Ethanol economies of Cane

Achieving sustainability in agriculture requires taking into account many different

factors: global climate, pollution, better use of industrial water, options regarding the

use of fertilizers, pesticides, and herbicides, and also economic sustainability in terms of

costs, competitiveness, and the number and quality of jobs created. The sugarcane

industry is a good example of the integration of such concerns. It also illustrates what

can be attained when people in developing countries receive the training they need to

develop their own technologies.

Bioethanol has taken precedence as Prime Biofuel after lot of controversy erupted on

international food shortages and spiraling food prices.

In spite of all the controversy Shrouding Biofuels, there has been universal acceptance

& understanding that we need to continually look at alternate sources of fuels and

feedstock's which are non food and this has seen visible interest for Sugarcane based

Bioethanol to wheat, Maize and other food crops.

In July 2008 alone, big investments in sugarcane/ethanol production were announced

across the globe in sugar producing countries in the order of over 500 million dollars.

The preceding months saw planned investment in the billions of dollars in the sector.

The International Energy Agency sees world Biofuels production rising from 1.35 million

barrels a day in 2008 to 1.95 million barrels a day in 2013 – only five years away- and it

is a safe bet that most of this increase will come from sugarcane ethanol. Dow Jones

notes the sector seems impervious to the liquidity crunch with new investment being

announced in Brazil despite high levels of existing debt.

Pressure is also mounting on the developed countries to free up current import

restrictions on southern hemisphere ethanol. One estimate is that if Brazilian ethanol

was to be freely imported into the US, the price of gasoline could drop by as much as 5

cents a gallon. These are compelling arguments, and General Motors is e.g. reportedly

exploring the possibility of opening chains of ethanol stations across the US to deliver

non-corn produced ethanol.

The International Energy Agency (IEA) plays the role of energy policy advisor to 27

member countries on issues related to providing "reliable, affordable and clean energy

for their citizens". The IEA website posted a recent statement on the agency's views on

the impacts of Biofuels on food/energy security, economic development and reduction

of greenhouse gases, as well as the importance of sustainable Biofuels production.

Among the highlights of the statement are:

(1) Biofuels production using "first generation feedstocks" (such as grains for ethanol

and oil seeds for biodiesel) may compete with food, feed and fiber production, although

"currently less than 2% of global agricultural cropland is used for Biofuels production".

(2) Biofuels produced from "second generation feedstocks" (lignocellulosic biomass,

such as woody biomass and vegetative grasses) have "considerable promise for

eventually providing more sustainable types of Biofuels; however, support for research

and development is important in order to lower production cost.

(3) Ethanol production from sugarcane produced in tropical or subtropical countries like

Brazil, Southern Africa, and India is a good example of properly managed production of

sustainable Biofuels ("excellent characteristics in terms of economics, carbon dioxide

reduction and low land use requirements").

(4) Biofuels are becoming increasingly important in meeting the global demand for

transport fuel; in 2008, an estimated 55% of the growth in non-OPEC oil supply can be

attribute to Biofuels.

Sugarcane is a tropical plant and does well under tropical conditions in the world.

"Sugarcane is a clean crop with high varietal resistance, which requires very little in the

way of treatments. It is anti-erosive and thus helps preserve biodiversity in tropical and

subtropical zones".

The structure, water use, fertilizer intake, sucrose content, and the very nature of sugar

production in sugarcane are likely to undergo major changes with the modern tools of

biotechnology and genetic modification. Field trials of GM sugarcane crops for these

traits are being undertaken in Brazil and Australia.

Cane Technology Center (CTC), a research organization based in the state of Sao Paulo,

Brazil is conducting field trials to test three varieties of genetically modified cane.

According to CTC, these GM plants have been modified to exhibit sucrose levels 15%

higher than those of ordinary sugarcane - for now, under laboratory conditions.

However, if field trials are successful, the company may bring these plants to the market

by the end of the decade. Scientists and engineers think that the ethanol yield of

sugarcane can be doubled from 6000 liter/ha to more than 12,000 liter/ha within the

next 15 years.

Other biotech Companies in Brazil also are interested in the potentially large market of

GM sugarcanes and they are awaiting approval from the Brazilian authorities to conduct

field trials with several sugarcane varieties. University of Queensland, Australia, has

applied to the Gene Technology regulator of the Australian government for a limited

and controlled release of GM sugarcane.

The Bureau of Sugar Experiment Stations Ltd is seeking to introduce mainly four

modified traits: shoot architecture (shoot number, stalk size, and height), water use

efficiency, nitrogen use efficiency and marker gene expression (antibiotic resistance and

reporter genes).

The proposed trial will take place in 15 sites in Queensland between September 2008

and December 2014, and will involve experiments to assess the agronomic properties of

the GM sugarcane under field conditions and to analyse sugar production and quality.

Promising lines would be selected for propagation for possible future commercial

development, subject to further approvals.

Results of the trial will be the basis for future commercial developments and for the

possibility of using the transgenic lines in future breeding programmes. The GM

sugarcane in this trial will not be consumed by humans nor by livestock. Currently, a

comprehensive Risk Assessment and Risk Management Plans are being prepared, which

will be released for public comment soon.

Sugarcane is hard to grow, and it takes 10 to 15 years to produce a new variety by

conventional selection. Yet sugarcane is sensitive to abiotic stresses such as frost or

aluminum toxicity. Approaches such as transgenesis and marker-assisted selection may

thus prove essential.

Five years ago, a scientific association in the state of Sao Paulo initiated a major

genomics programme. Instead of building a big new facility employing hundreds of

people, it established ONSA, a network of 65 labs, five bioinformatics centers, and 80

data mining groups dedicated to genome sequencing and analysis. This network was the

first to sequence the genome of a plant pathogen, Xylella fastidiosa, which affects

almost 30% of the 200 million orange trees in Brazil. Since then it has turned to other

genomes of interest to Brazilian farmers – other pathogens but also sugarcane and

eucalyptus. It has even made a contribution to human cancer EST sequencing.

By sequencing over 240,000 sugar cane expressed sequence tags (EST) a database has

been developed containing a wealth of genetic information related to plant resistance

and/or tolerance to biotic stresses (viruses, bacteria, fungi, and a multitude of

herbivores) and abiotic stresses (such as drought, cold, and aluminum toxicity). This

information will help scientists to develop improved sugar cane varieties and therefore

increase the use of this crop for sustainable energy production.

This work is being done in Brazil by Brazilian researchers trained abroad and in Brazil. It

has attracted the interest of investors willing to supply money for the creation of

biotechnology start-ups. This illustrates once again that the training of scientists and

engineers is key to helping developing countries help themselves.

How does cane accumulate sucrose? Put simply, sugarcane forms and then stores

sucrose via a four-step process:

1. CO2 is absorbed by the plant leaves.

2. Following a series of chemical reactions, sucrose is formed in the leaves.

3. This newly formed energy is transported via the plant's vascular system.

4. Sucrose is then stored in the cells that surround the vascular system (making up the

cane stem).

"It appears that a number of factors influence how much sucrose is formed during

accumulation and this is largely determined by the plant's individual DNA" .

"We believe that some plants have more efficient enzymes that synthesise sucrose; in

other plants the genes that encode the sugar 'transporters' seem to be regulated

differently to ensure storage of higher quantities of sucrose.

Worldwide sugarcane occupies an area of 20.42 million ha with a total production of

1333 million metric tons (FAO, 2003). Sugarcane area and productivity differ widely

from country to country (Table 1). Brazil has the highest area (5.343 million ha), while

Australia has the highest productivity (85.1 tons/ha). Of 121 sugarcane producing

countries, fifteen countries (Brazil, India, China, Thailand, Pakistan, Mexico, Cuba,

Columbia, Australia, USA, Philippines, South Africa, Argentina, Myanmar, Bangladesh)

86% of area and 87.1% of production (Table 1). Of the total white crystal sugar

production, approximately 70% comes from sugarcane and 30% from sugar beet.

Table 1. Sugarcane In The world: Area, Production And Productivity

Country Area

(million ha)

Production (million tons) Productivity

(Tons/ha)

Brazil 5.343 386.2 72.3

India 4.608 289.6 62.8

China 1.328 92.3 65.5

Thailand 0.970 64.4 66.4

Pakistan 1.086 52.0 47.9

Mexico 0.639 45.1 70.6

Colombia 0.435 36.6 84.1

Australia 0.423 36.0 85.1

USA 0.404 31.3 77.5

Philippines 0.385 25.8 67.1

Indonesia 0.350 25.6 73.1

Cuba 0.654 22.9 35.0

South Africa 0.325 20.6 63.4

Argentina 0.295 19.2 65.2

Myanmar 0.165 7.5 45.4

Bangladesh 0.166 6.8 41.2

WORLD 20.42 1333.2 65.2

Bioethanol when blended with Petrol acts as oxygenate to burn Hydrocarbons

completely reducing emissions, particulates and noxious gases.

Feedstock availability and Scale is critical for successful blending, Sugarcane has proven

to be the most successful feedstock.

With little controversy of Food Diversion to Fuel and Sugarcane Distillation moving

towards second generation, Technological advancements, Carbon, Energy and Water

foot print models being worked out we foresee Optimization deriving Enhanced Yields.

Recent New Developments in Agronomy, Harvesting, Crushing whole Cane, Improved

Distillation Practices using better Enzymes, catalysts have been Improving Capacities of

Ethanol Production.

Governmental Support & Incentives are very much essential to Mandate and

successfully implement Blending Targets.

Vietnam, Thailand, Indonesia, India, Pakistan Bangladesh, China are some of the Asian

countries that actively promote ethanol production from cane molasses for fuel

blending. Besides these, studies have revealed that Australia, Mauritius, South Africa are

also fairly attractive. Apart to Price of Ethanol Commodity, factors of Carbon Footprint

of Hydrocarbons, Logistic Implications of Transporting Hydrocarbons and its Distillates,

Particulate emissions from using Hydrocarbons either leaded or using MTBE oxygenate

which has shown impacts on Water bodies in leakages need to be seriously looked in to.

We have to adhere to Kyoto Protocol to reduce CHG Emissions.

Visible was effect of dependence on Hydrocarbons and its Impact on Economies which is

swift and Unpredictable, making life of Ordinary populace more miserable.

Renewable like Bioethanol minimize such Risks, apart to generating Rural Employment

and improving Rural Livelihoods manifold.They also reduce Emissions and enable a

platform to avail Clean Development Mechanism (CDM) in reducing Methanation, also

on Co2 reductions and also in generating CNG out of Distillation Sludge.

