Report shows potential of emerging ethanol industry in Ecuador

By Erin Voegele | February 12, 2018

A new report shows that Ecuador may be a promising new market for ethanol. The country currently has an E5 mandate that it is not meeting and its domestic sugar industry is looking to expand to non-food products, according to a report filed with the USDA Foreign Agricultural Services Global Agricultural Information Network.

According to the report, Ecuador produced approximately 83 million liters (21.93 million gallons) of ethanol last year. The fuel is currently available for sale in 41 percent of Ecuador’s gas stations.

Ecuador first issued a government policy encouraging the production of renewable fuels in 2001. In 2005, a new law was passed offering tax incentives for the production of renewable fuel additives, including ethanol. An E5 pilot program started in select cities in 2010 and was later expanded. In 2015, the government announced its intent to expand the ethanol mandate to E10.

The report indicates that Ecuador will need to significantly increase its ethanol production in order to meet the 10 percent blend goal. Estimates show approximately 314 million liters of ethanol would be needed to move the country’s blend rate from E5 to E10, in addition to the 83 million liters already produced. In order to reach this goal, the report states that the country will need to continue to develop its ethanol infrastructure, including a significant expansion of sugarcane fields, refinery and storage capacity, the adoption of new technologies and management practices, and the creation of incentives for its domestic industry to increase production.

The report also lists several current barriers to exporting ethanol to Ecuador. The report states that if the country increased its blend rate to create a more enabling environment to complement its domestic ethanol industry with foreign sources, potential trade barriers could include current tariffs and taxes on alcohol imports that would make it prohibitive to source ethanol form foreign countries. The report also states that the country’s petrochemical sector could see a higher blend mandate as operational costly and as a substitute for petroleum-derived fuels, which are the core of their business.