Biofuel development in Latin American and the Caribbean

Risks and Opportunities

Master's Thesis, 2008

117 Pages, Grade: 100%






Table of contents

List of abbreviations

List of tables

List of figures

1. Introduction
1.1 Motivation
1.2 The area under investigation
1.3 Research objectives and scope
1.4 Intended significance
1.5 Structure of the paper
1.6 Research methodology

2. Global energetic overview
2.1 Latin America and the Caribbean: Regional profile
2.1.1 Natural resources

3. Biofuels and their production
3.1 Definition of biofuels
3.1.1 Sources of biofuels
3.1.2 Alternative biofuels production pathways
3.1.3 Vehicle fuel compatibility
3.2 Biofuels globally
3.2.1 Production
3.2.2 Consumption
3.2.3 Future perspectives

4. Brazil
4.1 Outlook
4.2 History
4.3 Is Brazil ethanol really a model to follow?

5. Latin America & the Caribbean and the use of bioenergy
5.1 Latin America and the Caribbean: biofuels drivers
5.2 Regional potential
5.3 Biofuel policy implementation
5.4 Biofuel production
5.5 Conclusion

6. Biofuels opportunities
6.1 Green House Gases (GHG) reduction potential
6.2 Energy security
6.3 Rural development

7.Biofuels risks
7.1 Food security- the “food vs. fuel” debate
7.1.1 Food price inflation
7.1.2 Proposed action
7.2 Environmental impacts and biodiversity loss
7.3 Water scarcity

8.Discussion and criticism
8.1 Latin America and the Caribbean: Undeniable potential
8.2 Biofuels in Latin America and the Caribbean: Key questions
8.3 Other externalities
8.4 Measures
8.5 Extras


Annex 1: Glossary



Several persons have been actively involved in allowing this thesis to be concluded. First of all, I would like to thank my first supervisor, Prof. Dr.-Ing. Gerhard Lappus for accepting my topic and enable me to work in this particular field. I would also like to acknowledge my second supervisor, Dr. Jörg Becker for his time and consideration giving me useful hints and thought-provoking ideas. He provided me with the most valuable guidance and critique for the completion of this thesis.

My friend Andrea Tönjes deserves credit as well because of her support teaching me how to put together the pieces of my (sometimes) disjointed thoughts. Additionally, I would like to thank PD Dr. Oliver Dilly from the Chair of Soil Protection and Recultivation for his important inputs to this thesis.

Thanks also to MSc. Piotr Jaworski for the time he invested providing me with scientific support.

I would also like to thank my “Cottbus family” for their encouragement for developing this topic (I will not forget that late night kitchen-debate that shaped the beginning of this wonderful project - Thanks Lauro!). Juan Pi Gutierrez deserves a special mention. He managed to be surer of my ability than myself from the beginning of this venture. Moreover, I would like to give my appreciation to Ivan Zaleta, with who I am immensely indebted for his inspiration and support, professionally and personally.

Naturally, I would also like to thank my family, which makes everything I do, possible. Finally, I would like to express my gratitude to the Programme Alßan. Without its support it would not have been feasible for me to carry out and to complete this project.


I hereby declare that all information disclosed in this thesis is a product of my original and individual work. Neither this work in its complete form, nor any of its parts has been submitted to any university other than the Brandenburg University of Technology for the award of any academic degree.

Furthermore, I confirm that all sources other than my own have been duly acknowledged.

Place, Date (Signature)


In the light of availability concerns and environmental implications of fossil fuels, attached with the remarkable rise in the price of oil during the past several years; biofuels are getting a significant increase in interest worldwide from governments, private investors, farmers and the public in general.

Nevertheless, the use of cropland for biofuels had become a very controversial topic. On one hand, promoters state that biofuels represent opportunities to increase the energy security and to generate environmental and social benefits (through greenhouse gases emissions reductions and poverty alleviation through rural development respectively). On the other hand, topics such as the effects on food prices and availability, soil fertility and erosion, competition for scarce land and water resources and biodiversity loss are also widely discussed as important concerns related to further development of bioenergy. Notwithstanding this, several developing countries around the world are turning into the biofuels direction to satisfy the demand of developed countries while contributing to their economical growth and/or diversifying their current options of energetic arrangements. For Latin America and the Caribbean (LAC), a geographical area with privileged natural resources; home-grown energy crops emerge as an appealing possibility, especially given the example of Brazil, a historical leader in ethanol production.