Sugarcane Crop is believed to be Sequestering Co2. New Cultivars and Methodologies

are being studied at Southern Cross University of AU on Sugarcane Sequestration.

With Targets’ of 5% and 10% blending mechanisms of most of Nations we could see

thousand of Crores of each nation Currencies being saved moving away from

Hydrocarbons or minimizing its usage.The other Economic benefit of Local Employment,

infrastructure Development, 3PLogistics, CDM all accrue to Millions/ Billions of USD.

With International Trade and Shipping becoming dearer each day Self dependence for

Energy Needs is a must. Energy Needs of each Nation keeps enhancing and to cater to

them each nation should have its own Energy/ Biofuel Policy in Place. Other form Energy

in this Sector is Power from Cogen, i.e. burning Bagasse the biomass along with Coal in a

Boiler to cater to Industry's usage and sale of excess to Grid.

Biomass is becoming precious alike Metals each year with prices spiraling and Sugarcane

with almost double Cellulose content Compared to other Crops and also with Whole

Cane Crushing including Trash and Biotechnology modifications in cane would see better

yields of Bagasse per Ton of Cane Crushed.

Bagasse has apart to Cogen is seeing utilization in 2nd Generation Distillation of C5

where Lignocelluloses material is broken and converted to Sugars.Bagasse is also being

used to produce Bioplastics which Compost and Degrade below 100 days and a possible

CDM Template.

Sugarcane has seen an Unlimited Potential and to encourage farmers Derive advantage

they need to be taught to better existent practices and move towards automating

Agronomy, harvesting, Mapping, Optimizing use of water, fertilser and other Crop

management techniques.

Key to Success of Future energy needs is to achieve energy without conflict of Interests

for water, land, food and such Initiatives to develop guidelines have been initiated at

BSI/RSB/RSPO.

The Biofuels industry in the APEC region consists of two distinct sectors, ethanol and

biodiesel. Fuel ethanol production within the region in 2007 was estimated at

approximately 27,600 million liters, mainly produced in the United States; China;

Canada; Australia; and Thailand.

Biofuels in the APEC region are produced from a variety of first-generation feedstock

using well-established conversion technologies. For ethanol production, these include:

starches from grains (cereals, feed, and grains), tubers (cassava and sweet potatoes),

sugars from crops (sugar beets, sugarcane, and sweet sorghum), and food-processing

byproducts (molasses, cheese whey, and beverage waste). Second-generation

feedstocks for ethanol production include lignocellulosic material, such as crop and

forest residues.

Economies with large-scale agriculture and forestry operations such as Canada; the

United States; and China have set up demonstration projects using lignocellulosic

biomass for ethanol production

Biofuels production in Vietnam is in its very early stage of development. Although Viet

Nam has been producing ethyl alcohol for many years (76 million liters in 2005), it has

been consumed primarily by the alcoholic beverage and pharmaceutical industries. Just

recently, in November 2007, the government approved the production and use of

Biofuels as it seeks to diversify its energy portfolio. Its target is 500 million liters of fuel

ethanol and 50 million liters of biodiesel by 2020. The government plans to create

favorable conditions for the development of Biofuels and promote investments,

including tax incentives and low-interest loans. The priority for Biofuels R&D in Viet Nam

is increasing crop productivity and development of advanced conversion technologies.

Viet Nam is rich in biomass resources and it has great potential for Biofuels production.

The existing ethyl alcohol industry is already using cane molasses and starches as

feedstock. Estimates show that if Viet Nam uses all cane molasses and 10% of cassava

and corn production, it could produce about 320 million liters of fuel ethanol. Sugarcane

production has been consistent during the past six years, about 15 million tones

annually; while cassava production has grown rapidly from 2 million tones in 2000 to

about 8 million in 2006. Viet Nam is also rich in cellulosic biomass, such as agricultural

residues (rice husk, straw, baggage, and cane leaf) at 45.6 million tones, and woody

residues at 1.6 million tones (Tran Dinh Man 2007). Dedicated energy crops, particularly

elephant grass, are also seen as an opportunity. Pilot elephant grass plantations have

been set up in Dongthap province (67 hectare - ha), BacKan (100 ha), and TuyenQuang

(200 ha). Viet Nam has also expressed interest in production of ethanol from seaweed.

Two fuel ethanol plants are expected to come online in Viet Nam during 2008-2009:

Viet Nam's Bien Hoa Sugar Company and Singapore's Fair Energy Asia Ltd. have signed a

memorandum of understanding for the construction of an ethanol plant capable of

producing 63 million liters a year. The plant will be built in an industrial zone in Ninh

Dien village, Chau Thanh district, in the southwestern province of Tay Ninh, and it will

use sugarcane molasses (Biopact 2007).

Petrosetco, a subsidiary of state-run oil monopoly Petrovietnam, has teamed up with

Japan's Itochu Corp. to build a biorefinery in Ho Chi Minh City's Hiep Phuoc Industrial

Park. The facility will use cassava as a feedstock, and it is expected to produce 100

million liters of ethanol annually. The company plans to build three additional ethanol

plants using cassava, sugarcane, and rice as feedstock.

Four subsidiaries of the Vietnam National Oil and Gas Group (PetroVietnam) have

decided to establish a company to produce and distribute biofuels.

Located in Binh Son district of central Quang Ngai province, the PetroVietnam Biofuel

Joint Stock Company has a charter capital of 45 billion VND (roughly 2.7 million USD).

The PetroVietnam General Services Joint Stock Corporation (Petrosetco) will contribute

the largest part of the capital at 51 percent, while the PetroVietnam Oil Corporation will

hold 29 percent; the Binh Son Refining and Petrochemical Co. Ltd., 15 percent; and the

PetroVietnam Finance Joint Stock Corporation (PVFC), 5 percent.

The company will produce ethanol from cassava, which is used to mix with gasoline to

help the country reduce dependence on fossil fuels and mitigate environmental

pollution.

Thailand has set up serious efforts to reduce oil imports and carbon emissions by

replacing at least 20% of its vehicle fuel consumption with renewable energy sources

such as ethanol and biodiesel within the next five years. Biofuels are also seen by the

government as an opportunity for rural development and trade.

Production

Ethanol production in Thailand was 192.8 million liters in 2007. There are nine operating

plants with a total capacity of 435 million liters per year, and nine plants are under

construction (440 ML per year).

Feedstock

Almost 90% of ethanol produced in Thailand is from cane molasses. The remaining 10%

is from cassava. The proportion is expected to shift over time in favor of cassava.

Molasses supplies are expected to increase to 3 million tones, half of which will be used

in food industries (mostly for liquor production), and the balance will be for exports and

fuel ethanol production (USDA 2007). Cassava production was 22.5 million tones in

2006, and it is expected to grow as the planned cassava-based ethanol production

plants start operating.

Economics

Ethanol US$/liter

From cassava0.54

From cane molasses0.46

Source: DEDE, 2007; 34.5 Baht/US $

Biofuels in Use

Thailand currently sells gasohol (E10), which accounts for about 20% of total petroleum

sales, through its service stations. The state-owned companies PTT and Bangchak

started supplying E20 in January 2008. Bangchak plans to introduce E85 at its stations in

the near future.

B2 is available nationwide; PTT and Bangchak started selling B5 in 2007.

Infrastructure and Vehicles

There were 3,822 gasohol service stations in Thailand as of December 2007. Currently,

40 stations in Greater Bangkok sell E20 (February 2008). B2 is available at all stations

throughout Thailand; 976 stations offer B5 in Greater Bangkok.E20 compatible vehicles

are available in Thailand from Ford, Toyota, Honda, and Nissan.

Trade

Most ethanol producers plan to supply ethanol domestically (particularly those who do

not have sugar mill businesses), due to concerns regarding sourcing of raw materials

(USDA 2007). However, fuel ethanol export is expected to grow as the production

increases in Thailand. About 14.4 million liters of fuel ethanol was exported in 2007 to

Singapore, the Philippines, Chinese Taipei, Australia, and Europe.

Policy

Policymakers in Thailand have taken measures to increase investments in the

production and use of ethanol, including a Board of Investment (BOI) privilege for a fuel

ethanol plant, a waiver on the excise tax for the ethanol blended in gasohol, a low rate

of oil fund levy, and expansion of cassava production. Also, the government set gasohol

prices around 2.0 - 2.50 baht/liters cheaper than regular and premium gasoline. The

government requires all its fleets to be fueled with gasohol.

Thailand's Cabinet approved an excise tax reduction for cars using gasoline containing at

least 20% of fuel ethanol, proposed by the Excise Department and effective January 1,

2008. The excise tax cut is expected to lower the price of cars by at least THB10, 000

($1=THB0.03204). A car with a cylinder capacity of no more than 2,000 cm³ and an

engine performance of no more than 220 hp will be taxed at 25%, down from a previous

30%. Cars with a cylinder capacity of no more than 2,500 cm³ and no more than 220 hp

will be charged at 30%, down from 35%. Finally, cars with a cylinder capacity between

2,500 and 3,000 cm³ and no more than 220 hp will be taxed at 35%, down from a

previous 40%. The rates apply to passenger cars and vans with fewer than 10 seats. The

Excise Department estimates that about 30,000 new vehicles powered by E20 or higher

will be in the market in 2008 (DEDE 2008).

The Philippines embraced the development of Biofuels a few years ago with hopes of

achieving future energy security, augmenting farmers' income, and generating rural

employment. The member economy also hopes to position itself as a leading Biofuels

producer in the region. The main challenge facing the industry is the availability of

feedstock and the processing facilities to meet the demand of the government's

National Biofuels Program.

Production

Production of fuel ethanol will commence in late 2008, in time for its mandated use in

2009. Several ethanol plants are under construction, but their scheduled completion,

inclusive of their corresponding feedstock supply-base, is uncertain (USDA 2007).

Feedstock

In the Philippines, sugarcane is considered a primary source for ethanol production. The

government sees it as the most reliable feedstock due to its well-established farming

technologies and the highest yield per hectare compared to other feedstock (corn,

cassava, and sweet sorghum). Sugarcane production in the Philippines is expected to

increase to meet the requirements of the Biofuels Act. At present, the sugar industry

can only supply 79% of the needs of the 5% ethanol blend, which is between 200 and

400 million liters per year. The Philippines, therefore, needs to expand its current

167,300 sugarcane farms covering a total area of 344,700 hectares to meet the ethanol

demand. The Sugar Regulatory Administration (SRA) already identified 237,748 hectares

of new sugar fields, mostly in Mindanao, that can be tapped to produce fuel ethanol

(Bulatlat 2007). Additional ethanol feedstocks considered by the government are sweet

sorghum and cassava.

