The inclusion of hydrous ethanol has long been a subject of debate.

"The debate over what is and what is not 'substantial transformation' goes back 20 years," said the company president EPM spoke to. "U.S. producers argued that removing water from hydrous ethanol did not meet CBI criteria. Caribbean producers argued that it did. Eventually, a settlement was reached, which left us with the policies in place today."

Full-fermentation producers can maximize CBI imports
In addition to the volume of CBI ethanol allowed to be imported into the United States via "substantial transformation" of European and Brazilian feedstock, the CBI allows for higher levels of "full fermentation" process ethanol derived from indigenous feedstock. This market would perhaps be spurred by very low molasses or sugar prices, according to an EPM source associated with a Jamaican ethanol plant.

Most analysts believe there is sufficient land available for sugar cane production in some CBI nations but insufficient economic potential to spur sugar cane planting for ethanol production. Reportedly, Guatemala, Nicaragua and the Dominican Republic have the potential to support indigenous production but have not done so.

In fact, there is considerable room for growth under the "indigenous production" definition of the CBI, which places no U.S. import cap on ethanol made from indigenous Caribbean feedstock, according to an October 2003 California Energy Commission (CEC) report entitled, "Ethanol Supply Outlook for California."

"While there appears to be only very limited plans for indigenous production. . . at present, the potential is being evaluated in a number of [CBI] countries and is. . . substantial," the report stated.

This year, with no indigenous Caribbean production facilities on line and only one expansion project complete, the CEC expects about 100 mmgy to be imported under the CBI, with just 50 mmgy destined for the vast 900-mmgy California market. However, plans for new or revived full-fermentation ethanol plants in Panama, Costa Rica and Trinidad-Tobago could double CBI imports in the years ahead, according to the CEC report.

Four CBI producers
There are, according to the CEC, four active CBI ethanol rectification/dehydration facilities, including two in Jamaica, one in Costa Rica and one in El Salvador. Interestingly, the CEC concluded, the limiting factor of CBI ethanol imports to California is low production capacity.

In Jamaica, Petrojam Ethanol Ltd., in some relationship with ED&F Man, operates a 20-mmgy dehydration plant, exporting fuel ethanol to the United States under CBI provisions. ED&F Man also operates its own 20-mmgy ethanol plant on the island, according to industry documents. In Costa Rica, a company called LAICA operates a 20-mmgy ethanol plant, and in El Salvador, another company (unable to be identified for this report) reportedly runs a 10-mmgy facility.

Ethanol was produced for export by Petrojam for the first time in 1985 but, according to Petrojam's Web site, the first CBI ethanol plant was established in the early 1980s by U.S.-based Tropicana. Representing an investment of about $23 million, the plant was easily the largest investment that had entered Jamaica or the Caribbean under the CBI until as late as 1987.

From what EPM was able to ascertain, Petrojam's operations have historically consisted of procuring low-cost wine alcohol feedstock from France, Spain, Italy, Portugal and Greece. Feedstock purchases have also been made from India and Brazil, according to online company statements.

The rectification of the alcohol—removing waste components including solids, methanol and higher alcohols—is the first production step for most CBI producers. One technology provider described wine alcohol from Europe as a "nasty feedstock—bottom of the barrel stuff—that requires sophisticated separation technologies."

Dehydration in Jamaica (formerly accomplished by azeotropic distillation, and more recently by the more advanced and environmentally-friendly molecular sieve technology), along with denaturing, completes the process and prepares the product for export to the United States.

U.S. regulations require CBI ethanol to be marketed through a U.S. agent. In the case of Petrojam, marketing was done previously through International Alcohols Limited (IAL), then through ED&F Man, and more recently through Moloco Inc., for sales to Murex Inc. in the United States, according to Petrojam's online company records.

CBI's potential for growth
Acknowledging that the state's fuel supply has included ethanol deliveries via marine tankers from the Caribbean, on an irregular basis for several decades, the CEC report stated, "Shipments of imported ethanol are contributing to the state's ethanol supply, and there are increasing prospects for foreign sources of supply to the state in the future."

<-- Previous Page	1   2   3   4	Next Page -->
View Entire Article