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increase biofuel production, it has not been able to keep pace with the rapid increase
in biofuel consumption (Jank et al. 2007). Therefore, if the USA maintains its current blending mandate, it might be sufficient to increase imports of ethanol gradually from the small CBI countries. However, if the mandate increases further, it
would be necessary to import larger quantities of ethanol from countries such as
Brazil with larger production capacities.
Elobeid and Tokgoz (2006) conducted a study simulating the removal of US
import tariffs on ethanol. This study estimated that removing the tariff would
increase world’s ethanol prices by 24% and sugar prices by 1.8%, and it would
decrease maize prices by 1.5%. In the USA, ethanol prices would fall by 14%, since
cheap imports from Brazil would displace imports from Caribbean countries, and
US consumption would increase by 4%. In Brazil, ethanol consumption would drop
by 3%, and ethanol exports would increase by 64%.
The USA has been a major importer of biofuels in the past, and imports could
potentially increase if the US consumption continues to outpace production, and the
blending mandate becomes more aggressive. However, this potential may be moderated by increasing the productivity of maize production and continued political pressure to maintain trade protection for domestic producers. Although the USA
also exports some biofuels, it seems unlikely that it could become a major consistent
supplier to many other countries, at least not without significantly diverting more of
its food crops to use for biofuel production.
14.5.3 Brazil
At the time of writing, Brazil was the world’s largest bioethanol consumer, as well as
one of the most efficient and low-cost producers. Brazil had neither production subsidies nor import tariffs on ethanol. Compared to corn-based ethanol produced by the
USA, Brazil’s sugarcane-based ethanol production had a much higher productivity,
and Brazil’s cheap labor was suitable for labor-intensive sugarcane production.
Brazil also had abundant water, which is essential for large-scale production.
With these advantages, Brazil has been the world’s most competitive producer
of bioethanol. Brazil produced 22,100 million liters of bioethanol in 2008.
According to the OECD-FAO Agricultural Outlook (2008), projected bioethanol
production in 2017 will increase 83.3% from 2008 to a total of 40,500 million
liters. Overall, Brazil is the sole country with the ability to potentially export a
large amount of bioethanol in 2017 according to projections by OECD-FAO and
FAPRI (2010).
Nevertheless, there are limits to Brazil’s ability to export biofuels to the world.
On one hand, from 2008/2010 to 2020, Brazil’s production of ethanol is expected to
rise from 26 to 50 billion liters. On the other hand, much of the projected increase
in production is expected to be consumed domestically, as the replacement of gasoline increases from 47% to 75%. So only about 9.6 billion liters would be exported
in 2020, although Brazil still would be the world’s largest exporter by far. This
M. Elder and S. Hayashi
increase biofuel production, it has not been able to keep pace with the rapid increase
in biofuel consumption (Jank et al. 2007). Therefore, if the USA maintains its current blending mandate, it might be sufficient to increase imports of ethanol gradually from the small CBI countries. However, if the mandate increases further, it
would be necessary to import larger quantities of ethanol from countries such as
Brazil with larger production capacities.
Elobeid and Tokgoz (2006) conducted a study simulating the removal of US
import tariffs on ethanol. This study estimated that removing the tariff would
increase world’s ethanol prices by 24% and sugar prices by 1.8%, and it would
decrease maize prices by 1.5%. In the USA, ethanol prices would fall by 14%, since
cheap imports from Brazil would displace imports from Caribbean countries, and
US consumption would increase by 4%. In Brazil, ethanol consumption would drop
by 3%, and ethanol exports would increase by 64%.
The USA has been a major importer of biofuels in the past, and imports could
potentially increase if the US consumption continues to outpace production, and the
blending mandate becomes more aggressive. However, this potential may be moderated by increasing the productivity of maize production and continued political pressure to maintain trade protection for domestic producers. Although the USA
also exports some biofuels, it seems unlikely that it could become a major consistent
supplier to many other countries, at least not without significantly diverting more of
its food crops to use for biofuel production.
14.5.3 Brazil
At the time of writing, Brazil was the world’s largest bioethanol consumer, as well as
one of the most efficient and low-cost producers. Brazil had neither production subsidies nor import tariffs on ethanol. Compared to corn-based ethanol produced by the
USA, Brazil’s sugarcane-based ethanol production had a much higher productivity,
and Brazil’s cheap labor was suitable for labor-intensive sugarcane production.
Brazil also had abundant water, which is essential for large-scale production.
With these advantages, Brazil has been the world’s most competitive producer
of bioethanol. Brazil produced 22,100 million liters of bioethanol in 2008.
According to the OECD-FAO Agricultural Outlook (2008), projected bioethanol
production in 2017 will increase 83.3% from 2008 to a total of 40,500 million
liters. Overall, Brazil is the sole country with the ability to potentially export a
large amount of bioethanol in 2017 according to projections by OECD-FAO and
FAPRI (2010).
Nevertheless, there are limits to Brazil’s ability to export biofuels to the world.
On one hand, from 2008/2010 to 2020, Brazil’s production of ethanol is expected to
rise from 26 to 50 billion liters. On the other hand, much of the projected increase
in production is expected to be consumed domestically, as the replacement of gasoline increases from 47% to 75%. So only about 9.6 billion liters would be exported
in 2020, although Brazil still would be the world’s largest exporter by far. This
M. Elder and S. Hayashi