Biofuels in Use

B1 (1% biodiesel and 99% petroleum diesel) and E10 (10% ethanol and 90% gasoline)

are available nationwide.

Infrastructure and Vehicles

B1 is available through all service stations in the Philippines, and it has been successfully

used by thousands of vehicles in the Philippines since 2002. E10 is currently offered by

all Sea oil stations nationwide. It is expected that in 2008 more gas stations will be

offering E10 (Biofuels Philippines 2007).

In 2007, Ford Philippines opened a plant that manufactures flexible fuel engines in Santa

Rosa, Laguna. These engines are designed to run on a mix of up to 20% ethanol.

Production output of the Ford facility reportedly is estimated at 105,000 FFV engines in

the next five years, with some units intended for export to South Africa and other

Association of Southeast Asian Nations (ASEAN) countries. The Ford plant's opening is

expected to enhance and accelerate the adoption of Biofuels in the economy (USDA

2007).

Trade

Chemrez Inc. has exported 500,000 liters of coconut-based biodiesel to Germany and to

Asian markets including China, Chinese Taipei, South Korea, and Malaysia. If the

mandated biodiesel blend increases to 2% in the next two years, as specified in the

Biofuels Act, biodiesel companies in the Philippines may concentrate on supplying the

domestic market and export only excess volumes.

Policy

The Philippine Biofuels Act, implemented in January 2007, establishes the following

requirements for ethanol and biodiesel:

Within two years from the affectivity of this Act, at least five percent (5%) Bioethanol

shall comprise the annual total volume of gasoline fuel actually sold and distributed by

each and every oil company in the member economy, subject to the requirement that

all Bioethanol blended gasoline shall contain a minimum of five percent (5%) Bioethanol

fuel by volume.

Within four years from the effectively of this Act, the National Biofuels Board (NBB)

created under this Act is empowered to determine the feasibility and thereafter

recommend to the Department of Energy (DOE) to mandate a minimum of ten percent

(10%) blend of Bioethanol by volume into all gasoline fuel distributed and sold by each

and every oil company in the member economy. In the event of supply shortage of

locally-produced Bioethanol during the four-year period, oil companies shall be allowed

to import Bioethanol but only to the extent of the shortage as may be determined by

the NBB.

Within three months from the effectively of this Act, a minimum of one percent (1%)

biodiesel by volume shall be blended into all diesel engine fuels sold in the member

economy; provided that the biodiesel blend conforms to the Philippine National

Standards (PNS) for biodiesel. Within two years from the affectivity of this Act, the NBB

created under this Act is empowered to determine the feasibility and thereafter

recommend to DOE to mandate a minimum of two percent (2%) blend of biodiesel by

volume which may be increased taking into account considerations including but not

limited to domestic supply and availability of locally-sourced biodiesel component

(Republic Act No. 9367).

Among the incentives designed to encourage the production and use of Biofuels are an

exemption of the ethanol/biodiesel portions of fuel blends and an exemption from

value-added taxes for raw materials (coconut, sugarcane, Jatropha, cassava, etc.). There

are also favorable loan policies available from banks for Biofuel investors and

producers.

Korea is interested in adding Biofuels to its energy matrix, driven primarily by the

desire to reduce air pollution and oil dependency. Biodiesel is the primary choice given

the fact that Korea consumes large amounts of diesel (twice the amount of gasoline)

and it has the option of producing feedstock domestically.

Production

There is no fuel ethanol production in Korea. Only a small amount of ethanol is

produced by Changhae Ethanol Co. Ltd as a test.

Biofuels in Use

B5 (5% biodiesel and 95% petroleum diesel) and B20 (20% biodiesel and 80% petroleum

diesel) are available nationwide.

Infrastructure and Vehicles

Korea has supplied B5 through all of its gas stations since July 2006. There are about 200

stations offering B20 operating for fleets only. Korea also is testing E3 (3% ethanol and

97% gasoline) and E5 (5% ethanol and 95% gasoline) stations.

Policy

The government of Korea supports the development of Biofuels and it aims to develop

energy policy that considers both economic growth and environmental protection.

The Ministry of the Environment (MOE) began testing biodiesel and biodiesel fuel

blends in early 2002. As a result of these emission tests, MOE recommended biodiesel

as a renewable fuel to the Ministry of Commerce, Industry and Energy (MOCIE). MOCIE

is responsible for setting standards for petroleum and petroleum substitutes, and MOE

is responsible for regulating air pollution. In late 2002, 73 gas stations in the Seoul

metropolitan area and Chonbuk Province were designated as demonstration stations

and began carrying B20. By January 2006, the number of stations testing B20 reached

200. In 2003, Korea began preparing official biodiesel standards, and the biodiesel

demonstration was extended to June 2006. The final standards, drafted in September

2004 by MOCIE, were adopted in January 2006 and are very similar to EN14214, the

European biodiesel standards (USDA 2007).

Korea plans to mandate nationwide B3 by 2012 and will extend the current tax

incentives on production of biodiesel to 2010.

Japanese fuel ethanol production is in an experimental stage, and the current

production level is 30,000 liters (April 2006). Figure 1 depicts the location of the existing

biorefinery. Sugarcane molasses in Okinawa, wheat and corn unsuitable for food in

Hokkaido, sorghum in Yamagata, and wood residues in Okayama and Osaka are the raw

materials used for ethanol production. To further promote domestic ethanol

production, the government hopes to use abandoned arable land (Koizumi and Ohga

2007). It also will rely on technological breakthroughs in lignocellulosic ethanol in the

near future, which would allow the use of waste material such as crop and wood

residues.

Current Biorefineries in Japan (Koizumi and Ohga 2007)

Economics

Ethanol US$/liter

From sugarcane molasses1.20

From wheat1.26

Biodiesel US$/liter

From rapeseed2.9

Source: Koizumi and Ohga 2007

Biofuels in Use

Japan began testing E3 (3% ethanol and 97% gasoline) and ETBE (ethyl tertiary butyl ether) in 2007.

Infrastructure and Vehicles

Japan started to offer E3 at two gasoline stations, one in Sakai City and the other in

Daito City, in October 2007. E3 is also offered in Osaka but is limited to about 100 cars

registered in advance with the local government. Japan is gradually increasing the

number of E3-supplying gas stations to sell the product to the general public in 2008.

There are about 50 stations in the Tokyo metropolitan area offering ETBE blended

gasoline. Their number is expected to reach 100 during 2008, increasing to 1,000

nationwide in 2009 (Asia Times 2007).

Trade

Japan imports ethanol (mostly from Brazil and China) to supply its beverage, chemical,

and pharmaceutical industries. Brazil has the world's largest ethanol export potential,

and it is seen by Japan as its major source of the alternative fuel. Last year, the

governments of Japan and Brazil set up a study group on trading in the fuel. It is

expected that large amounts of fuel ethanol will be imported from Brazil in the coming

years (Ohmy News International 2007).

Policy

In 2002, the Biomass Nippon Strategy was published, which recognized the need to halt

global warming, encourage recycling in Japanese society, and foster alternative energy

industries. As a signer to the Kyoto Protocol, Japan has pledged to reduce CO2 emissions

by 60% from 1990 levels by the year 2010. To reach that goal, the Japanese government

plans to replace fossil fuels with 500,000 kiloliters of ethanol for the transportation

sector by 2010. In addition, the new National Energy Strategy, compiled in 2007 by the

Ministry of Economy, Trade, and Industry (METI), set a goal of reducing the nation's

reliance on oil for transport to 80% from the current 100% by 2030.

A preferential tax system for gasoline blended with ethanol is expected to be introduced

in 2008, when tariffs may also be lifted on imports of ETBE. Under the planned tax

system, Biofuels mixed with gasoline will be exempted from the gasoline tax —

currently 53.8 yen (US$0.48) per liter — in proportion to the amount of Biofuels

included. For example, E3 will be taxed 1.61 yen less per liter than pure gasoline. There

is no tax break for gasoline mixed with Biofuels, regardless of the ratios involved. The

government is also expected to make imports of ETBE tariff-free, removing the current

3.1% import tax (Asia Times 2007).

Indonesia sees Biofuels as one of the key instruments to accelerating economic growth,

alleviating poverty, and creating employment opportunities while also, under the Kyoto

Protocol, mitigating greenhouse gas emissions. The government had set up goals of

reaching 2% Biofuels in the energy mix by 2010 (5.29 million kiloliters), growing to 3% by

2015 (9.84 million kiloliters) and 5% by 2025 (22.26 million kiloliters). A major challenge

to achieving these goals is financing, and the government has provided a set of

incentives to attract domestic and foreign investors. The government prohibits

rainforest deforestation for Biofuels purposes.

In 1981 the Government formed the Asosiasi Gula Indonesia (AGI, or Indonesia Sugar

Association) comprised of all sugar mills, whether public or private. The AGI is a member

of the Indonesian Sugar Council (Dewan Gula Indonesia) and the KADIN (Indonesian

Chamber of Commerce and Industry). At present there are some 69 sugar mills in

Indonesia, 90 percent of which are publicly owned and organized into management

units called Perseroan Terbatas Perkebunan (PTPs). PTBs operate somewhat

independently, and many are involved in other businesses such as rubber or palm oil.

The share of mills in the private sector is likely to grow if the industry expands as the

Government envisages, and if measures are implemented to close antiquated publicly-

owned small capacity mills in Java.

At present the total capacity of mills is some 209 000 tonnes of cane per day (TCD).

Most mills are small by international standards: 49 have slicing capacity of less than 4

000 tonnes TCD, 12 are between 3 000 and 4 000 and eight are above 4 000 TCD. The

efficiency of the small factories is generally relatively low, particularly with regard to the

sugar extraction rate. Many countries achieve recovery of over 85 percent of sugar,

while Indonesia obtains about 83 percent or less. It is envisaged that by the year 2000,

four new sugar factories will be established outside Java with a total capacity of 34 000

to 36 000 TCD and planned sugar production of 445 000 tonnes. By 2005 further sugar

processing facilities are planned to bring total production to over 3 million tonnes.

Until 1997, most manufacturers with a demand for highly refined sugar rather than the

"standard" domestically produced sugar, depended on imports. The first refinery began

operation in mid-1997. It is located in west Java, and will have a capacity to produce 150

000 tonnes of refined sugar per year. The owners include BULOG (a statutory

organization), with a 10 percent share, and four other companies. Raw sugar is supplied

by Australia, Thailand, Fiji and South Africa.