After assessing some core elements of the biofuel’s debate, the evidence seems to suggest that biofuels may represent a valuable source of renewable energy. Nonetheless, in order to represent a promise to the LAC region, local governments will be required to firmly normalize land use and agricultural activities, while cautiously shaping public policies. Whether the biofuels’ boom will represent an opportunity or a risk for the LAC region would depend on how each country regulate agricultural and manufacturing practices, including how many small farmers and workers from rural areas would benefit from the industry.

Keywords:Renewable resources, Biofuels risks and opportunities, Latin America and the Caribbean, Ethanol, Biodiesel, Food vs. Fuel debate, GHG reduction, Holistic approach to biofuels.


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Table 1 Top five fuel ethanol producers in 2005

Table 2 Top five biodiesel producers in 2005

Table 3 Brazilian’s ethanol exports in million of litres

Table 4 Latin America and the Caribbean countries’ energetic profile

Table 5 South American countries’ biofuel potential

Table 6 Central American countries’ biofuel potential

Table 7 Caribbean countries’ biofuel potential

Table 8 South American countries’ legal framework development in relation to biofuels

Table 9 Central American countries’ legal framework development in relation to biofuels

Table 10 Caribbean countries’ legal framework development in relation to biofuels

Table 11 South American biofuel production

Table 12 Central American biofuel production

Table 13 The Caribbean biofuel production

Table 14 US fuel ethanol imports by country (2002-2007)

Table 15 Ethanol from grains

Table 16 Ethanol from sugar beets

Table 17 Biodiesel from Fatty Acid Methyl Esters

Table 18 Ethanol from Cellulosic Feedstock


Figure 1 World energetic consumption (1981-2006)

Figure 2 Regional consumption pattern (2006)

Figure 3 Ethanol Production steps by feedstock and conversion technique

Figure 4 World fuel ethanol production, (1975-2005)

Figure 5 World biodiesel production, (1975-2005)

Figure 6 Percentage of global production of fuel ethanol and biodiesel (2006)

Figure 7 The Brazilian energetic matrix (2005)

Figure 8 Brazilian’s ethanol production (2000-2010)

Figure 9 Ethanol fuel production by year

Figure 10 Potential for expansion of farm land once an E5 blend has been achieved

Figure 11 Potential for expansion of farm land once a B5 blend has been achieved

Figure 12 Index of per capita food energy supply

Figure 13 Holistic approach to the problem (1)

Figure 14 Holistic approach to the problem (2)



Today, the modern global community is greatly dependent on non-renewable resources, especially, on fossil fuels. Growth of their employment for long periods of time had taken place as if there were not limitations in terms of availability or environmental implications. Nevertheless, fossil fuels (especially oil) are distressed by geopolitical complexities that augment price instability, affecting the economy in global terms.

In the light of the remarkable rise in the price of oil during the past several years and considering that they can replace petroleum fuels in today’s vehicles; biofuels are getting a significant increase in interest from governments, private investors, farmers and the public in general worldwide. Therefore, it should not be a surprise that biomass is considered by some players as a feasible alternative to comply with the current energy requirements.

Promoters state that biofuels represent opportunities to increase the energy security and to generate environmental and social benefits (through greenhouse gases emissions reductions and poverty alleviation through rural development respectively).

On the other hand, topics such as the effects on soil fertility and erosion, competition for scarce land and water resources, and biodiversity loss are also widely discussed as important concerns related to further development of bioenergy.

Maybe the most controversial implication of biofuels expansion is the significance of agricultural resources for food security worldwide. This aspect has been intensively discussed in the scientific and political sphere.

This last point is exactly from where the main motivation of this research came from. It came from the concern about the possibility that large scale political decisions in this matter would be justified notwithstanding social and environmental costs. This unease might have been aggravated by the fact of coming from a net food importing country.

