Ethanol and Biodiesel: The Role of Brazil and South Korea in the Emerging Alternative Energy Market
Around the globe, government and private ventures in the ethanol and biodiesel industry are booming on the basis of their potential to replace fossil oil, to reduce carbon emissions, and to raise incomes in rural areas. The two most common biofuels are (bio) ethanol and biodiesel. Sugarcane is the most effi cient feedstock for producing ethanol and is the predominant feedstock for ethanolproducing and -exporting countries, most notably Brazil, Thailand, South Africa, and Australia. Several plants, such as rapeseed in Europe; soybeans produced in Argentina, Brazil, and the United States; palms in Indonesia and Malaysia; and jatropha, more common in India, the Philippines, and Thailand, are considered the main feedstocks for producing biodiesel. Some estimates predict that these alternative fuels will grow at 7 to 9 percent annually in the coming decades and displace one-third or more of road transportation fuels by the 2050–2100 time frame.
To meet the increasing demand for energy, the burgeoning biofuels industry will need to develop signifi cantly in the short and medium term. According to the International Energy Agency, global energy needs are likely to be about 50 percent higher than today by 2030. Between 2006 and 2030, energy demand in the Asia-Pacifi c region is estimated to grow by about 2.75 percent per year, or 32 percent faster than the world average. In a recent study, the UN Economic and Social Commission for Asia and the Pacifi c (ESCAP) estimated that energy demand under the most “sustainable” (improving savings and renewables) energy scenario will be equivalent to 6,919.8 million tons of oil equivalent (Mtoe) for the region’s 58 economies by 2030. According to this same report, energy demand for the Republic of Korea, which is the world’s fifth-largest importer of oil, is expected to reach 312.0 Mtoe.
To date, South Korea has made scant progress in shifting its dependence away from fossil oil. The limited efforts that have been implemented to introduce biofuels into the transport sector have thus far concentrated on the development of biodiesel, as two-thirds of its transportation industry relies on diesel as a fuel source. As the other one-third relies on gasoline, experiments with ethanol as a fuel source have just begun. Korea has a long tradition of alcohol production geared toward the food and beverage industry. For this use, it also has become a large importer of this commodity from its neighboring countries, and it imports signifi cant amounts from Brazil as well. Despite familiarity with alcohol technologies and uses, Korea has only recently become interested in exploring their potential as an alternative fuel source for the transportation sector.
Brazil was a pioneer in developing ethanol as an economically viable alternative to fossil fuels. As part of the government’s efforts to diversify the nation’s energy sources and to overcome the threat of future oil price shocks, the country produced the first cars to operate with ethanol as fuel—the carro a álcool in 1979. Brazil has grown to become one of the world’s top producers of biofuels and today has one of the highest renewable energy matrices in the world. By 2007, 492 tons of sugarcane were produced, and a portion of this feedstock was used to produce 8.4 billion liters of anhydrous, also called pure, ethanol and 13.9 billion liters of hydrated ethanol. Indeed, it is estimated that more than $33 billion will be invested in the sector in Brazil by 2011. Brazil is also at the forefront of developing biofuels as an international trade commodity.
To change the energy consumption features of any country, new technologies and government policies are decisive. This paper reviews the role each of these factors has played in the evolution of Brazil’s biofuels industry. It then briefl y assesses the technological and policy environment in Asia before focusing on this “new” emerging industry in South Korea. It shows that South Korea has made scant progress in the development of biodiesel relative to its counterparts in the Asia-Pacifi c area. In the case of ethanol, Korea is farther behind. In addition to policy measures, it shows that some countries, including India, Japan, South Africa, and the United States, are joining efforts with Brazil to further develop the biofuels industry on an international scale. The study concludes that South Korea could increase the effectiveness of its biofuel development by partnering with countries that have a demonstrated expertise and capacity to be reliable suppliers.