Indonesia harvests about 400 000 ha of cane for centrifugal sugar, of which almost

three-quarters is on Java. Most of the remainder comes from Sumatra, Kalimantan and

Sulawesi. While a decade ago more than half of Java's cane was irrigated, this area has

declined reflecting a shift to the cultivation of more profitable crops. Nevertheless,

sugarcane cultivation in the major producing islands remains a highly significant

economic activity, and covers more than one-third of the total land area.

About 70 percent of the sugarcane areas are cultivated by farmers, mostly on small to

medium sized holdings. The remainder is cultivated on sugar factory plantations, both in

Java as well as on other islands where the dominant form of sugarcane cultivation is

plantation-style. Farmers are organized into groups (Kelompok Tani) responsible for at

least 20 ha of land, in order to coordinate the supply of cane to the mills. Sugarcane

areas have increased sharply since the mid-seventies at an average annual rate of

7.5 percent from 116 000 ha in 1976 to a peak of 423 000 ha in 1994. However, areas

have since declined to 400 000 ha in 1996.

Sugarcane yields have shown little growth, fluctuating during the nineties in the range

of 73 to 79 tonnes per ha, compared to an average level of 73 tonnes during the eighties

and 83 tonnes during the late-seventies. The average cane yields in the nineties were

thus about 8 percent lower than in the mid-seventies, though admittedly on a total

harvested area, which was four times larger. During the same period, average paddy

rice yields increased by 65 percent, and the area rose by 35 percent. Between the late-

seventies and the nineties, average sugar extraction rates also declined from about

10 percent to 7 percent.

Production of sugarcane rose from about 28 million tons in the early-nineties to a peak

of 33 million tons in 1994, but subsequently receded to 30 million tonnes in 1995 and

1996. Sugar production showed comparable changes, rising from 2.1 million tonnes in

1990 to nearly 2.5 million tons in 1993 and 1994 and declining to 2.1 million tonnes in

1996.

CONSUMPTION

The population of Indonesia is young and growing rapidly. Average growth since 1970

has been around 2.0 percent annually though rates have slowed in the latter part of this

period. Income has also risen rapidly. Since 1970, total real GDP grew by more than

7 percent annually, and on a per caput basis by 5 percent. These factors have led to a

strong growth in the use of many consumer products, including sugar and items

containing sugar, such as confectionery and beverages. About 90 percent of sugar is

used directly by households and 10 percent by industries. Imported refined sugar is

largely for industrial use.

Between 1976 and 1996, total sugar consumption increased from 1.8 million tonnes to

2.75 million tonnes, or by an average annual rate of 2.0 percent (Table 2). Per caput

consumption rose by about 0.6 percent annually from about 12.9 kg a year in 1976 to

14.4 kg in 1994. Provisional data for 1996 indicate a per caput consumption of 13.5 kg.

Production

Ethanol production in Indonesia was about 140 million liters in 2007, and the economy

plans to reach 3,770 million liters in 2010 (Figure 1). Biodiesel production in 2007 was

about 1,550 million liters and it is estimated to reach 5,570 million liters in 2010 (Figure

2).

Feedstock

Currently, fuel ethanol in Indonesia is produced from sugarcane molasses. Indonesia has

about 5.5 million acres dedicated to sugarcane production, and several companies want

to expand their plantations. Indonesia is among the top 10 sugarcane producers in the

world with about 30 million tones per year. Indonesia is also looking at cassava as

feedstock for ethanol. There were 52,195 ha planted with cassava in 2007 and it is

expected to increase to 782,000 ha. In Indonesia, 1 ton of molasses yields about 250

liters, and 1 ton of cassava yields about 155 liters of anhydrous ethanol (USDA).

Due to abundant biomass resources, such as palm fruit shells, rice husk, sugarcane

Bagasse, and other crop and forest residues, Indonesia is interested in cellulosic ethanol

production and actively supports R&D in the area.

Economics

Biodiesel US$/liter

From palm oil0.41

From jatropha0.48

Source: APEC Biofuels Task Force, 2007

Biofuels in use

B5 (Biosolar) and E5 (Biopertamax) are available through the state-owned oil firm

Pertamina. In January 2008, Pertamina reduced the percentage of Biofuels in its Biosolar

and Biopertamax products from 5% to 2.5% due to rising palm oil prices and lack of

incentives.

Infrastructure and Vehicles

B5 is offered at 228 gas stations in Jakarta, Surabaya, and Bali. Since December 2006, E5

is offered at 14 stations in Jakarta, 7 in Surabaya, 4 gas in Malang, and 11 in Bali. Bio-

premium (E5 using Premium blend) is offered at 1 station in Malang.

Trade

The main export market for Indonesian ethanol is Japan. The future of ethanol export is

uncertain, considering the growth of domestic fuel ethanol demand.

Policy

Some of the current Biofuels policies in Indonesia include:

Presidential Instruction No.1/2006 to 13 central and regional government institutions on

supply and utilization of Biofuels as alternative energy (January 2006)

Presidential Regulation No.5/2006 on National Energy Policy, calling for 5% Biofuels in

the energy mix by 2025 (January 2006)

Presidential Decree No.10/2006, established by the National Team for Biofuels

Development to coordinate industry expansion (July 2006)

While the Indonesian government had expressed strong interest in Biofuels

development, it has been moving slowly and cautiously in implementing supporting

policy. The government subsidizes biodiesel, bio-premium, and bio-pertamax at the

same level as fossil fuels, leaving Pertamina to cover the difference when biodiesel

production costs exceed fossil fuel costs. The government is considering providing

various incentives, including value-added tax (VAT) reductions for business players, and

excise duty cuts for Biofuels users. In 2007, the government announced an interest rate

subsidy of Rp 1 trillion for farmers growing Biofuels crops including Jatropha, oil palm,

cassava, and sugar cane.

Hong Kong has adopted many programs and measures focused on improving the fuel

quality and efficiency, such as liquefied petroleum gas (LPG) taxis and minibus

programs, installation of particulate trap and oxidation catalytic converters, and

introduction of ultra low-sulfur diesel. To relieve existing pollution, Biofuels and

especially biodiesel have also been considered in recent years.

Biodiesel feedstock available in Hong Kong is waste cooking oil and animal fats. About

10,000 liters of used cooking oil are produced every day in Hong Kong, which translates

roughly into 3.5 million liters of biodiesel per year. There is one existing biodiesel

production plant in Hong Kong, with a small output primarily for domestic consumption

(annual capacity of 4.3 million liters). ASB Biodiesel, a joint venture company, is building

a second plant near the Tseung Kwan O industrial area of Hong Kong. The plant will have

a capacity of 114 million liters per year and it will use waste products including used

cooking oil, waste animal fat and grease trap waste (restaurant sewage). The biodiesel

produced will be for domestic consumption and export to Europe.

Hong Kong-based companies have invested in ethanol production projects in other parts

of the world, such as Noble Group Ltd. in Brazil and Rapid Grow Investments in Fiji.

The government of Hong Kong encourages the use of biodiesel and plans to introduce a

duty-free policy on its use. The Environmental Protection Department is developing

specifications for biodiesel to ensure fuel quality, boost users' confidence, and help

control the impact on environment. The government will further propose a mandatory

labeling requirement for biodiesel blends above 5% to ensure their proper use in

vehicles and increase awareness of some possible corrosion problems associated with

higher blends.

Chinese Taipei is promoting the development and use of Biofuels to reduce carbon

dioxide (CO2) emissions and imports of fossil fuels. The government supports many

research projects focused on advanced Biofuels production technologies, such as

ethanol from cellulosic biomass and biodiesel from used cooking oil, which don't

compete with the food industry.

Production

Chinese Taipei is considering ethanol production from sugarcane, sweet sorghum,

molasses, and other biomass from agricultural wastes.

Economics

Ethanol US$/liter

From sugarcane0.62

Source: ITRI 2007

Biodiesel US$/liter

From used cooking oil1.08

From soybeans1.34

Source: ITRI 2007

Biofuels in Use

Sales of E3 (97% gasoline and 3% ethanol) started in 2006, and biodiesel is offered at

different blending levels from B1 to B20 (20% biodiesel).

Infrastructure and Vehicles

Nearly 300 service stations offer B1, and E3 is supplied by eight stations. Biodiesel is

used by city buses in Kaohsiung City and Chiayi County.

Trade

Small volumes of ethanol are imported annually from China, Indonesia, and Thailand for

use by the food industry.

Policy

The government plans to introduce an E3 mandate in 2011. It also plans to have B1

available at all gas stations nationwide by 2008 and B2 by 2010. Some policies include:

Exemptions from commodity tax and air pollution control fee

Incentives to encourage motorists to switch to ethanol gasoline

Subsidies provided for demonstration programs

China's economic growth in the 1990s resulted in a rapid increase of petroleum

consumption and led to serious air pollution problems. To deal with fuel shortage,

energy security, and air quality issues, the Chinese government began promoting

Biofuels in 2000. However, concerns about feeding the world's most populous nation

could limit the growth of China's Biofuels industry. China has long been concerned

about its food security; thus, the top priority for land use is growing crops for food.

Based on incomplete statistics, there have been 11.99 million tons sugar produced by

288 sugar factories in all, including 246 cane sugar factories and 42 beet sugar factories,

respectively, in China in 2006/2007 milling season, which was up 36% above the

products in last milling season and the peak in history. Cane sugar output was 10.75

million tons, increased 34.2% than 8. 08 million tons in last milling season, while beet

sugar output was 1.25 million tons, 54.8% increased than that in last milling season.

By the end of June 2007, totally 8.9 million tons sugar had been sold, 2.36 million tons

more than the previous year, the selling rate was 74.44%, nearly the same as the last

milling season. Among the 8.9 million tons, 7.74 million tons cane sugar were sold with

the selling rate of 72.04% (in last milling season it was 5.80million tons) and 1.19 million

tons beet sugar were sold with the selling rate of 95.12% (in last milling season it was

0.766 million tons).

