Josephine V. Yam

Sustainability

A Comparative Analysis of Brazilian Sugarcane Ethanol and U.S. Corn Ethanol Using the Sustainability Framework

Josephine V. Yam, December 2010
This article aims to provide a comparative analysis of Brazilian sugarcane ethanol and U.S. corn ethanol using the three fundamental dimensions of the sustainability development framework, namely,environmental, social and economic sustainability (Fontes, 2010).

The concept of sustainable development has been advanced as a means of integrating the environmental, social and economic objectives of society in order to maximize human well-being in the present without compromising the ability of future generations to meet their own needs (OECD, 2001). Development that is not sustainable will inevitably lead to negative environmental, social and economic repercussions (OECD, 2001).

As widespread concerns about climate change and dependence on fossil fuels grow, the search for renewable energy sources that reduce carbon dioxide (CO2) emissions has become a matter of significant worldwide attention (Crago, Khanna, Barton, Giuliani, & Amaral, 2010). Among the most promising renewable energy sources is the use of biofuels as economical substitutes for petroleum-based liquid fuels (Dias de Oliveira, 2005). Biofuels, such as ethanol, are generally considered renewable since the CO2 emitted into the atmosphere is recaptured by the growing crop in the next growth cycle (Martinelli, 2008).

The production and use of ethanol as a transportation fuel is entrenched in domestic and regional policy (Keeney, 2009). In the global ethanol industry, the United States and Brazil account for almost ninety percent of world production (Crago et al., 2010). Nevertheless, both countries produce ethanol in very disparate ways that intrinsically affect their respective sustainability profiles in ethanol production (Hofstrand, 2009).

Overview of Brazilian sugarcane ethanol industry


Brazil is the world's largest sugarcane producer, representing thirty-four percent of the global market (Almeida, 2009). It produced twenty-two billion litres of ethanol in 2006, which comprised thirty-three percent of world ethanol production (de Cerqueira, 2009). Eighty-four percent of Brazil's current ethanol production is for the domestic market and the remaining sixteen percent is for export (de Cerqueira, 2009).

Back in 1973, over eighty percent of Brazilian petroleum use was from imported oil. During the world oil crisis, oil prices skyrocketed such that Brazil's balance of trade with imported petroleum costs increased from US$ 469 million in 1972 to US$ 2.8 billion in 1974. In 1975, the government began the National Alcohol Program (Proalcool). The objectives of Proalcool were to replace imported gasoline with transport fuel from a renewable energy source, to use sugarcane to its full potential and to promote greater rural employment (Ribeiro, 2001). In 2003, Brazil began to manufacture and sell flexible fuel vehicles, which accounted for eighty-six percent of all passenger vehicles sold in Brazil (de Cerqueira, 2009). Consequently, Brazil has become the largest exporter of ethanol biofuels in the world (Rosa, Campos, & Araujo, 2009).

Overview of U.S. corn ethanol industry


The United States is the largest ethanol producer in the world with production levels of about thirty-four billion litres in 2009 (Crago et al., 2010) from over a hundred ethanol bio-refineries in operation (Low, 2008).

Back in 1980, the U.S. ethanol industry was a small industry that produced 175 million gallons of ethanol annually. In the succeeding decades, the federal and state governments have implemented environmental and energy policies that became major drivers to stimulate strong ethanol demand. For example, the Energy Policy Act of 2005 created a national Renewable Fuels Standard, which required the use of seven billion gallons of renewable fuels in the motor fuel supply by 2012 (Low, 2008). In a move to protect domestic ethanol production, the government also imposed a $0.54 per gallon tariff on imported ethanol (Low, 2008). Despite this impediment, Brazilian ethanol exports to the U.S. had increased from $98 million in 2005 to $1 billion in 2006 (Almeida, 2009).

Environmental Sustainability


Environmental sustainability addresses issues related to biodiversity, land preservation, air quality, water and soil preservation (Fontes, 2010). Environmental sustainability means the extraction of renewable resources should not exceed the rate at which they are renewed. It also means that the absorptive capacity of the environment to assimilate wastes should not be exceeded. (Gilbert, Stevenson, Girardet, & Stren, 1996).

To this end, the Life Cycle Assessment (LCA) of the production of biofuels for energy applications represents the tool most widely used in the evaluation of environmental impacts of biofuels production, as far as greenhouse gas (GHG) emissions and energy balances are concerned (Fontes, 2010), so that biofuels are produced in an environmentally prudent manner (Ometto, 2009).

