, and sugarcane ethanol.

The EPA does not consider corn-based ethanol, which is available in ample quantities in the United States, an advanced or new-generation biofuel.

But sugarcane ethanol is classed as a new-generation biofuel because it “has a lifecycle GHG (greenhouse gas) emission reduction of more than 50 percent compared to the baseline petroleum fuel it would replace, and that qualifies it as an advanced biofuel under our RFS program”, the EPA told Thomson Reuters Foundation in an emailed response.

Emissions from sugarcane ethanol are 30 percent lower than from corn ethanol, according to the EPA. So far, it has been less expensive than bio-diesel, making it the first choice for gasoline companies required to meet the RFS.

Environment experts say the United States has two options: continue to undermine the aims of the RFS by encouraging ethanol trade, or change policy to spur a move towards cleaner biofuels.

Tim Wise, a director at the Global Development and Environment Institute at Tufts University and a researcher with ActionAid, said incentives need to be put in place to develop advanced biofuels other than imported sugarcane ethanol. Otherwise, “we can see the early warning signs of a worrying trend,” he said.

According to current projections in the RFS, the United States will need 15 billion gallons of new-generation biofuels to meet the mandate in 2020 – over 12.25 billion gallons more than this year. If just half of this were met by Brazilian sugarcane ethanol, the shipping alone would pump an extra 3 million tonnes of CO2 into the atmosphere.


As demand for biofuels has grown in the United States, non-profit groups working on poverty and the environment have also weighed into the debate, arguing that growing biofuel crops on large swathes of land is hiking food prices, damaging the productivity of farmland and causing deforestation.

The largest expansion of sugarcane plantations is taking place in Brazil’s fertile grassland savannas, according to Adriano Campolina, country director of ActionAid Brazil, a development charity.

“The impact is conversion of what was a biologically diverse region into a mono-crop – that means loss of biodiversity, increased soil erosion and contamination of soil and water because of heavy fertiliser and pesticide use,” he said. 

The savanna gives rise to some of Brazil’s most important rivers, and so whatever seeps into them runs the risk of contaminating farmland along their banks, Campolina said.

There’s also renewed concern about the consequences for the forests and ecosystems of the Amazon Basin.

The impact there has been minimal so far, Campolina noted. At most, some cattle herds have been displaced to the Amazon by sugarcane plantations. But that could change after the Senate passed a bill in May that would allow sugarcane plantations and mills in the Amazon, he added. 

Sugarcane grows quickly and spreads aggressively, and demand is rising thanks to markets created by governments with biofuels mandates.

“The incentive for farmers to grow sugarcane if they’re near a mill is so great it’s nearly impossible not to,” Campolina said. The area around the mill “becomes a sea of sugarcane … That’s what we’ve seen everywhere else in Brazil,” he added.


How did we work out emissions from U.S.-Brazil ethanol trade?

The total weight of carbon dioxide (CO2) emitted was reached by analysing shipping data provided by the PIERS U.S. customs database, covering the period from January 2011 through to the end of March 2013.

The first step was to find out the number of separate voyages of ethanol-laden tankers between the two countries. There is no unique identifier in the PIERS data for a single voyage, so we created a new one by combining several fields: the vessel name, the departure port, the arrival port, and the date it sailed or arrived.

Our new field allowed us to separate each journey, and calculate the weight of ethanol shipped as well as the distance the vessel travelled. Distances between ports were calculated, and we researched the energy efficiency of each different type of ship named in the database.

We were then able to multiply CO2 emission intensity standards for each vessel type, provided by the International Maritime Organisation (IMO), by the distance travelled and weight of cargo to produce the final weight of CO2 emitted.

This formula we used was created by the European Chemical Transport Association (ECTA) and the European Chemical Industry Council (Cefic).

Finally we added up the CO2 footprint of every voyage to produce the total weight of CO2 emitted over the period of two years and three months.


5 facts about the ethanol trade

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