Guangxi is the largest sugar producer in China and its sugar output was higher than in

Yunnan Province, the second largest sugar producer with 1.83 million tons products in

2006/2007 milling season. In Guangxi, there were 93 sugar factories, and 7.08 million

tons sugar were produced in 2006/2007 milling season, accounted for 66% of the total

sugar output in China. The sugar outputs of other provinces are as follows: Guangdong,

1,280,000 tons, Sinkiang, 708,200 tons, Hainan, 375,000 tons, Heilongjiang, 242,000

tons, Inner Mongolia, 200,000 tons, Hebai, 70,000 tons, Fujian, 58,000 tons,

Sichuan,52,9000 tons, Hunan, 30,000 tons, the outputs of the other provinces were

added up to 58,000 tons. Due to the sale of 5.28 million tons cane sugar at selling rate of

74.46%, 6.3 billion RMB Yuan revenue for the government and 15.36 billion RMB Yuan

real income for the sugarcane growers were obtained in Guangxi during 2006/2007

milling season.

Leaning from the statistic data of China Sugar Association, sugar production and

marketing have both reached the highest level in history ( it is expected to be over 12

million tons), and sugar quality has been the best among the recent years, too.

According to the inspection by China National Quality Inspection Center on 161 sugar

refineries in 12 provinces and autonomous regions, 82.7% enterprises are eligible, 0.9%

higher than last year.

China will approve more fuel ethanol plants using feedstocks other than grains, after

suspending approval of such projects for more than a year on concerns over food supply

and inflation.

The National Development and Reform Commission has endorsed proposed plans by

five provinces to build plants using sweet potatoes, sweet sorghum or cassava, it said on

its Web site (www.ndrc.gov.cn).

The announcement did not approve any specific plants, but invited the provinces of

Hubei, Jiangsu, Jiangxi and Hebei, as well as Chongqing, to finalize plans for such

projects and make a formal proposal.

Proposals would be in line with Beijing's policy encouraging the use of feedstocks other

than grains, as long as planting those crops does not take land away from grains.

Beijing is eager to reduce its dependence on expensive crude oil, but it is also

increasingly concerned that planting crops for fuel ethanol could limit China's ability to

grow enough grains to feed its people.

The relaxation comes as world oil prices CLc1 stay close to record high levels reached in

March. China, the world's second largest oil consumer, relies on imports for half of its

needs.

China's largest fuel ethanol producer, China Agri-Industries Holdings Ltd (0606.HK:

Quote, Profile, Research), said last month it planned to build a second plant using

cassava in Guangxi this year.

Guangxi plans to blend 10 percent fuel ethanol into gasoline used in all cars this month,

following the start-up of China Agri's first plant in December.

China Agri intends to build plants in Hebei and Hubei provinces, using sweet potatoes as

a feedstock, its managing director Yue Guojun told Reuters last month.

Production

China is the world's third-largest producer of ethanol, but most of it is consumed by the

pharmaceutical and beverage industries. In 2006, there were four operating ethanol

biorefinery (Figure 1) running at maximum capacity, about 1.02 million tones. Though

Beijing has stopped approving new fuel ethanol projects since December 2006, four

more plants in the provinces of Guangxi (110,000 tonnes), Hebei (300,000 tones),

Liaoning (300,000 tones), and Hubei (200,000 tones) were scheduled to be completed in

2007.

China National Cereals, Oils and Foodstuffs Corp. (COFCO) is investing 50 million Yuan

(U.S.$6.5 million) to build a cellulosic ethanol pilot plant. The plant in Zhaodong, in the

northeastern province of Heilongjiang, will have an annual capacity of 5,000 tones.

Another cellulosic ethanol pilot plant with a production capacity of 10,000 tones is being

planned in the Yucheng area of Shandong.

Feedstock

Nearly 80% of the fuel ethanol in China is made from corn. Three of the existing facilities

(Heilongjiang, Jilin, and Anhui) use the grain as feedstock. The biorefinery in Henan uses

wheat. Concerns about food supply and high prices led the industry to look at other,

non-grain feedstock, such as cassava, sweet sorghum, and sweet potato, viewed as

transitional feedstock in the long term. The crops could be grown on China's 116 million

hectares of marginal land unsuitable for producing grains.

Ultimately, China plans to transition to ethanol production from cellulosic biomass,

particularly crop residue, which is of sufficient supply. Estimates show that the member

economy generates approximately 1,500 million tones/year of agricultural and forest

residues, which is sufficient to produce 370 million tones of ethanol. Currently, there are

several pilot plants producing ethanol from lignocellulosic biomass via biochemical

conversion process.

Economics

Ethanol RMB/MT

From corn 5,000

From sweet sorghum 4,000

From cassava/sweet potato 4,500

Source: NDRC 2007

Source: NDRC 2007

Biofuels in Use

E10 is used in five provinces: Helongjiang, Jilin, Liaoning, Henan, and Anhui; and 27

cities: nine in Hubei, seven in Shandong, six in Hebei, and five in Jiangsu (Figure 1).

Gasohol consumption in 2005 accounted for nearly 20% of national gasoline

consumption.

According to a U.S. Department of Agriculture (USDA) report, biodiesel currently

produced in China is of low quality, and it is not suitable for fuel use. It has been used as

a solvent or as an additive to coal in thermal power plants or industrial cooking facilities

in rural areas.

Infrastructure and Vehicles

There are 75,000-85,000 refueling stations in China, with approximately 20,000 offering

E10.

Trade

Most exports of ethanol from China are undenatured (potable), particularly in Japan,

Korea, and Singapore where it is used for alcohol production. In 2006, China hit a record

volume of exports, about 500,000 tones. This was mostly due to higher demand in the

United States because of phasing out methyl tertiary-butyl ether (MTBE), which

increased the price of alcohol.

Official statistics on biodiesel trade are not available, but estimates show that total

exports were approximately 10,000 tones in 2006 (USDA). Some attempts were made to

import palm oil from Indonesia and Malaysia, but they have been suspended due to

increasing prices of this feedstock.

Policy

In 2001, the State Council launched a Fuel Ethanol Program, which led to the

establishment of the four ethanol plants and distribution of E10 in nine provinces.

Polices — such as free income tax, VAT refunding and fiscal subsidies — were made

available to ethanol producers. In 2006, each ton of ethanol received a 1,373 Yuan

subsidy. Beijing has committed 1.1 billion Yuan (U.S.$143 million) to help develop

vehicles that run on Biofuels. In comparison, policy measures for the biodiesel industry

are not developed. Technical standards, distribution channels, production techniques,

equipment, environmental evaluations, etc. are yet to be finalized.

Under the revised National Plan, fuel ethanol production is to increase to 3 million

tones/year by 2010 and to 10 million tones/year by 2020. Biodiesel is to grow to

300,000 tones/year in 2010 and 2 million tones/year in 2020. According to the plan, E10

sales are to expand in more provinces in 2010, and E20 and E85 possibly will be

introduced, as well as B5 or B10 in 2020.

The Chinese government's overall policy for Biofuels is to move this technology forward

in a way that it doesn't compete with arable land, grain is not used as feedstock, and it

doesn't destroy the environment. No new corn-based ethanol plant is to be approved. It

considers giving subsidies and tax breaks to demonstration projects: plants using non-

grain feedstock and plantations growing non-food crops.

Sugarcane in India:

Indian Sugar Industry has made a turnaround in last 5 years from being a seasonal and

Cyclic Industry to a Biorefinery model. Here Sugar, Distillation, Cogen and Biofertilizer

are produced optimizing their resources.

With CDM taking shape since 2004 some of these also have utilized opportunity of

Cogen by enhancing Boilers and generating additional Power to be sold to Grid and also

benefit CER / VER realization. Few of them have also realized CDM for Distillation

(Methanation). If UNFCCC provides benefit of CDM realization to Ethanol manufacturers

then there is additional benefit that accrues to existing.

Indian sugar industry operates in Zone area allocated to them; they are well networked

with farming community of that zone sharing on all areas of inputs from seeding, Crop

management, harvesting, and logistics and even in Loan disbursal from banks.

So for two crop years once planted farmer is relieved of sale and pricing of produce and

is attracted to this crop as long as it does not pinch his wallet. Harvesting Cost of

Sugarcane is of growing concern and its timeliness, as Sucrose content deteriorates if

not done at appropriate time. There has been marked improvement in farm equipment

too in this segment.Using water shoots and Tops as Fodder has been prevalent for

centuries.

Indian sugar industry’s success is also due to contribution from Sugar Breeding Institute

(Coimbatore), vasant Dada institute, Regional Bodies in Sugarcane research and others.

SBI is one of the two World repositories (the other being at Miami, Florida state, USA) of

sugarcane germplasm.

India is the world’s largest consumer of cheap liquor and is a major revenue source of

state Govt’s, with potable alcohol growing above 10% each year and its impact on Social

fabric catastrophic and not taken seriously; Energy & Chemical value addition has lot of

relevance that need to have support of all. There is another menace of Illicit Liquor from

Jaggery and if this curtailed will make more available cane for Crushing.India occupies

40% of Global sugar mkt. Of the total cane produced 12% to go in to seed production,

5% to chewing and Juice, 25-30% to Khandasari (jiggery).Only 60%would be used for

actual sugar production. Percapita consumption of sugar in India: 20kg and 5Kg Jaggery.

Plant/Ratoon ratio is usually 45/55 to 55/45, but almost after 3 decades it’s shifting to

30/70 and to overcome this additional 14-15 milling plantation is required for Sugar

alone. Moving towards Transgenetic sugar for alcohol manufacture also would enhance

yields. Most of Mills have gone for Semi automation of Milling and Honeywell, Rockwell,

OA, ABB, Siemens and several entered this Domain. As future is unfolding to smart grid

and Plug-in technologies this Industry would see more of development.

With CNG being produced of spent wash and this also being worthy template for CDM,

we would see rural landscape buzzing with Flex fuel vehicles and vibrant innovations.

Biofertilizer of spent wash is a must for all distillations and is still better to Incernation as

to totally burn residues we need high energy and Biofertilizer would enhance soil

fertility.

Today most Molasses trading Companies like UMC, SVG, Peter Cremer, and Toepfer

have no sellers at all and Domestically Present Indian Molasses Prices are above 7000

INR, so factories without distillation too are generating Good Revenues.

Bagasse is also being completely utilized for self Cogeneration and as future is moving to

whole cane crushing with Sugars induced in cane leaves no Trash would go waste or

burnt in field. Bioplastics is another area which is catching the attention of Industry and

Bagasse is the raw material with Sugar as binder and this also Generated CDM. Some

have been using Bagasse for paper and particle board manufacturing.

With Agronomy being the prime focus to bring better yields, Crop Sciences have also

taken Centre stage and companies like Syngenta, Monsanto, and DuPont and several

others conducting lot of research. Indian Companies like NFL, Nuziveedu Seeds, Ralli’s

have also seen Success.

