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Economic Opportunities for Developing Countries |
About GRFA
Global Renewable Fuels Alliance News Conference
Comments by Alliance Spokesperson, Bliss Baker
at the National Ethanol Conference
February 25, 2009
San Antonio, Texas
Good morning and welcome,
We are here today for an important announcement concerning the future of the biofuels industry. I am joined here today by Bob Dineen, President of the Renewable Fuels Association in Washington D.C., Gord Quaiattini, President of the Canadian Renewable Fuels Association in Ottawa, and Rob Vierhout, Secretary General of the European Bioethanol Fuel Association (eBIO) in Brussels.
We are here today to announce the formal creation of the Global Renewable Fuels Alliance.
The Global Renewable Fuels Alliance is a new global federation representing over 60 percent of the world's renewable fuels production from 30 different countries.
This new alliance has a dual mission.
The global alliance is committed to promoting the expanded use of
renewable fuels throughout the world through the advocacy of sound
public policy and responsible research and, through the development
of new technology and best practices, our members are committed to
producing renewable fuels with the smallest possible ecological footprint.
This is our commitment:
As a group, there are a few very important things we want to speak to you about today
- first, a look at the industry’s contribution to the global economy;
- second, a look at climate change and the important role that ethanol will play in mitigating the effects of global warming; and
- third, we want to outline for you the incredible opportunity that developing nations have before them with the adoption of biofuels friendly policies.
For several years now our industry has grown rapidly to satisfy the growing demand for cleaner more sustainable transportation fuels. Driven by progressive policies adopted by several countries, this unprecedented growth has seen global ethanol production increase from approximately 10 billion litres in 2000 to approximately 60 billion litres globally in 2007.
In 2009 the world will produce 80 billion litres of ethanol replacing the need for 1.9 million barrels per day of crude oil.
(The 20.4 billion gallons of ethanol production expands the quantity of gasoline available to consumers around the world. Since ethanol has lower energy content than gasoline, there is not a one-to-one substitution of ethanol for gasoline. The BTU content of ethanol is about two-thirds that of gasoline (76,330 BTU/gal for ethanol compared to 116,090 for gasoline). Reflecting this, if ethanol were not available, the world’s oil refiners would have to “find” an additional 13.4 billion gallons (320 million barrels) of gasoline to make up the shortfall. Considering that a 42 gallon barrel of crude oil typically produces about 19.2 gallons of finished gasoline, an additional 1.9 million barrels of crude oil per day, or 2.2 percent of current world supply, would be required to produce the 13.4 billion gallons of gasoline needed to make up for the lost volume of ethanol.)
In fact, a 2008 Merrill Lynch report said that eliminating this ethanol production from the global fuel supplies would increase gasoline prices by as much as 15 percent today, the global ethanol industry employs an estimated 800,000-1,000,000 (World Bank estimate) people and has invested over $25 billion into the economies of Europe, the United States, Canada and several other countries in the past 5 years alone.
At a time when economies are realign, the global energy complex is going through huge change, and governments are struggling to find the next economic wave to boost their economies, the ethanol and biofuels industry is showing incredible promise and opportunity for the future.
This may seem counter intuitive to some today because oil prices are depressed and the global economy is in recession, but three fundamental facts have not changed despite the current economic challenges we are facing:
- Future energy demands continue to be unsustainable.
- The threat of climate change has not abated.
- Fossil fuel is still a finite resource.
Despite this economic slow-down and subsequent decline in oil prices, the international energy agency paints a dire picture of the world’s future energy needs.
In fact, according to an IEA report released this winter:
“The world will need an additional 64 mb/d of gross capacity to be installed between 2007 and 2030 – six times the current capacity of Saudi Arabia – to meet demand growth and an offset decline in crude production.”
The point being – if you thought we were entering a period
of sustained low energy pricing you are wrong. In fact here are a
few additional facts that also have not changed according to the International
Energy Agency:
- World oil demand is set to continue to expand through to 2030 on current trends, albeit more slowly than over the past two decades to 106 mb/d in 2030.
- Around three-quarters of the projected increase in oil demand worldwide comes from the transport sector – the sector least responsive, in the short term, to price changes.
- Most of the increase in world oil output is expected to come from OPEC countries, their collective share rising from 44 percent in 2007 to 51 percent in 2030.
- Rising global consumption of fossil fuels is still set to drive up greenhouse-gas emissions and global temperatures, resulting in potentially catastrophic and irreversible climate change.
In short, we are hear today to tell you that ethanol can and will play an important role in meeting this future global energy demand.
With respect to climate change and the move to a lower carbon economy - ethanol can and will play an important role in reducing GHG’s and the carbon footprint of our transportation fuels.
The latest modeling from natural resources Canada has shown that not only is the carbon footprint of grain ethanol shrinking it will continue to shrink well into the next decade. The GHGeniusModel created by Canada’s energy ministry predicts a 60 percent reduction in GHG’s from conventional grain ethanol by 2015.
Building on the success of the grain ethanol industry, the first cellulosic ethanol plants are now under construction using a variety of biomass feedstocks to produce the next generation of ethanol.
The promise that this new development brings for further reductions in GHG’s will catapult the ethanol industry forward as the single biggest opportunity to reduce emissions from the transportation sector.
And, for those countries with abundant arable land this represents a huge opportunity to become producers of fuel as opposed to importers of crude.
So, while the footprint of ethanol and biofuels continues to shrink, the carbon footprint of gasoline continues to grow.
As conventional oil is depleted and we expand the mining of unconventional resources several miles under the ocean or we expand the mining of unconventional sources like the Canadian tar sands, this footprint will continue to grow. In fact, some have argued that the mining of the Canadian tar sands already has a negative energy balance.
In the end, ethanol can and will play an important role in fighting climate change.
Finally, we want to speak about opportunity – the opportunity facing many developing countries today should they choose to adopt biofuels friendly policies.
Today, 38 of the 47 poorest countries on earth are net importers of crude oil. The 25 of those countries import all of their crude requirements.
When crude prices rise even slightly, the impact on the developing countries’ balance of trade is devastating.
When crude prices rise even slightly, developing countries must reduce social spending and when crude prices rise - even slightly - the economic impact on a family earning $1,000 per year is devastating.
The good news is that many of these developing countries have vast areas of arable land and the desire to reduce their crippling reliance on imported crude oil.
In this regard we are not talking just about corn – in the case of Africa and parts of Asian we are talking about: sugar cane, cassava, jatropha, native grasses and agricultural residues like corn stover. The potential is awesome.
According to the World Bank:
- Biofuels industries require about 100 times more workers per unit of energy produced than the fossil fuel industry. The ethanol industry is credited with providing more than 200,000 jobs in the United States and half a million direct jobs in Brazil alone.
- Many of these 38 countries mentioned have substantial agricultural bases and are well positioned to grow highly productive energy crops.
This will not be easy – it will take political will, the right policies and investment from the west to make this dream a reality.
We are calling on the World Bank today to make investments in developing countries’ biofuels infrastructure a top priority.
We are here today to say that ethanol can and should play a role in helping developing countries reduce their reliance on imported oil while at the same time providing these countries with a much needed boost to their agricultural sector.
The global renewable fuels alliance will be an active participant in the ongoing debate at the international level regarding biofuels policies.
We look forward to providing a much-needed voice in the international arena to ensure that all countries have the opportunity to benefit from the development of a renewable fuels industry.