The actual impacts of the biofuel industry development are part of an always uncertain future. A promise? A risk? It is said that its consequences will vary depending on the evolution of technological developments, market structures and legislation frameworks at national and international levels.

The complexity of the situation and the role of different interest groups in local, regional and global levels are the some of the objects under research in this Master Thesis.


It had been suggested that Latin America is the geographic area with more contrasts among countries. There are noteworthy variations regarding the distribution of wealth, incomes and opportunities. In addition, one of the most important aspects of inequality among the region’s population is the unequal access even to basic infrastructure for example electricity, water and drainage.

Undernourishment and rural poverty are some of the region's main challenges even when sources such as FAO/GBEP (2007) had suggested that these countries have sufficient food production and had shown economic regional growth.

As it will be discussed on chapter 5, the Latin America and the Caribbean area is getting a lot of attention in regard to biofuels development because it hosts Brazil, an important biofuels producer, and because its richness in biomass resources. Besides, the region enjoys other advantages such as long growing seasons, tropical climates, high precipitation levels and low labour and land costs. Furthermore, many countries have the interest of balancing their energetic mix without risking their further development.

These contrasts and similarities at a regional level make this study even more interesting and challenging. Therefore, an analytical framework intends to take into consideration these aspects in the countries under study including Mexico (in North America), the countries located in Central and South America plus the Caribbean Islands.


The objectives of this Master Thesis are various. First of all, it is intended to give an introduction about what biofuels are and how they are produced, making a brief comparison among different pathways of production. This study focuses on two biofuels produced with organic matter: ethanol and biodiesel.

After, the study would try to describe the current situation of biofuels, from a general perspective (worldwide) and then narrow the scope to the countries under research making a distinction among Brazil and the rest of Latin America and the Caribbean.

The core element of this case analysis comes then with the exploration of the possible risks and opportunities of the enlargement of the biofuel industry with a specific focus on the region. The paper will review the potential effects of bioenergy on climate change, food security, biodiversity, and rural development.

This analysis will make a discussion come up about some requirements that need to be tackled bringing ideas for a sustainable performance in terms of both environmental and social impacts.

The main objective of the whole research is in principle to maintain a scientific position carrying out a study comparing some of the findings available in literature. With a critic focus, the objective is not to present a position so as to either support or attack the development of biofuels. On the other hand, it is written in order to find possible mitigation measures in the case that big scale political decisions are made in this matter, always highlighting the complexity of the implications of the biofuels industry.


For some actors, biofuels represent a feasible choice for a more sustainable array of energy options. But truly, opportunities come with challenges. Many aspects should be taken into consideration to proceed making informed decisions; considering the chances and trying to minimize the potential negative effects.

This case analysis intends to depict a comprehensive picture of the system of actors and structures which have a stake in the use of the agricultural resources, bearing in mind the land and water resources and the importance of agricultural resources for food security.

The discussion recalls that biofuels should be an alternative only if they are socially and environmentally sustainable (and not only economically beneficial).


The following chapters cover various aspects.

Chapter 2 is focused on giving a brief foreword about the conditions of the energy markets worldwide. Also, it provides a general picture of the Latin American region in economical and social terms.

Chapter 3 covers topics such as the definition of biofuels and their potential sources. Besides, the chapter explores alternative biofuels production pathways and their energetic balance. It finalises with a global portrait of the biofuel production and consumption nowadays and the perspectives for the future.

Chapter 4 reviews the Brazilian case study considering mainly its historical development and socio-economical dimensions.

Chapter 5 includes an analysis of relevant aspects of the bioenergy development in the Latin America and the Caribbean countries such as; particular drivers derived from their energetic mix, regional and local potential, policy implementation and current production. Chapter 6 provides a glimpse on the opportunities generated by the biofuel industry expansion such as GHG reduction potential, contribution to the energy security and rural development with a specific focus on the region under study.

Chapter 7 on the other hand focuses on the potential risks such as impacts on food prices and security, biodiversity loss and water scarcity aggravation.