Other area of focus in Indian Biofuel Industry is Enzyme manufacturers like Novozyme,

Genencor, Abmauri, Tate, Richcore lifesciences, Enzyme India etc.

Traditional Practices like Black Gold agriculture which enhances carbon content and Soil

health have again come back to centre stage. VAM fungus has also seen Success in

Sugarcane cultivation. Optimizing Fertilizer, water, Insecticides, Pesticides, Herbicides

and mapping Crop has also taken precedence. For Seed Treatment of Cane Renewable

resources like Solar Power for steam and Temperature are being utilized. Future

Cultivation should enable more ratoon years to bring down cost as well stop soil

erosion.

Manpower in Harvesting being Critical Semi and full harvesting is being studied and also

to optimize cost. Mahindra Tractors is working on Solutions around Tractor suiting Asian

needs.

In Sugar manufacturing saving steam, minimizing usage of Lime, HCL, Sulphur and also

moving towards refined Sugar has caught up attention of Industry. Using Fondant for

Crystallization is visible in all plants. Sugar the Commodity is moving from being a

sweetener to Fortification and Low GI Sugar bringing in value addition and take

cognizance of Health & Diet.

With Distillation rapidly moving towards Second generation and Stable prices for

Alcohol as Fuel and also Potable usage, Sugarcane’s 50% revenue stream would be from

Sugar and 50% from Alcohol and Cogen.

Alcohol requirement:

Alcohol based chemical Industries: 1,100 million Lts.

Potable Alcohol requirement: 1,000 million Lts.

@5% ethanol Blending : 600 million Lts.

@10% ethanol Blending : + 600 million Lts.

----------------------------

3,300 Million Lts.

----------------------------

India produces 1.3 billion Lts and requires almost 2 billion Lts if it has to cater 10%

blending. Petrol Consumed in 2006-07: 9,295,000MT.Only 0.64% of petrol is replaced

with Ethanol. Alcohol at 10% level requires another 10-15 million, so a possible acreage

growth of 25-30Million ton based on price rewarded to farmer.

Area Undersugarcne : 3,329,000 hectares

Production of Sugarcane (Yield) : 65 MT/Hectare

No of Factories in Operation : 500 & above

Average capacity of factory : 3500 Tone Per Day

Molasses Production : 6,500,000 MT

Molasses Percentage : 4.4%

Percapita Consumption of Sugar : 20 Kg

Percapita Consumption of Jaggery : 5Kg

Of the Total Cane Production :

12% will go in to Seed purpose and 5% goes to Chewing and Juice manufacturing.

25-30% will go in to Khandasari and Jaggery Production.

Only 60% is being used for Sugar production.

Brazil produces 311 million tones of sugarcane per year. This represents 25% of total

world production. The country has 324 sugarcane mills and 60,000 growers. Half of the

sugarcane produced is used to produce ethanol.

In 1975 the Brazilian government decided to implement an 'Ethanol as fuel' programme.

Step one was to increase sugarcane yields. Step two was to produce ethanol-petrol

blends for use as automobile fuel – today, petrol at the pump in Brazil must contain at

least 22% ethanol. Step three was to make vehicles that run on 100% ethanol.With

400,000 hectares of sugar cane planted in Central America, the region produces more

than 3.5m tonnes of sugar a year, according to figures from the Economic Commission

for Latin America and the Caribbean.

In Brazil, $14.6bn of investment is being ploughed into the industry in the next five

years in the bid to create a reliable supply chain that will enable the country to triple its

exports of biofuels in the next ten years.

Growing consumption in Japan, Europe and the US is set to make the commodity Brazil's

top export in less than a decade, overtaking soya by 2017. Last year, the industry was

worth $6bn to the Brazilian economy. The figure is set to quadruple by 2015.

In the first six months of the year, exports of the fuel were up 70.9%. A total of 1.5bn

litres were shipped to other countries in the first half of 2007, compared with 904m

litres in the same period last year.

The value of Brazilian ethanol exports jumped from $351m in the first half of 2006 to

$698m in the first half of this year.

More than one ethanol production plant a month is due to open between now and 2012

as the country ramps up production to around 36bn litres a year, from the current level

of around 17.5bn litres. Exports currently account for about 15% of total production,

with 80% used to fuel Brazilian flex-fuel vehicles capable of running on alcohol and

gasoline.

The US consumes 29% of the country's exports, although the proportion is falling as

consumption increases elsewhere. The trade between Europe and Brazil more than

doubled this year, from 82m litres in the first half of 2006 to 180m litres between

January and June 2007.

In addition to reducing Brazil's dependence on oil and to stabilising the sugarcane

industry, the use of ethanol as fuel has had favourable environmental consequences:

the elimination of lead-containing additives from automobile fuel, has reduced

considerably emissions of sulfur oxides, carbon particulates, CO, and CO2. So far Brazil is

the only country to have developed efficient cars for ethanol and the only one to use

this technology.

Growing consumption in Japan, Europe and the US is set to make the commodity Brazil's

top export in less than a decade, overtaking soya by 2017. Last year, the industry was

worth $6bn to the Brazilian economy. The figure is set to quadruple by 2015.

In the first six months of the year, exports of the fuel were up 70.9%. A total of 1.5bn

litres were shipped to other countries in the first half of 2007, compared with 904m

litres in the same period last year.

The value of Brazilian ethanol exports jumped from $351m in the first half of 2006 to

$698m in the first half of this year.

More than one ethanol production plant a month is due to open between now and 2012

as the country ramps up production to around 36bn litres a year, from the current level

of around 17.5bn litres. Exports currently account for about 15% of total production,

with 80% used to fuel Brazilian flex-fuel vehicles capable of running on alcohol and

gasoline.

The US consumes 29% of the country's exports, although the proportion is falling as

consumption increases elsewhere. The trade between Europe and Brazil more than

doubled this year, from 82m litres in the first half of 2006 to 180m litres between

January and June 2007.

Exports are set to rise rapidly, with production increases. Petrobras in particular has

identified countries like Japan as markets for the future.

Brazil 's total exports could be as high as 12bn litres a year by 2012, according to the

latest government forecasts.Petrobras has established with Nippon Alcohol Hanbai a

joint-venture company to distribute the fuel. The first shipment to Kobe, in June,

involved 73,000 litres of industrial- and food-grade ethanol to Japan Alcohol Trading Co.

The oil company estimates that its exports of the clean energy fuel will grow from 850m

litres this year to 3.5bn litres a year by 2011, on the back of investment in a logistics

chain that includes inland waterway terminals, barges and pipelines, as well as

improvements to existing export terminals in Rio de Janeiro and Sao Sebastiao.

"It is going to take time to enter the energy matrix. Nobody moves these energy matrix

just like that. It is like LNG today, it is beginning to become an export market but it took

time to develop. The challenge is very big but the competitive advantage Brazil has with

ethanol is very, very good". As an indication of the shipping requirements of the ethanol

boom, exports of 8bn would require three dedicated suezmaxes and three very large

crude carriers, according to studies by Arnaldo Arcadier, Transpetro's fleet manager. An

increase to 18bn litres by 2015 would require seven suezmaxes and six VLCCs.

With long-term contracts in place, says Mr Arcadier, the vessels could be added to the

company's existing newbuilding program. In the meantime, the company's clean

product carriers are to be used to ship the company's rapidly expanding exports. An

entirely new logistics network will be required to keep Brazil's competitive advantage

over its biggest rival, the US. A third cheaper than corn-based biofuel production in the

US, Brazilian sugar-based ethanol has a strong competitive advantage in the battle for

global demand. High logistics costs in Brazil will need to be overcome to maximise the

returns. Mr Siquiera estimates that Brazil loses "more than half" of its competitive

advantage in agriculture and industry "due to the absolute inefficiency of the logistics

system".

Brazil 's Union of the Sugar Cane Industry (Unica), state-owned energy generator Copel

and Petrobras are looking at five pipeline projects in the south-east of the country that

would concentrate exports in the ports of Paranagua and São Sebastião.

Petrobras' proposal to construct more than 1,000 km of pipeline is estimated to be

worth $1.1bn alone. Altogether, the company's logistics arm, Transpetro, has plans to

invest around $2.3bn by 2015, not including the construction of new vessels to allow it

to operate its own dedicated ethanol fleet.

In 2008, Mr Siquiera says the company is planning to invest $30m in new storage tanks

in the Paulínia Refinery in São Paulo to the Ilha D'Água terminal, in Rio de Janeiro. A

$170m pipeline project will increase the flow of the fuel to the company's Guararema

export terminal in Rio de Janeiro by 2010. A second phase of investment will see the

company invest $410m to link its Rio de Janeiro and Sao Sebastiao export facilities with

the production centres of Matto Grosso and Sao Paulo. Multimodal terminals all along

the Tiete-Paraná inland waterway will be developed before 2010.

In phase three, the company will build another pipeline at a cost of $290m. This phase is

due to be completed by 2012.

By then, monthly ethanol flows will have increased fivefold from 50m litres to 250m

litres. A fourth phase will see the Senador Cacedo pipeline linked to the terminals of

Guararema and Sao Sebastiao at a cost of $200m. This phase is due for completion by

2015.

The port of Paranagua is also investing R$14m ($7.4bn) to build a new ethanol export

terminal that would serve producers in the state of Paraná.

Multilateral banks have been quick to identify the importance of the fuel for the region.

The Inter-American Development Bank is just one multilateral backing the alternative

fuel as a positive development for the region.

At the end of last month it opened its account in the field with a $120m private sector

financing for Usina Moema Acúcar e Alcohol, one of the largest sugar, ethanol and bio-

energy producers in the state of São Paulo.

It is part of the IDB's initiative to promote the structuring of senior debt financing for

five Brazilian ethanol production projects that will have a total cost of $997m.

Other private investors are already piling in to ethanol production as well. Some are

investing directly in developing their own production facilities while others, like Spanish

renewable energy and construction firm Abengoa, are acquiring existing companies that

already have a presence in the market.

Abengoa agreed to buy Brazilian sugar cane producer Grupo Dedini Agro for €216m

($296.1m) on Monday.

Brazilian construction and engineering giant Odebrecht has also committed itself to

invest R$5bn in the sector.

Private and public sector investors alike have identified the Caribbean as having special

strategic importance for entry to the US market.

During this year's sugar cane harvest, 1bn litres of Brazilian sugar-cane based ethanol

will be shipped to the US via the Caribbean, with as little as 1.7m litres being shipped

directly, according to a recent report from Unica.

