EU Ethanol Production EU Ethanol Production Outlook & Outlook &

Potential for African Potential for African ImportsImports

March 2009March 2009

Presented by Massimo Marletto

Partners for Euro-African Green Energy

www.pangealink.orgwww.pangealink.org

In January 2008, In January 2008,

the European Commission proposed to establish a the European Commission proposed to establish a 10% binding minimum target for renewables in 10% binding minimum target for renewables in road transport, calculated on energy contentroad transport, calculated on energy content

This target has to be achieved by each of the This target has to be achieved by each of the Member States by 2020 through a Member States by 2020 through a

combination of domestic EU production and combination of domestic EU production and imports from third countries imports from third countries

The aim of the report is to define the amount of The aim of the report is to define the amount of ethanol the EU would need to produce or ethanol the EU would need to produce or

import in order to meet the proposed targetimport in order to meet the proposed target

EU Ethanol Production EU Ethanol Production Capacity TodayCapacity Today

There are 51 ethanol factories currently There are 51 ethanol factories currently operating in the EU with a total production operating in the EU with a total production capacity of: capacity of:

5.8 billion litres in volume5.8 billion litres in volume

135.5 billion MJ in energy content135.5 billion MJ in energy content (Note: 1 litre of ethanol contains 23.4 MJ)(Note: 1 litre of ethanol contains 23.4 MJ)

EU Petrol Consumption EU Petrol Consumption TodayToday

The current EU petrol consumption for road The current EU petrol consumption for road transport is:transport is:

142 billion litres in volume 142 billion litres in volume

4,543 billion MJ in energy content4,543 billion MJ in energy content (Note: 1 litre of gasoline contains 32 MJ)(Note: 1 litre of gasoline contains 32 MJ)

Therefore, current ethanol production Therefore, current ethanol production capacity corresponds to:capacity corresponds to:

only 2.9% of gasoline consumption for road only 2.9% of gasoline consumption for road transport in energy contenttransport in energy content

Ethanol Production Ethanol Production Capacity in the EU by Capacity in the EU by

20202020 51 ethanol factories currently operating with total 51 ethanol factories currently operating with total

production capacity of 5.8 billion litres production capacity of 5.8 billion litres

10 ethanol factories under construction: Total new 10 ethanol factories under construction: Total new production capacity should reach 1.4 billion litres production capacity should reach 1.4 billion litres by 2010by 2010

50 ethanol factories are planned with an 50 ethanol factories are planned with an estimated total of new ethanol production estimated total of new ethanol production capacity of 7.1 billion litres by 2020 capacity of 7.1 billion litres by 2020

Ethanol Production Ethanol Production Capacity in the EU by Capacity in the EU by

20202020Therefore, there could be a total of 111 ethanol Therefore, there could be a total of 111 ethanol

factories operating in the EU by 2020 and factories operating in the EU by 2020 and their combined production capacity could their combined production capacity could reach:reach:

14.3 billion litres in volume14.3 billion litres in volume

334.7 billion MJ in energy content 334.7 billion MJ in energy content

Petrol Consumption for Road Petrol Consumption for Road Transport in the EU in 2020Transport in the EU in 2020

Low scenario: it stays at the same level as in Low scenario: it stays at the same level as in 20082008

Most likely scenario: it increases by 7% Most likely scenario: it increases by 7% compared to 2008compared to 2008

High scenario: it increases by 15% compared High scenario: it increases by 15% compared to 2008 to 2008

LOW SCENARIOLOW SCENARIO

Ethanol production capacity and petrol Ethanol production capacity and petrol consumption for road transport in the EU in consumption for road transport in the EU in 2020 2020

In the low scenario, expected EU ethanol In the low scenario, expected EU ethanol production in 2020 would correspond to:production in 2020 would correspond to: only 7.37% of gasoline consumption for road only 7.37% of gasoline consumption for road

transport in energy contenttransport in energy content

LOW SCENARIOLOW SCENARIO

For the low scenario, the EU would need to For the low scenario, the EU would need to produce or import an additional 5.1 billion produce or import an additional 5.1 billion litres of ethanol: litres of ethanol:

Producing this amount of ethanol in the EU Producing this amount of ethanol in the EU would require the construction of 40 more would require the construction of 40 more ethanol factories with an average capacity of ethanol factories with an average capacity of 129 million litres each in addition to those 129 million litres each in addition to those already plannedalready planned

MOST LIKELY MOST LIKELY SCENARIOSCENARIO

In the most likely scenario, expected EU In the most likely scenario, expected EU ethanol production in 2020 would correspond ethanol production in 2020 would correspond to:to:

Only 6.89% of petrol consumption for road Only 6.89% of petrol consumption for road transport in energy content.transport in energy content.

