Ethanol shuffle based on 'questionable assumptions'

With the combined factors of tight ethanol supply and high demand in Brazil, plus a demand for sugarcane ethanol in the U.S., Brazil and the U.S. have been exporting ethanol to each other—and it’s expected to continue. 

Despite ethanol shortages in Brazil, the country has exported nearly 40 million gallons of sugarcane ethanol to the U.S. from July to October. During the same time period, the U.S. exported 123 million gallons of ethanol to Brazil.

Geoff Cooper, vice president of research and analysis for the Renewable Fuels Association describes it as the ethanol shuffle, with California importing Brazilian ethanol rather than corn ethanol from Nebraska or Kansas and corn ethanol from the Midwest is traveling via rail to Texas ports where it is shipped to Brazil to backfill what that country has sent to the U.S. “Picture the irony of a tanker full of U.S. corn ethanol bound for Brazil passing a tanker full of cane ethanol bound for Los Angeles or Miami along a Caribbean shipping route,” Cooper said. “Remember, this is all being done in the name of reducing GHG emissions. But what are the real GHG implications of the shuffle? And what are the economic impacts?”

The pull to bring Brazilian ethanol to the U.S. is happening because the U.S. EPA and the California Air Resources Board (CARB) “treat Brazilian sugarcane ethanol as if it were the Holy Grail of biofuels,” Cooper says. However, the assumption that the production of sugarcane ethanol results in fewer lifecycle greenhouse gas (GHG) emissions than corn ethanol is based on questionable analyses, Cooper argues. On the land use change side, EPA’s analysis for the renewable fuel standard (RFS2) concluded that expansion in the sugarcane ethanol industry won’t cause any land use change emissions in Brazil. Yet the acres of sugarcane grown in Brazil have doubled in the past decade. For the U.S., the EPA’s land use change assumptions are that with more corn and less soybeans produced, Brazil will take on more soybean production to capture increased prices. “The EPA says Brazilian soybean acreage expands at the expense of pasture and forestland,” Cooper says. “And the emissions from those land conversions get charged back to the U.S. corn ethanol. So, out of all of the LUC emissions assigned to corn ethanol in EPA's analysis, two thirds of those emissions occur in Brazil.”

Looking at CARB’s analysis produces some head scratchers as well. For example, CARB lets Brazilian ethanol producers claim their sugarcane crop was mechanically produced. The RFA, on the other hand, counters that much of sugarcane crops are manually harvested after the field is burned—releasing significant GHG emissions. Another assumption is that sugarcane ethanol is transported to export terminals by rail and pipeline. Cooper asserts that it’s commonly known that trucks are the main transportation, an important detail since emissions from transportation are calculated as part of the overall carbon footprint and rail and pipeline transportation emits less GHG than truck transportation.

In addition, despite claims otherwise, Brazilian ethanol is much more expensive than corn ethanol in the past two years. Through August, Brazilian ethanol was an average $1.56 a gallon more than U.S. ethanol, according to figures from the California Energy Commission. That pricing difference is going to hit drivers’ pocketbooks. “As a result of tightening annual LCFS carbon intensity targets, CARB expects much less corn ethanol will be used in California in coming years and substantially more cane ethanol will be imported,” he said. “If the current pricing differential between U.S. ethanol and Brazilian ethanol continues (or widens), the cost to California drivers of the transition to cane ethanol could be tremendous.”

But sugarcane ethanol results in lower GHG emissions, so the higher cost is justified, right? Depends on how you look at it. The ethanol shuffle is actually worse environmentally, Cooper calculated, due to the emissions that happen during transporting Brazilian and U.S. ethanol in ships. Using CARB’s transportation distances and emission factors, he shows that the GHG emissions from transporting Brazilian ethanol to California and backfilling U.S. ethanol to Brazil is more than double the emissions from meeting ethanol demand with U.S. ethanol.

For more information, including a chart with the breakdown of distances and CO2 equivalent emissions, see Cooper's blog on the topic.