Panama and Central America have the advantage of having signed free trade

agreements with the US, the world's largest consumer of biofuels.

Under its free trade agreement with the US, Panama is allowed to export 7% of the total

US biofuels market free of import duties, the equivalent to 1.3bn litres a year.

Sugar production market in North Africa

a large biofuel project, under which 18,000 hectares in Dombe, in the central province

of Manica, will be planted with sugar cane for the production of ethanol.

The project, budgeted at 280 million US dollars, belongs to the company "Mozambique

Principle Energy". Although the government spokesperson, Deputy Education Minister

Luis Covane, told reporters that this firm is owned by Mozambican and Mauritian

interests, its parent company, Principle Capital, is registered in London, and also has

offices in Geneva and Cape Town.

The goal of Principle Energy is to produce 213 million litres of ethanol a year, starting in

2013. This will require a production of 2.5 million tonnes of sugar cane a year (140

tonnes of cane per hectare).This project also includes the production of 82.2 megawatts

of energy, starting in 2012. The company itself will use 20 per cent of this, and supply

the remainder to the national grid.

The project is expected to create about 2,650 jobs. The company will also build a bridge

over the Lucite river, and some social infrastructures for the benefit of the residents of

the surrounding areas.

Covane explained that in approving this project, the government took into account

aspects such as water supply, because sugar cane plantations need a great deal of

water, and the Lucite river will be the source.The government expects that this

undertaking will be a major contributor to the state treasury, paying about 57 million US

dollars in taxes in 2011, a figure that should grow to 119 million dollars by 2012, and to

144 million in the following year.

Principle Capital announced the launch of Principle Energy in December 2007, when it

said that it had secured funding for the first phase of the Dombe project. It claimed that

it had already raised some 70 million dollars in equity funding which would take the

projects into 2009. It expected to raise a further 90 million dollars of equity, possibly

through a public offer of shares. The rest of the money would be project finance (bank

loans).

The company also announced that, thanks to the quality of the soil, the Manica climate,

and irrigation, expected cane yields at Dombe are 50 per cent higher than the average in

Brazil, which is the world's largest sugar cane ethanol producer.Last year the

government approved PROCANA, an even larger ethanol project which will involve

planting 30,000 hectares with sugar cane in Massingir district, in the Limpopo Valley, in

the south of the country. The foreign investor here is the London-based Central African

Mining and Exploration Company (CAMEC), better known for its mining of copper and

cobalt in the Democratic Republic of Congo.

ETHANOL PROJECTS UNDER WAY

Two large biofuel projects, to produce ethanol from sugar cane, are now under

way. Construction has already started on the larger one, Procana in Massingir district, in

the Limpopo Valley. The foreign investor is the London-based Central African Mining

and Exploration Company (CAMEC), which also has coal licences in Tete and copper and

cobalt mines in the Democratic Republic of Congo.

Procana will plant 30,000 hectares with sugar cane to produce 120 million litres of

ethanol a year. It will cost $510 million, create 7000 jobs, and provide $40 million a year

in revenues to the state. it should begin production in 2011.

The second project, approved last week, is for 18,000 hectares of sugar cane in Dombe,

a very poor area in southern Manica. The investor is Principle Capital and the project will

cost $280 million. It will create 2650 jobs and pay $57 million in taxes in 2011, rising to

$144 million in 2014. Water will come from the Lucite river. Principle predicts that the

project will have 50% higher yields than Brazil.

Procana will take water from the Massingir Dam, but this is controversial. Downstream

farmers say this will take water away from rice and other food production. The

government denies this, and says Massingir's capacity will be expanded to cope. But the

dam was under construction at the end of the colonial era and has always been dogged

with problems. A rupture occurred in one of the dam's floodgates on 22 May, causing

local flooding, and will cost $15 mn to repair.

Mozambique will produce 295,000 metric tons of sugar this year, 21 percent more

than in 2007 when national production was 243,000 tons, a source in the Association of

Mozambican Sugar Producers (APAM) told macauhub.

Around 165,000 tons of sugars is earmarked for domestic consumption and the

remainder for export. The APAMO source said the sector plans to invest around US$ 6

million in sugar cane production.

Mozambican sugar exports go to preferential markets (the EU and US) and have a

significant favorable impact on the country's balance of payments. In 1972,

Mozambique was the world's fourth-largest sugar exporter after Mauritius, South Africa

and Egypt. Maputo wants to attract investments to boost annual national production to

500,000 tons over the coming years, said the APAMO source. After being almost totally

depleted during Mozambique's civil war, the country's sugar sector is resurgent and

more than US$ 500 million has been invested in the industry, much of this by South

African firms.

Cuba could produce 3.2 billion gallons of ethanol a year, Sanchez figures. (Other

academics guess it would be closer to 2 billion gallons.)

But unlike Brazil, which has a thirsty domestic auto market to feed, Cuba's relative lack

of internal demand would free most of that ethanol for export. Sanchez figures as much

as 3 billion gallons, worth around US$7 billion at today's prices. Hard currency aside,

sugarcane ethanol appears to have two other selling points over other varieties. It

seems to produce lower carbon-dioxide emissions than biofuel made from corn, soy, or

palm oil. And sugarcane biomass, long used to fire distilleries in Cuba, could produce an

additional 4 gigawatts of power (think four nuclear plants) for the electricity-starved

nation.Cuba is stepping up efforts to make use of sugarcane (Saccharum officinarum)

derivatives for animal and human medications at a time when the island's sugar industry

is undergoing restructuring due to the low sugar prices on the international market.

The conversion policy for this sector, launched two years ago, includes a push for

utilization of sugarcane derivatives in the food, chemical, pharmaceutical and

biotechnology industries.

Local experts are unanimous in touting ''alternative'' uses for sugarcane, to make sweets

and alcohol, animal feed, resins, preservatives, plastics and manufactured products like

paper or furniture.

''In these times of production and commercialization (of sugar) it is not enough to

produce with high quality and low costs. It is essential to head towards broad

diversification,'' Luis Gálvez, director of the Havana-based ICIDCA, the Cuban sugarcane

research institute, told Tierramérica.

Founded more than 40 years ago, ICIDCA is at the forefront of Cuban technological

endeavors to take full advantage of this crop, one that is deeply linked with the island's

history and culture.

ICIDCA research covers agriculture, animal feed and human food, as well as

environmental, biotech and pharmacological studies.

Among the novelties in the pharmaceutical line are extracts of cane wax and organic

acids.

''In sugarcane derivatives there is ongoing potential in the technological knowledge

achieved by Cuba,'' said Gálvez, adding that through chemical and biotechnology,

sugarcane can generate as wide a variety of products as petrochemicals produce.

Of the surprising variety of sugarcane derivatives, the product that achieved perhaps the

greatest international popularity in the late 20th century was policosanol, or PPG,

discovered and developed in Cuban laboratories.

PPG is applauded as a regulator of the metabolism for fats, including cholesterol, and as

a food supplement for people in situations of great physical exertion.

This ''natural'' medication does not have harmful side effects and is thought to enhance

sexual function. The product has customers in Europe and Australia, among other points

of the globe, and is sought by many of the tourists visiting this socialist-run island.

The Dalmer labs of Havana, where PPG is produced, have spent years searching for

other natural derivatives of Cuban plants, and particularly of sugarcane.

Just a few weeks ago, Cuban experts announced a new family of antibiotics for treating

animals. These drugs were produced from sugarcane by the Chemical Bioactives Center

at the Central University of Las Villas, in Santa Clara, 300 km east of the capital.

The research center uses furfural, from sugarcane waste, to produce what is known as

G-1, a strong adversary against bacteria and fungus that were resistant to previously

known antibiotics.

The product is used as a veterinary drug to treat diseases in nine animal species,

according to the experts.

The center has developed new active drug ingredients from furfural for use in

agricultural biotech and in human and animal medicine.

Also in Cuba, scientists have utilized sugarcane pulp to produce anti-diarrhea drugs

Ligmed-A and Ligmed-H, for animals and humans, respectively.

The first has a powerful anti-microbe effect and a great capacity to absorb toxins and

pathogenic microbes in the digestive tract of pigs.

Its use for livestock is made simple by the fact that it does not have a strong taste or

smell, nor does it have adverse side effects.

Ligmed-H has been used successfully in hospitals for digestive illnesses, and even as a

palliative for symptoms of colon cancer.

For decades, Cuba invested heavily in infrastructure and research for a sector that

focused mostly on sugar production. The aim now is to take greatest advantage of that

investment, say officials.

Among the projects under way is the creation of the Development Center for Industrial

Fermentation and Nutrition, which will have three pilot plants for semi-commercial

production of biotech derivatives of sugarcane.

The Center has the financial support of the United Nations Development Program and

implementation support from the U.N. Industrial Development Organization. The two

years of restructuring of the island's sugar sector has included the closing of 70 mills,

leaving 71 in operation.

In general, the objective of the conversion is to reduce production costs and improve

competition, develop sustainable agriculture and increase food production, the Cuban

officials said at the time.

Sugar has been the center of the Caribbean nation's economic, social and cultural

development for centuries, and -- until the restructuring -- the sector employed 2.5

million people.

Srilanka:

Sugar is one of the main food items consumed in Sri Lanka. The per capita consumption

of sugar in Sri Lanka is around 30 kg which is high when compared to average sugar

consumption in the world. About two decades ago, sugarcane was cultivated in about

25, 000 hectares. There were 3,800 ha in Kantale, 5,600 ha in Hingurana, 4,500 ha in

Pelawatta, 4,600 ha in Sevanagala and 5,700 ha in Moneragala. The total production of

sugar in Sri Lanka at that time was around 114,000 t annually representing around 20 %

of the local requirement. Kantale and Hingurana sugarcane plantations were closed due

to various reasons, and at present only Pelwatta and Sevanagala sugar factories

function. The total extent under sugarcane at present is around 15, 000 hectares. About

4,000 hectares are in Sevanagala, 9,000 hectares in Pelwatta., and 2,000 ha in other

districts mainly Amapara, and Badulla Distrcits, cultivated by smallholders for

production of jaggery, sugar syrup etc.

The total annual requirement of sugar in the country is around 500,000 t but only about

60,000 t are produced locally. The balance has to be imported. Large extents of land,

suitable for sugarcane cultivation are found in Badulla, Moneragala, Galle, Kurunegala

and Hambanthota Districts. Sugarcane Research Institute has initiated activities to

promote sugarcane cultivation under coconut in Kurunegala District.

