A Report from the Economic Research Service United States Department www.ers.usda.gov of Agriculture Brazil’s Ethanol Industry: BIO-02 Looking Forward June 2011 Constanza Valdes,
[email protected] Abstract Brazil is a major supplier of ethanol to the world market, the result of its natural advan- tage in producing sugarcane, productivity increases, and policies stimulating the supply of feedstock and of sugar-based ethanol. Global demand for ethanol and other biobased fuels is expected to grow in response to mandates for increased use of renewable fuels around the world. Brazil will be well positioned to fi ll the growing world demand for Contents ethanol. However, Brazil’s ability to supply the export market depends on its domestic ethanol use mandate, world sugar and oil prices, the currency exchange rate, and the Introduction ........................ 2 infrastructure to move ethanol to ports. Brazil is challenged with sustaining production growth in the ethanol sector so as to meet increasing domestic demand and, at the same Ethanol Feedstock, time, maintain its position as a major supplier of ethanol to world markets that are Industrial Processing, and Distribution ...............4 growing rapidly in response to their own ambitious targets for renewable energy use. The Contribution of Keywords: Brazil, ethanol supply chain, sugarcane, sugar, agricultural policies, Policies to the subsidized credit allocations, challenges for the ethanol industry, future perspectives, Development of Brazil’s domestic and global ethanol demand Ethanol Sector ............... 21 Challenges for the Acknowledgments Brazilian Ethanol The author thanks all reviewers for comments, feedback, and suggestions, including Industry .......................... 26 Mary Anne Normile, Molly Garber, Rip Landes, William Coyle, Erik Dohlman, Kim Future Perspectives for Hjort, and Fred Gale of USDA, Economic Research Service (ERS); Alan Hrapsky, Brazil’s Ethanol Michelle DaPra Wittenberger, and Sergio D.S.