Chapter 8 provides a discussion about the conflicting issues handled on Chapters 6 and 7. Chapter 9 covers the conclusions derived from the discussion held on previous chapters. Chapter 10 finalizes the research with some reflections about issues that need further exploration and research in the short and medium run.


Information has been sourced from books, recent news, journals, government agencies, trade associations, industry news and international electronic libraries. Scientific articles were corroborated with other sources, in order to create a richer picture of the events happening in this extent.

The methodology of this research work was based on the assessment and integration of divergent points of view coming from different stakeholders for better understand their concerns and the specific roles they can play in the implementation of solutions.


According to BP’s Statistical Review of World Energy (2007) during the last 10 years there have been significant changes in supply and demand conditions of the energy markets. Topics such as: the availability of energy to enable economic growth for a rising global population and the changing composition of the available fuel mix had remained at the centre of attention. High prices for fossil fuels, combined with political interest, encouraged the rapid growth of renewable energy sources, but this growth starts from a very small base.

The greatest challenge facing the energy sector today is how to meet rising demand for energy, whilst at the same time reducing the emissions of greenhouse gases due to the climate change recognition in the political and scientific sphere.

In 2007 BP suggested that growth in global energy consumption slowed, despite stronger economic growth: World primary energy consumption increased by 2.4%, down from 3.2% in 2005 and just above the last 10-year average.

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Fig. 1World energetic consumption (1981-2006)

Source: BP. Statistical Review of World Energy, June 2007

It was also pointed out that growth slowed for every fuel except nuclear power. BP (2007) also suggested that during 2006 oil was the slowest growing fuel, while coal was the fastest growing. Although oil remains the world’s leading energy source, it has lost market share to coal and natural gas in the past decade.

In spite of this, oil remains the leading energy source in all regions except Asia Pacific and Europe and Eurasia. Coal dominates in the Asia Pacific region, while natural gas is the leading fuel in Europe and Eurasia. The Asia Pacific region accounted for two thirds of global energy consumption growth last year (BP 2007).

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Fig. 2Regional consumption pattern (2006)

Source: BP. Statistical Review of World Energy, June 2007

Hydrocarbons’ availability concerns and the crucial interest on guarantying energy security whilst reducing GHG emissions; had contributed to the growing enthusiasm about biofuels around the world.


Latin America and the Caribbean include the island nations of the Caribbean Sea, Mexico, Central America, and South America. According to the UNCCD (2008) the population of Latin America and the Caribbean has increased dramatically over the last decades. From 1950 to 2008, it increased from 166 million 465 million inhabitants in which around 110 million live below the poverty line. Another important change in the population of the region is that it has rapidly moved to the urban areas. In LAC over 75% of the population of the region lived in cities in 2000. Especially massive ones are Mexico City (19.2 million people in 2005) and São Paulo (10.9 million people). Thinkquest (2008) suggested that urbanization has affected land usage, the level of natural resource depletion, and has created waste.

The World Bank (2008) pointed out that the LAC region and Sub Saharan Africa are the world’s most unequal region in terms of income distribution. The richest 20 percent receive 57 percent of the total, while the poorest consumes receive less than 3 percent. Most of inequalities between individuals can be attributed to inequalities observed within countries. In contrast, differences in average per capita incomes or consumption across countries are relatively small.

Economic overview

According to US Aid (2008) following the economic crises of the 1980s, economic activity has accelerated, but much of it is in the informal sector. It was also mentioned that individuals and families face increasing job insecurity, lower wages and a reduction in essential social services.

US Aid (2008) also noted that the change from military to civilian regimes throughout the region and the devolution of powers to local authorities have given impetus to grass-roots and local initiatives, creating a climate for a diverse network of local and national non-governmental organizations and associations. Increasingly, local and municipal authorities are subject to election rather than appointment by central governments or parties, increasing their accountability and responsiveness to local populations.



According to the World Bank (2008) the region has the world’s largest reserves of arable land. Nevertheless, unplanned expansions of cities, erosion and changes in agricultural practices have contributed to the loss of once productive agricultural land. Long extensions of land have been degraded, mainly due to erosion caused by non-sustainable land use, nutrient depletion, chemical pollution, overgrazing and deforestation.