Table 1 provides a comparison of Brazilian sugarcane ethanol and the U.S. corn ethanol in respect of environmental sustainability.

First, in terms of the LCA of ethanol production, sugarcane ethanol uses less energy because it uses bagasse, which is a by-product of sugarcane, as a source of energy in the production process (de Cerquiera, 2009). Corn ethanol, on the other hand, uses natural gas, coal or diesel as an energy source for that purpose (Hofstrand, 2009). Sugarcane ethanol also emits 53% lower GHG emissions than corn ethanol and 74% lower than gasoline (Crago et al., 2010).

Second, in terms of water used in the production process, sugarcane ethanol uses 12 liters of water per liter of ethanol as compared to corn ethanol which uses only 4 liters of water per liter of ethanol (de Cerquiera, 2009).

Third, in terms of land use and deforestation, sugarcane ethanol production only uses 2.6% of agricultural land in Brazil, such that the impact on deforestation is very low (Rosa et al., 2009). On the other hand, there is not enough corn in the U.S. to cover corn ethanol demand without other essential needs going unmet (Keeney, 2009). Moreover, intensive land use by corn farming has negatively impacted biodiversity (Keeney, 2009).

Fourth, in terms of net energy ratio, or the amount of energy in the ethanol produced in relation to the fossil energy used for its production, sugarcane ethanol has a positive net energy ratio while corn ethanol has a negative net energy ratio (de Cerquiera, 2009). This means that more energy is produced in sugarcane ethanol than the fossil energy used for its production. On the other hand, more fossil energy is used in corn ethanol production than the energy that is produced in corn ethanol (de Cerquiera, 2009).

Lastly, in terms of diversion of agricultural resources to fuel instead of food production, Brazil is only using five percent of its cropland for sugarcane ethanol production (Crago et al., 2010). It has considerable capacity to allow expansion of sugarcane production without competing with food production (Crago et al., 2010). On the other hand, the U.S. has limited potential to expand total cropland such than any increase in corn acreage must be met through reduction in acreage of other crops (Crago et al., 2010). This constraint has fueled the food versus fuel debate in the U.S. (Keeney, 2009).

In conclusion, it appears that Brazilian sugarcane ethanol is more environmentally sustainable than U.S. corn ethanol.

Social Sustainability


Social sustainability reflects how the production and use of biofuels impacts agriculture and local development. It aims to ensure that the human rights, land rights and land use rights are respected (Fontes, 2010). Social sustainability requires that individual needs, such as those for health and wellbeing, nutrition, shelter, education and cultural expression should be met (Gilbert et al., 1996).

Table 3 provides a comparison of Brazil and the U.S. ethanol industries in respect of social sustainability.

First, in terms of the working conditions of ethanol workers, majority of Brazilian sugarcane workers are paid very low wages and are subjected to very poor working conditions. Because half of the ethanol plants in Brazil still use manual labour for sugarcane burning, the labourers are exposed to pollution that adversely affects their health (Martinelli, 2008). On the other hand, the corn ethanol workers in the U.S. are paid good wages and are protected by the strict labour standards (Low, 2008).

Second, in terms of impact on the local economy, no significant improvement has occurred in terms of education and health of the Brazilian sugarcane workers despite the flourishing ethanol industry in the country (Martinelli, 2008). On the other hand, the corn ethanol states in the U.S. have witnessed robust economic growth because the industry has provided jobs, a local tax base, and increased demand for housing and land (Low, 2008).

In conclusion, it appears that U.S. corn ethanol is more socially sustainable than Brazilian sugarcane ethanol.

Economic Sustainability


Economic sustainability addresses issues related to the efficient allocation and use of resources, usually expressed in monetary terms (Fontes, 2010). Economic sustainability occurs when development, which moves towards social and environmental sustainability, is financially feasible (Gilbert et al., 1996).

Table 3 provides a comparison of Brazil and the U.S. ethanol industries in respect of economic sustainability.

First, in terms of government support, the Brazilian government does not provide a subsidy to the sugarcane ethanol industry. It has very little intervention in the robust ethanol market in Brazil (Crago et al., 2010). On the other hand, the U.S. government has heavily subsidized the corn ethanol industry, without which it would not survive (Zhang, 2007). It has also imposed an import tariff on Brazilian ethanol in order to protect the domestic corn ethanol industry (Keeney, 2009).