Ethanol

In Sri Lanka, ethanol is made mainly by fermenting molasses which is a by-product of

sugar industry. At present, around 10 million liters of ethanol are produced annually in

the country as a by product of sugar industry. This amount would increase considerably,

to as much as 30 million liters if Hingurana and Kantale sugarcane factories operate at

full capacity.

The ethanol obtained by fermenting molasses contains 3-4% water

The financial viability of using alcohol as an alternative would depend on the taxes,

duties etc. on petrol and alcohol, which influence the market prices. The landed cost of

petrol and cost of production of alcohol are almost the same. However, the socio-

economic benefits of using locally produced alcohol as opposed to use of imported

petrol need to be realised when their competitive advantages are considered.

A sub-committee of the Plantation Cluster of the National Council of Economic

Development (NCED) has initiated studies, in collaboration with the Dept. of Mechanical

Engineering of Moratuwa University and Ceylon Petroleum Corporation to examine the

different aspects of using hydrous alcohol in three wheelers. The Minister of Science

and Technology also has appointed a committee to examine the use of alcohol and

other fuel additives in vehicles. If these endeavors produce positive results, it would be

possible to use locally produced alcohol, at least in three wheelers and motor bicycles,

resulting in a considerable saving of foreign exchange. At present there are about

250,000 three wheelers and 650,000 motor cycles. Hence, the total amount of petrol

used by three-wheelers and motor cycles would be substantial.

Fuel and Economy: 2006 annual fuel bill will be around Rs 200 billion. This

constitutes almost about 25% of the value of our imports and is about 30% of our total

exports which is Rs. 600 billion.A high expenditure on petroleum will widen annual trade

deficit, which is around Rs. 200 billion.importing crude oil on credit from India and

Malaysia. We need to be concerned of the very high level of indebtedness, which stands

at around Rs. 1200 billion, and the total debt service payments, which is around Rs. 350

billion per year, more than the total government revenue.

Australia’s Biofuels industry is in its early stage of development, with both ethanol

and biodiesel making up its portfolio. The Australian government has set a biofuels

target of 350 million liters (ML) by 2010. However, this equates to less than 1% of

Australia's total transport fuel demand; and, at this level, it will remain a niche industry

with limited prospects (Wright 2007).

The biofuels industry offers great opportunities for Australia's agriculture sector, but

also poses some risks related to additional inputs (water, fertilizers, and pesticides), low

crop production due to sustained drought conditions, and impact on other industries,

such as livestock. A detailed risk-benefit assessment is needed if biofuels are going to

play a stronger role in Australia's future transportation fuel mix.

Production

Ethanol production in Australia doubled in the past two years, from 40.3 ML in 2005/06

to 83.6 ML in 2006/07. Biodiesel experienced a stronger growth during that period, from

21.2 ML to 76.3 ML. There were four operating ethanol plants as of November 2007

with a total capacity of 245.8 ML per year. Current Australia's Ethtec (Ethanol

Technologies Limited), 51% owned by Willmott Ltd., recently began work on an A$20

million (U.S.$18 million) pilot lignocellulosic ethanol plant in New South Wales. The

plant will use wood residues (including pine), bagasse, and other lignocellulosic

materials as feedstock and will convert it to ethanol via biochemical conversion process.

Table 1. Existing Biofuel Production Facilities

Company Fuel Type Capacity (ML) Location

Manildra Ethanol 170 Bomaderry, NSW

CSR Ethanol 60 Sarina, QLD

Rocky Point Distillery Ethanol 15 Woongoolba, QLD

Tarac Technology Ethanol 0.8 Nuriootpa, SA Berri, SA Griffith, NSW

Biodiesel Industries Australia Biodiesel 40 Rutherford, NSW

Eco Tech Biodiesel Biodiesel 75 Narangba, QLD

Evergreen Fuels Biodiesel 1 Mossman, QLD

Future Fuels Biodiesel 30 Moama, NSW

Biomax Biodiesel 100 Laverton, VIC

Table 2. Under-Construction and Proposed Biofuel Production Facilities

Company Fuel Type Capacity (ML) Location

Austcane Ethanol 60-100 Burdekin, QLD

Bundaberg Sugar Ethanol 10 Bundaberg, QLD

CSR Ethanol Ethanol 60 to 100 Burdekin, QLD

Dalby Bio-refinery Ethanol 80 Dalby, QLD

Downs Fuel Farmers Ethanol 160 Dalby, QLD

Four Arrows Ethanol Not known Coleambally, NSW

Mackay Sugar Ethanol 70 Mackay, QLD

Primary Energy Ethanol 160 Kwinana, WA

Primary Energy Ethanol 160 Pinkenba/Brisbane, QLD

Marinna Energy Ethanol 500 Junee, NSW

SymGrain Ethanol 100 Quirindi, NSW

SymGrain Ethanol 100 Western Victoria, VIC

Trangie Farmers and Business Ethanol 60 Narromine, NSW

Feedstock

Ethanol in Australia is produced mainly from sorghum, wheat, and sugar cane.

Feedstock supply regions are primarily the grain belt (primarily the south and southeast)

and the east coast, where the sugar cane .The increasing cost of feedstock and irregular

supply (due to persistent drought conditions) are major concerns for local ethanol

producers. Drought has adversely affected grain and oilseed production in Australia for

a second year in succession. Wheat production in 2007/08 is estimated at around 12.7

million tonnes, and canola production at 931 000 tonnes. Although these production

levels are significantly higher than production in 2006-07, they are well below average.

The total area planted to grain sorghum is forecast to be 795,000 hectares in 2007-08,

74% more than the area sown last year. This is due to average and above average

rainfall in the fall (ABARE 2007).

Economics

Ethanol US$/liter

From grains 0.51

From C-molasses 0.35

From sugar cane 0.71

Biofuels in Use

Ethanol and biodiesel are the two biofuels with commercial prospects in Australia. The

bulk of biodiesel production in Australia is sold in blends with petroleum diesel, ranging

from B2 to B100. The bulk of ethanol production in Australia is sold in blends with

petroleum containing up to 10% ethanol.

Infrastructure and Vehicles

Australia has more than 800 Biofuel refueling stations. The majority of these sell E10 (a

10% ethanol in petroleum mix) with some stations selling biodiesel blends typically B2,

B5, and B20. United Petroleum intends to sell E85 from two sites, one in Melbourne and

another in Sydney.

The Saab 9-5 2.3t was made available to Australian consumers in 2007. Accurate data on

how many of these vehicles are now on the road is not available; however, an estimated

336 vehicles were sold as of June 2007.

Trade

Statistics on the trade of fuel ethanol are not available. However, small volumes of

ethanol (all types — fuel, industrial, and beverage) were reported as having been

exported in 2006 to the Philippines, Japan, Malaysia, and Thailand. Natural Fuels

Australia Ltd. reported that it made the member economy's first export shipment of

biodiesel to Asia and the United States in August 2007. The company produced 8.8

million liters of palm oil biodiesel.

Policy

The Australian government promotes alternative fuels as a means of diversifying

Australia's fuel mix and has a suite of measures in place to support alternative fuels and

their use.

The government has committed more than $200 million to the development of

Australian sources of Biofuels. Relevant measures include:

An election commitment in November 2007 to a $15 million grant program for

R&D of second-generation Biofuel technologies;

A Biofuels target of at least 350 million liters by 2010. The measures to achieve

this target are included in the Biofuels Action Plan, which indicate that Biofuels

will grow from a base of 28 million liters in 2005 to exceed the 350 million liter

target by 2010;

Initiatives to improve consumer confidence in ethanol including actively

encouraging users of Commonwealth vehicles to purchase E10 (a blend of 10%

ethanol with petroleum); undertaking vehicle testing of E5 (a blend of 5%

ethanol with petroleum) and E10 blends; commissioning a study on the health

impact of ethanol under Australian conditions; and labeling new Australian-

made vehicles to advise of their suitability to use ethanol-blended fuels;

$37.6 million for the Biofuels Capital Grants Program to support new or

expanded Biofuel production capacity;

The Ethanol Production Grant Program and the Cleaner Fuels Grant Program of

38.143 cents per liter paid to domestic ethanol and biodiesel producers,

respectively;

Ensuring that alternative fuels remain effectively excise-free until 2011, after

which they will receive a 50% discount on the rate of excise compared to other

fuels with the same energy content;

Funding of $7.72 million committed under the National Collaborative Research

Infrastructure Strategy to construct two pilot-scale facilities for development of

novel Biofuel production technologies and to enhance related laboratory

infrastructure at three universities;

Funding of more than $7.5 million for innovative renewable fuel projects under

the Renewable Energy Development Initiative; and

$17.2 million for the Ethanol Distribution Program to support the uptake of

ethanol by encouraging petroleum stations to install new, or convert existing

pumps, to sell E10 blended fuel.

Developments in Sugarcane:

• QUT, SRI, FARMACULE & Syngenta have been inducing Tobacco gene to better

distillation output in AU.

• Crystalsev-Dow / Crystalsev-Amyris / Cosan-Petrobras in Brazil.

• Indonesia’s University of Jember & Gadjha Mada inducing Sugars in Sugarcane

leaves to convert to ethanol.

• Cuba /Peking University in Beijing China working on Cellulosic ethanol.

• Vietnam’s University of Tech & Petro Chem Center & Japan’s Univ of Tokyo /

Mitsui Eng working on Ethanol from various feedstock's.

• USA’s Louisiana/Florida along with SRU on Cane Ethanol.

• DuPont –Danisco on Cellulosic ethanol.

• Praj Industries, NCL, CSIR working on 2nd generation Biofuels in India.

• New Parental lines of Sugarcane Developed: All of the sugarcane varieties

commercially grown in the continental United States (U.S.) can trace their

ancestry to one female parent. Black Cheribon, a non-thrifty chewing cane from

New Guinea that is incapable of surviving most winters in Louisiana. Several of

these lines have been shown to have sucrose contents that match those of

current commercially grown varieties. These lines will be used as parents during

the 2006 crossing season in the hopes of developing sugarcane varieties with

improved cane and sugar yields over a range of environments.

Competing Crops to Sugarcane:

Stevia is getting attention as sweetener and GersonLehman group has invested

in this.

Sweet Sorghum is seen as alternate to get better yields for distilling Ethanol

using less water and less maturity time.

Phani Mohan, Anagha datta Trade Ayilyam apts-3, Newno-17, SadhullaSt, TNagar, Chennai-17, India. Email: phanis.kancharla@gmail.com