Colombia Ethanol Industry Likely Domestic Boom
Leveraging Off an Already Efficient Sugar Industry It Will Expand
Apr 19, 2009
Colombia looks set to become a significant ethanol producer although its impact looks likely to be largely domestic, according to a report from the U.S. Department of Agriculture's Economic Research Service or ERS. "However, it is unlikely that Colombia could export ethanol anytime soon because domestic production is insufficient to meet nationwide requirements that gasoline contain a 10-percent ethanol blend," said the report.
The report paints an encouraging picture of the industry, the second biggest in the Western hemisphere. Currently daily production is 277,000 and if proposed expansion projects go ahead could almost quadruple to one million gallons in 2010.
Several Factors Have Brought Colombia to This Strong Position
Several factors have helped bring the Colombians to this strong position including an efficient sugar industry, judicious use of technology and government support. The sugarcane industry which is acknowledged to be among the best in the world is undoubtedly the starting point. ASOCAÑA, the trade body of Colombia’s sugarcane industry, said it is the most efficient when measured by sucrose yield tons/acres/year. More objectively the 2007 LMC International Worldwide survey placed it among global leaders in terms of low costs.
Indian Rather Than Brazilian
Another asset is technology. Surprisingly, given who its neighbour is, Colombia uses Indian rather than Brazilian technology which gives both environmental and cost advantages. Indian technology produces low volumes of vinasse, which is further processed, whereas most Brazilian plants don’t. It has also allowed Colombian processed vinasse, because of its high mineral content to be sold as fertilizer, thereby returning some US$40 million to the industry. Or as the ERS report put it, “The decision to use Indian technology appears to be paying off.”
Another way the technology has been used is not so much high tech as just plain practical: most Colombian mills that produce ethanol are energy self-sufficient. This is done by using bagasse, a by-product, to generate the energy needed for processing with surplus energy being sold into the national electric grid. This could be explanded in the years to come. Currently the 1% of Colombia’s energy or 90 megawatts (MW) is produced by bargasse, but this could rise to 2.5% if the right investment and government support are made.
Government Support
All this has been helped by the government who kickstarted the industry by progressively mandating more ethanol to be blended into car-fuel both over time and over an increasing geographical area. The government also created an agency whose principal objective is to coordinate sustainable development via a multiagency approach. This covered areas such as prices, taxes and research.
Currently the government is developing a law mandating that by 2012 all new cars be equipped to handle being power by fuel that is at least 20% ethanol, the Hacia el E-20 or the until E-20 project. Supplementing this an Inter-American Development Bank project “Sustainable Energy and Biofuels Strategies for Colombia” is aimed at finding and correcting bottlenecks.
It still might be that the Colombian industry makes an international mark.
Sources
Colombia: A New Ethanol Producer on the Rise? By Jose Toasa
A Report from the Economic Research Service of the United States Department of Agriculture.
Published January 2009