Second, in terms of production costs of ethanol, the price of sugarcane ethanol is cheaper at US$ 0.22 per liter than the price of corn ethanol at US$ 0.52 per liter (Crago et al., 2010). In some cases, the total production cost of sugarcane ethanol in Brazil is thirty nine percent lower than corn ethanol in the U.S. (Crago et al., 2010). Also, sugarcane feedstock is cheaper to grow than corn per gallon of ethanol (Hofstrand, 2009).

Third, in terms of production efficiencies, sugarcane ethanol is more efficient than corn ethanol in its use of land, as it is possible to obtain over forty-five percent more sugarcane ethanol per unit of land than corn ethanol (Crago et al., 2010). This is due in part to the positive climate conditions in Brazil that allows for two harvest seasons a year as opposed to one harvest season in the U.S. (Almeida, 2009).

In conclusion, it appears that Brazilian sugarcane ethanol is more economically sustainable than U.S. corn ethanol.

Table 1. Comparison on Environmental Sustainability


Table 1

Table 2. Comparison on Social Sustainability


Table 2

Table 3. Comparison on Economic Sustainability


Table 3

Future prospects of Brazil's sugarcane ethanol industry


With Brazil being responsible for a share of around sixteen billion liters of the forty billion liters of global ethanol production, there is still a real potential for Brazil to significantly increase its share. In fact, the harvest from sugarcane fields should increase from 473 million tons in 2009 to 700 million in 2014 (Almeida, 2009).

In order for Brazil to significantly increase its global market share, it should actively address the outstanding environmental and social problems as discussed above that negatively affect its sustainability profile in ethanol production (Martinelli, 2008).

Future prospects of U.S. corn ethanol industry The future of the U.S. corn ethanol industry is not certain. This is because of the inefficacy of corn ethanol to mitigate global warming, higher competition of corn ethanol with food agriculture, lower productivity per hectare, higher cost of corn ethanol and prediction of increasing the percentage of ethanol to twenty percent of car fuel (Rosa et al., 2009). Economic analysis has shown that the promised societal benefits of ethanol industry, such as huge job creation and improved infrastructure, have not occurred (Keeney, 2009).

In this regard, the U.S. government has begun scaling back on agriculture subsidies for corn ethanol (Waage, 2008). Instead, it has turned its mind to creating policies for the development of second-generation ethanol. Instead of using food crops, such as corn, which are first-generation ethanol feedstocks, the government now encourages ethanol production from perennial grasses, fast-growing trees and water streams, which have high cellulose content (Gore, 2009). This is in recognition that the only sustainable future for biofuels is one in which the use of feedstocks does not impinge on food supplies and does not add GHGs to the environment (Keeney, 2009).

Conclusion


From a sustainable development perspective, Brazil's sugarcane ethanol production is the better way to produce bioethanol from both the environmental and economic viewpoints as compared to corn ethanol (Rosa, et al., 2009). While a lot of improvements still need to be done to overcome the negative sustainability aspects of its ethanol production, Brazil has demonstrated that comprehensive government policies in biofuels can indeed serve as powerful catalysts in fully developing the biofuels industry though major policy tools, including laws, regulations and market policies (Rosa, 2009). Brazil has ensured that its policies have always been consistent, long-term and supported by broad stakeholder participation (Fontes, 2010) in its quest to attain true sustainable development in clean ethanol production through environmental protection, social development and economic efficiency (OECD, 2001).

