by Joanne Ivancic (Advanced Biofuels USA) What used to be known as “The New York Sugar Conference” has become “The ISO and Datagro Sugar & Ethanol Conference” with a record-setting number of attendees (350 from 25 countries) demonstrating the growing interest in the dual subjects by sugar growers/ethanol producers, investment and trading representatives and media.
ISO Datagro New York Sugar & Ethanol Conference in the Starlight Room of the Waldorf Astoria, famous for performances by Ella Fitzgerals, Dean Martin …
With nary a word dedicated to agriculture, agronomy or feedstock research, two other items received repeated attention: Logistics and Governments’ Policies.
Logistics. Speakers repeatedly bought up logistics as a key to development of ethanol production by the sugar industry. Certainly, Jacques Gillaux of Louis Dreyfus Commodities, Bas van Goor of RCMA Sugar and Clovis Junqueira Franco Neto of ECOM-EISA described important basic logistics related to moving sugar around. In addition to higher costs of bringing sugar to port, longer average vessel waiting times for sugar and other commodities; as well as shipping’s transition from large breakbulk vessels to use of containers, some sugar producers are vertically integrating to include ownership of port facilities to assure priority for their product.
However, particularly interesting with regard to the ethanol part of the picture, were comments by Dr. Plinio Nastari, Datagro’s president, who emphasized that the development of cellulosic or next generation ethanol would benefit from the logistics of sugar mills because the bagasse is already located at the refinery. He compared this to the disadvantage of transporting purpose grown energy crops, even corn cobs and stover, from the harvest site to a biorefinery. With bagasse already at the biorefinery they realize considerable savings related to the cost of transportation.
Although much of the sugar industry, as represented at this conference, has integrated first generation ethanol production into its business plans, investment plans and assessment of profits pictures, it steps more gingerly around projecting next generation ethanol or other advanced biofuels or bioproducts into business and investment plans or into projected profit pictures.
Dr. Elizabeth Farina, UNICA’s president addresses the ISO Datagro conference.
Logistics concerns merge here with government policy considerations.
A reason for focus on first generation ethanol in Brazil, the #1 sugar production country in the world, may stem from the need to use bagasse for power generation especially in light of the high power costs and problems with power supply due to drought affecting hydropower generation.
In Brazil, sugar producers can see that current world surplus of sugar can be addressed by increasing first generation ethanol production in Brazil to fill growing domestic markets (due to government tax policies that are increasing the price of gasoline at the pump). They also benefit from co-generation of power using bagasse for the additional power needed for production and distillation of ethanol. Thus, they didn’t give much attention to using bagasse for next generation ethanol production or conversion of bagasse to constituent sugars for use as building blocks for advanced biofuels or biochemicals and bioproducts.
Paulo Roberto de Souza, Copersucar’s CEO, discusses the importance of logistics and their US company, Eco-Energy, Inc., of Tennessee.
With regard to US policies, starting with Dr. Elizabeth Farina, president of UNICA (pictured), the Brazilian contingent seemed generally optimistic about the ability of the US Renewable Fuel Standard (RFS2) to withstand attempts to repeal or revise it, and about the consequent continued markets for sugar cane ethanol to continue to benefit from its status as an advanced biofuel in the RFS2.
There was not too much concern voiced about the ability of the US to transition to E15 or higher ethanol blends until the appearance of the panel of Chad Martin, CEO of Eco-Energy based in Tennessee, and David Hallberg, CEO of Prim BioSolutions who brings decades of experience with the ways of Washington, DC, from working on Capitol Hill to serving as president of the Renewable Fuels Association.
Previously, Fabio Venturelli, CEO of Sao Martinho, told a story that reflected the perspective of Brazilians who are accustomed to using even higher ethanol blends in their flex fuel vehicles without any problems. It seems unimaginable to them that the US will not use at least E15 when vehicles, as demonstrated in Brazil, should have no problems with its use. UNICA’s Leticia Phillips’ initially opined that it should not take much to achieve the transition to E15. On reflection, she agreed that such optimism probably grows from Brazilians having lived with even greater ethanol/gasoline blends as a normal part of life with no adverse consequences. Thus, they expect that the rest of the world, particularly the US, should have no problem making such a transition.
Similarly, those of us in the US who have lived with about 10% of our gasoline market supplied by an E10 blend with minimal complaints (relative to the number of vehicles using E10 daily; and most of those due to use in small engines (lawn mowers, marine engines, chain saws, etc.)) may find the controversies in other parts of the world over blends as low as 2% or 5% incomprehensible.
For someone steeped in the ferocious anti-ethanol, and anti-biofuels sentiments expressed in the US from the general public and by elected officials and legislators (see many articles linked on this web site), this optimistic attitude toward increasing ethanol blends in the US to achieve RFS2 goals seems a bit naïve in the short term. If it persists, the sugar/ethanol industry will miss opportunities to better assure a true market-based/non-mandate-based market for ethanol.
An example of this was the general unfamiliarity with EPA’s proposed Tier 3 regulations that would enable auto manufacturers to use E10 or E30 certification fuels for Clean Air Act air pollution and mileage testing. Until Hallberg focused on them, there was little appreciation for the ability of these changes to enable development of greater demand for ethanol; and, in turn, enabling achievement of RFS2 goals for cellulosic and advanced ethanol.
Hallberg did his best to communicate the vital importance of these regulatory updates not only to enabling compliance with RFS2, but also to control air pollution from the aromatics in petroleum gasoline and to alleviate health problems associated with them.
Other presenters repeatedly mentioned government mandates around the world for increasing blends of ethanol and other biofuels. Tempered by some skepticism about the likelihood of complete enforcement of those mandates, the mandates do indicate recognition of intentions to consider transitions to renewable transportation fuels. It seems that such transition will only occur if other economic drivers support these changes.
For example, the demand for sugar as food is expected to increase particularly in China and other parts of Asia as the cultures adopt more “Western” practices and increase the use of sugar in processed food, “fast food”, etc. This is projected to keep sugar prices for food use high, perhaps higher than producers of fuel or biochemicals are willing to pay. Much was discussed about these drivers of sugar prices and the elasticity of the markets.
On the other hand, as sugar production for food increases to meet anticipated growing demand around the world, production of bagasse and sugar beet pulp residues will also grow and, except in Brazil with its specific demand for use of bagasse for power generation, these resources may become available in greater quantities for conversion to advanced biofuels and other bioproducts.
The sugar industry has embraced ethanol production as an essential element of its business with optimism about the ability to replace petroleum fuel products, to provide feedstock for power generation, and to provide sugar for expanding world markets.
Thanks to DataGro for donating resources so that Advanced Biofuels USA was able to attend and to cover this conference. Photos by J. Ivancic