Ethanol now a major global commodity
2008 has so far been a challenging year for ethanol. While the macroeconomic conditions remain strong, with the continuing high oil price there are many calls for a re-appraisal of current biofuel policies.
Even though many of the accusations against the production and use of biofuels have proven groundless the debate shows that the ethanol industry must constantly innovate to maintain its place in the market as well as in the political arena. Ethanol is regarded by the oil refining industry as a serious competitor for market share while mulit-national food companies fear that biofuels will drive up their raw material costs.
Both 2007 and 2008 have been years of runaway expansion, when many new plant openings have been announced, particularly in the United States and Brazil. However, investor confidence has now dimmed as rates of return have slowed. The US will continue to produce record amounts of ethanol in the coming years in order to achieve the targets set by the Renewable Fuels Standard. An increasing share of this will come from non-food feedstocks as R&D budgets for the production of cellulosic ethanol have been boosted. However, for the time being maize will continue to be the most important substrate with 23.7% of the domestic crop being used for fuel purposes against 20% in 2006/07.
Production also remains strong in Brazil, where the ethanol share of the bumper 2007/08 sugarcane harvest rose to 55% from 49%, on growing domestic demand for flex-fuel vehicles. Brazil is stepping up its sugar and ethanol programme, and as the world's leading ethanol exporter is investing over $13 billion in 89 new sugar and ethanol mills between now and 2011. This will ensure that Brazil will remain the most cost-effective producer for years to come and the country's dominating position on the world export market will remain unchallenged.
Over the next five years, the outlook remains bright despite the heated debate over the impact of biofuels on commodity markets. The International Energy Agency emphasised that biofuels are produced for a good reason. After all, they make up about half the new fuel coming to market in 2008 from outside the OPEC cartel. Although biofuels contributed only 1.3% to world oil supplies last year, this is more than OPEC member Indonesia supplied and biofuels' share is expected to become much greater, helping to mitigate rising oil prices amid tightening oil supply.
What is the impact of those biofuel barrels on oil prices? According to investment bank Merrill Lynch, oil and gasoline prices would be about 15% higher if biofuel producers weren't increasing their output.
These and many other topics will be discussed at F.O. Licht's World Ethanol 2008, including a 3-day conference, a 1-day Risk Seminar, 1-day Workshop and a number of special events. The conference will include the World Ethanol Leaders Summit and streamed sessions on World Energy and Commodity Markets, Infrastructure and Logistics, Economic Development, and Technology and Sustainability, which will be led by senior executives from leading companies.
In addition to the main conference sessions, there will be two in-depth workshops. The Ethanol Production Workshop, led by internationally renowned experts on alcohol production technology, and the Ethanol Risk Management Seminar, led by Informa Economics, the world leader in commodity risk management, analysis and consulting.
New for this year, we incorporate our first ever Interactive Polling Session, as well as Speed Networking – where delegates can meet their peers and strike up new relationships, in a fun and informal atmosphere.
For details of the limited number of free press places available at this event, please contact Paul Davies: paul.j.davies@informa.com or phone +44 (0)20 7017 7500
www.agra-net.com/worldethanol