References


  • Almeida, W. (2009). Ethanol Diplomacy: Brazil and U.S.in Search of Renewable Energy. Georgetown University, Universia 2009 3(3). 114-124.
  • Crago, C., Khanna, M., Barton, J., Giuliani, E., & Amaral, W. (2010). Competitiveness of Brazilian Sugarcane Ethanol Compared to U.S. Corn Ethanol. A Position Paper delivered at Agricultural & Applied Economics Association 2010, 1-38. http://ageconsearch.umn.edu/bitstream/60895/2/Crago_CostofCornandSugarcaneEthanol_AAEA.pdf (accessed on November 12, 2010).
  • De Cerqueira, C. (2009). Can Brazil replace 5 percent of the 2025 gasoline world demand with ethanol?. Energy, 34(5), 655-661.
  • Dias de Oliveira, M. (2005). Ethanol as Fuel: Energy, Carbon Dioxide Balances, and Ecological Footprint. BioScience, 55(7), 593-602.
  • Fontes, S. (2010). Biofuels: Policies, Standards and Technologies. World Energy Council 2010 Report, 1-152. http://www.worldenergy.org/documents/biofuelsformatedmaster.pdf (accessed on November 12, 2010).
  • Gilbert, R., Stevenson, R., Girardet, D., & Stren, R. (1996). Making cities work: The role of local authorities in the urban environment. Earthscan Publication.
  • Gore, A. (2009). Our Choice: A Plan to Solve the Climate Crisis. Rodale Books Publication.
  • Hofstrand, D. (2009). Brazil's ethanol industry. An article published in the Ag Decision Maker agricultural business web site of the Iowa State University in January 2009. http://www.extension.iastate.edu/agdm/articles/hof/HofJan09.html (accessed on November 21,
  • 2010).
  • Keeney, D. (2009). Ethanol USA. Environmental science & technology, 43(1), 8-25.
  • Low, S. (2008). Ethanol and the Local Economy. Economic development quarterly, 23(1), 71-88.
  • Martinelli, L. (2008). Expansion of Sugarcane Ethanol Production in Brazil: Environmental and Social Challenges. Ecological applications, 18(4), 885-898.
  • Organisation for Economic Co-operation and Development. (2001). Sustainable development: Critical issues. A Policy Brief published in the OECD Observer 2001, 1-8. http://www.oecd.org/dataoecd/29/9/1890501.pdf (accessed December 1, 2010)
  • Ometto, A. (2009). Lifecycle assessment of fuel ethanol from sugarcane in Brazil. The international journal of life cycle assessment, 14(3), 236-247.
  • Ribeiro, S. (2001). Global warming and transport in Brazil - ethanol alternative. International journal of vehicle design, 27(14), 118-128.
  • Rosa, L., Campos, C., & Araujo, M. (2009). Biofuel contribution to mitigate fossil fuel CO2emissions: Comparing sugar cane ethanol in Brazil with corn ethanol and discussing land use for food production and deforestation. Journal of Renewable Sustainable Energy, 1(033111), 1-21.
  • Waage, E. (2008). U.S. Energy Policy Response to International Food Prices: The Costs and Effects of Corn Ethanol Production. Politics & policy, 36(5), 792-804.
  • Zhang, Z. (2007). Can the U.S. ethanol industry compete in the alternative fuels market?. Agricultural economics, 37(1), 105-112.
Josephine V. Yam
Josephine is CEO & Co-Founder of B3 Canada, a mission-driven organization in Canada dedicated to building breakthrough boards through innovative board matching services for businesses, professionals and nonprofits.

Josephine is a highly accomplished lawyer-social entrepreneur with significant years of professional legal, policy, leadership and entrepreneurial experiences in the private, public and nonprofit sectors in Canada and internationally. She has been admitted to practice law in New York (USA), Alberta (Canada), Ontario (Canada) and the Philippines. She has also been interviewed on international television such as CNN and CNBC and featured in the international news magazine Newsweek.

Josephine recently graduated from Stanford University's Executive Program for Non-Profit Leaders. She also completed her Master of Laws (LLM) degree at the University of Calgary, Faculty of Law. Complimenting her advanced education at Harvard Law School and the University of Toronto, Josephine currently serves as one of the Energy Futures Lab Fellows of The Natural Step Canada.

Before founding B3 Canada, Josephine was the Executive Director of the Environmental Law Centre of Alberta and Lead Advisor for Corporate Consulting at the Pembina Institute. As Board Member of Immigrant Services Calgary, a large registered charity, Josephine served as Corporate Secretary, member of the Executive Committee, Board Development & Nominating Committee, Audit & Finance Committee and CEO Evaluation Committee. In the public sector, Josephine served as Senior Legal Counsel with the Government of Alberta’s Ministry of Justice and Ministry of Energy. In the private sector, Josephine worked with the international law firm Baker & McKenzie in its Hong Kong, Manila and Toronto offices, the Asian Development Bank and Procter & Gamble.

With her significant legal and senior management experiences in the private, public and nonprofit sectors in Canada and internationally, Josephine deeply understands that cross-sector collaboration in social innovation is crucial to achieving positive change in the world. This is what drives her deep commitment to advance B3 Canada’s mission of strengthening the board leadership capacity of Canada’s nonprofit sector as a force for good in society.

© 2016. Josephine V. Yam. // Disclaimer. // Website by StartCanada.