MOST LIKELY MOST LIKELY SCENARIOSCENARIO

For the most likely scenario, the EU would For the most likely scenario, the EU would need to produce or import an additional 6.5 need to produce or import an additional 6.5 billion litres of ethanol:billion litres of ethanol:

Producing this amount of ethanol in the EU Producing this amount of ethanol in the EU would require the construction of a further 50 would require the construction of a further 50 ethanol factories with an average capacity of ethanol factories with an average capacity of 129 million litres each129 million litres each

HIGH SCENARIOHIGH SCENARIO

In the high scenario, expected EU ethanol In the high scenario, expected EU ethanol production in 2020 would correspond to:production in 2020 would correspond to: Only 6.41% of petrol consumption for road Only 6.41% of petrol consumption for road

transport in energy content.transport in energy content.

HIGH SCENARIOHIGH SCENARIO

For the high scenario, the EU would need to For the high scenario, the EU would need to produce or import 8 billion litres of ethanol:produce or import 8 billion litres of ethanol:

Producing this amount of ethanol in the EU Producing this amount of ethanol in the EU would require the construction of a further 62 would require the construction of a further 62 ethanol factories with an average capacity of ethanol factories with an average capacity of 129 million litres each129 million litres each

If as a whole the EU would have an ethanol deficit in If as a whole the EU would have an ethanol deficit in 2020, it could be interesting to see the situation 2020, it could be interesting to see the situation at Member State level, that is if a Member State at Member State level, that is if a Member State is going to have an ethanol surplus / deficit in is going to have an ethanol surplus / deficit in

2020 compared to the 10% target2020 compared to the 10% target

By Member StateBy Member State

In all of the three scenarios analysed we have In all of the three scenarios analysed we have found that, compared to the 10% target, in found that, compared to the 10% target, in 2020:2020:

19 EU Member States would have an ethanol 19 EU Member States would have an ethanol deficitdeficit

Only 8 EU Member States would have an Only 8 EU Member States would have an ethanol surplusethanol surplus

Member States with possible Member States with possible ethanol ethanol surplus surplus in 2020 compared in 2020 compared

to 10% targetto 10% target

HungaryHungary

FranceFrance

LithuaniaLithuania

BelgiumBelgium

EstoniaEstonia

Czech RepublicCzech Republic

Slovak RepublicSlovak Republic

LatviaLatvia

Member States with possible Member States with possible ethanol ethanol deficit deficit in 2020 compared in 2020 compared

to 10% targetto 10% target

Through the analysis of three possible scenarios for Through the analysis of three possible scenarios for gasoline consumption and ethanol production gasoline consumption and ethanol production

capacity in the EU in 2020, we have seen that the capacity in the EU in 2020, we have seen that the EU, in order to reach the 10% target, would EU, in order to reach the 10% target, would

probably have an ethanol deficit that could go probably have an ethanol deficit that could go from a minimum of 5.1 billion litres to a from a minimum of 5.1 billion litres to a

maximum of 8 billion litresmaximum of 8 billion litres

In other words, in order to fill this ethanol deficit the In other words, in order to fill this ethanol deficit the EU would have to build a further 40 to 62 ethanol EU would have to build a further 40 to 62 ethanol factories with an average capacity of 129 million factories with an average capacity of 129 million

litres eachlitres each

The construction of those “further factories” is quite The construction of those “further factories” is quite improbable, given the fact that the EU does not improbable, given the fact that the EU does not

plan to achieve the 10% target only through plan to achieve the 10% target only through domestic production, but through a combination domestic production, but through a combination of domestic EU production and imports from third of domestic EU production and imports from third

countriescountries

Therefore, it is safe to assume that the EU’s Therefore, it is safe to assume that the EU’s Member States will need to import between Member States will need to import between

5.1 billion and 8.1 billion litres annually 5.1 billion and 8.1 billion litres annually between 2010 and 2020.between 2010 and 2020.

Thank you for your Thank you for your attention.attention.