Ethanol proves a sweet export
Caribbean, Latin American nations turn sugar cane into biofuel for
By TYLER BRIDGES
Copyright 2007 Houston Chronicle
SOJO, PERU — With a sweep of his arm, Gov. Cesar Trelles showed off
acres of hilly scrub-land that, at first glance, seem best suited for
the foxes, lizards and geckos that call it home.
But in a few months, he said, the panorama will change dramatically.
Dallas-based Maple Energy will level the land and plant 20,000 acres of
sugar cane in a $157 million project to produce ethanol for export to
the United States and Europe.
It plans to begin growing sugar cane here in 2008, using water from a
nearby river and a sophisticated drip irrigation system. Ethanol
production is expected to start in 2008 with a goal of producing 30
million gallons a year.
"Nobody wanted this land, but now it is worth very much," said Trelles,
the governor of Piura state in northern Peru.
Latin American and Caribbean countries are trying to catch the biofuels
Government officials throughout the region say they want to help reduce
global warming and improve public health by producing a less-polluting
fuel. But the main impetus is the desire to create jobs, attract new
investment and increase exports.
"It's a cleaner, cheaper and homegrown source of energy," said David
Lewis, who tracks biofuel developments in Latin America and the
Caribbean for Manchester Trade, a Washington, D.C.-based consulting firm.
Brazil has jumped far ahead of everyone in the region. Most other
countries plan to begin exporting biofuels by 2010.
No country in Latin America or the Caribbean other than Brazil is
exporting biofuels to the United States made from a homegrown crop,
according to Lewis and officials in the region who track biofuels
Companies in Jamaica, Trinidad, Costa Rica and El Salvador are importing
alcohol made from Brazilian sugar cane, processing it into ethanol and
then shipping it duty-free to the United States.
Together, the four countries have exported about 90 million gallons of
ethanol to the United States through May, or about as much as Brazil,
Sugar yields higher profit
Nearly all of the promising ventures involve sugar cane-based ethanol,
like the Maple Energy project, because corn-derived ethanol or
biodiesels from vegetable oil are too expensive, said Manlio Coviello,
an energy specialist with the Economic Commission on Latin America and
the Caribbean, a U.N. agency based in Santiago, Chile.
But Todd Johnson, a senior energy specialist for Latin America and the
Caribbean for the World Bank, said most countries in the region face the
barrier of being high-cost sugar producers, so ethanol producers would
require subsidies to turn a profit.
"In most countries, it's more economical to produce sugar than ethanol,"
Johnson said by telephone from Washington, D.C.
Nevertheless, spurred by publicity about ethanol's benefits and the
interest of foreign investors, governments and investors throughout
Latin America and the Caribbean are moving ahead with plans to turn
sugar cane into ethanol or to blend in motor fuel.
In Jamaica, government officials hope ethanol production could revive
the island's dying sugar industry.
Guatemala will soon have five sugar cane-based ethanol plants in
operation, with plans for three more on the drawing board, said Aida
Lorenzo, general manager of the Renewable Fuels Association of Guatemala.
"We have interested investors from the United States, Japan, Brazil and
Taiwan," Lorenzo said.
Argentine soybean oil producers expect to begin converting a portion of
their crop for biodiesel exports in the next three to five years, said
Carlos St. James, president of the newly formed Argentine Biofuels Chamber.
Chile is conducting research to turn wood chips into fuel.
"The current research says it's five to 10 years away from being
competitive" with sugar cane-based ethanol, St. James said.
Maple's project isn't the only cane-to-ethanol project in Peru. Agricola
de Chira is already planting sugar cane on 8,000 acres in northern Peru
to produce ethanol by 2009 at a total cost of $65 million, said Angel
Irazola, the project's general manager.
The United States and Brazil — supported by the Inter-American
Development Bank and the Organization of American States — are trying to
accelerate efforts throughout Latin American and the Caribbean.
They have targeted four countries and will begin with a needs assessment
this summer, said Matt McManus, a State Department official based in
Those countries are Haiti, the Dominican Republic, El Salvador and the
Caribbean island nation of St. Kitts and Nevis.
Jamaica, Trinidad and El Salvador are importing dehydrated sugar cane
alcohol from Brazilian companies, processing it into ethanol and then
shipping it duty-free to the United States under the Caribbean Basin
Initiative and the Central America Free Trade Agreement.
This approach allows the Brazilian companies to avoid paying the
54-cent-per-gallon tariff imposed by the United States on imported
ethanol. Brazilian producers also export ethanol to the United States.
Colombia plans to produce ethanol for vehicles — the Congress has begun
mandating a 5 percent mix of ethanol in vehicles — and has even more
ambitious plans to produce biodiesel through palm oil plantings.
"We want to reduce dependence on imported fuel, diminish global warming
and create massive rural employment," said Jorge Bendeck, executive
president of the Colombian National Biofuels Federation.
Up to 500 permanent jobs
Meanwhile, Maple Energy's project in northern Peru is expected to create
400 to 500 permanent jobs and hundreds more during the construction
process, said Rex Canon, Maple's CEO.
Maple bought 20,000 acres of unused land from the state government of
Piura for $640,000 with the promise of investing $32 million, Canon
said. The project includes constructing a pipeline off the coast to a
facility where tankers will load the ethanol for export.
Maple, which also has invested in gasoline refining and electric
generation in Peru, is relying on private financing for the project,
which will not be government-subsidized, Canon said. It will use a
combination of its own cash, foreign bank loans and equity raised on the
Alternative Investment Market of the London Stock Exchange.
Canon said Peru's northern coast offers among the best conditions in the
world for producing sugar cane for ethanol, with hot, dry weather during
the day and cool temperatures at night, year-round.
Check for earlier Pacific Biofuel posts: http://pacbiofuel.blogspot.com/