The UNCCD (2008) suggested that the region under study has the greatest water resources per person (24.5 thousand cubic meters) and uses only 2 percent of that each year (South Asia, for instance uses 52 percent of its water resources in a year). Nevertheless, a large portion of cities' solid waste, industrial waste and sewage goes untreated, contaminating water supplies; cities like Lima and Mexico City which depend on wells are especially burdened (US Aid 2008). It was also noted that water plays an important role in generating electricity in the region since in 2005 hydropower generated 58 percent of the region’s electricity—higher than any other region. The region’s reliance on renewable energy, and a shift from oil to gas to generate electricity, has contributed to slowing the growth of carbon dioxide emissions.


Of the top ten countries in the world in terms of biodiversity, called the ecological mega-diversity countries, five are in Latin America. These include Brazil, Colombia, Ecuador, Mexico, and Peru. Latin America is home to 40% of all the species found in tropical forests throughout the world. In fact, Colombia alone has 10% of the plant and animal species in the world (Thinkquest 2008).

Further features

According to the UNCCD (2008) even when Latin America and the Caribbean is a region well known for its rain forests, it is actually about one-quarter desert and drylands (20,533,000 km2). The hyper-arid deserts of the Pacific coast stretch from southern Ecuador, the entire Peruvian shoreline and northern Chile. Further inland, at altitudes of 3,000-4,500 meters, high and dry plains (Altiplano) of the Andean mountains cover large areas of Peru, Bolivia, Chile, and Argentina. Besides, large parts of Colombia and Venezuela are highly degraded.

In Dominican Republic, Cuba, Haiti and Jamaica, there are arid zones, as erosion and water shortages are noticeably intensifying in the Eastern Caribbean. Most of Mexico is arid and semi­arid, mainly in the north. Land degradation and severe droughts make the Central American countries vulnerable to extreme events, delaying their sustainable development.

It was also mentioned that poverty and pressure on land resources are causing land degradation in many of these areas.

The UNCCD (2008) strongly emphasized the need for sustainable development in the LAC region. Unsustainable practices including excessive irrigation and inappropriate agricultural practices, inadequate legal issues, inappropriate use of soil, fertilizers and pesticides, overgrazing, and intensive exploitation of forests. Frequent droughts and forest fires along with these practices lead to land degradation. Indeed, the sharp losses of ecosystem productivity reduce overall economic productivity and livelihoods.



According to the IEA (2004) either in liquid form such as fuel ethanol or biodiesel, or gaseous form such as biogas or hydrogen, biofuels are simply transportation fuels derived from biological (e.g. agricultural) sources. The NNEC et al. (2007) suggested that contrary to fossil fuels, biomass1 can, at least in principle, be replaced in a somewhat brief time period.

The present research focuses on liquid biofuels, because they are the fastest growing bioenergy sector and because countries from Latin America and the Caribbean benefit from favourable conditions for their production and future expansion, as it will be discussed in Chapter 5.

An additional cause for stressing liquid biofuels is that, for the moment, they are obtained mainly from agricultural crops, which can as well be used for food and animal feed, and hence could have direct impacts on food security, a core concern of the present paper.

According to NNEC et al. (2007) ethanol and biodiesel are the most widespread liquid biofuels. Ethanol is an alcohol made by fermenting biomass. Currently, ethanol is made from starches (such as corn-based ethanol) and sugars (such as sugarcanebased ethanol). Nevertheless, researchers are also looking into making ethanol from cellulose, the fibrous material that makes up the bulk of most plant matter. Ethanol is mostly used as blending agent with gasoline to increase octane and reduce vehicle emissions. On the other hand the biodiesel is made by combining alcohol (usually methanol or ethanol) with vegetable oil (mostly soy oil), animal fat, or used cooking grease. Other vegetable oils, including rapeseed, mustard, canola, and sunflower can also be used to produce biodiesel. Like ethanol, biodiesel can be used as an additive to reduce vehicle emissions or in its pure form as an alternative fuel for diesel engines.


According to the IEA (2004) several sources can be used in order to produce biofuels:

- Cereals, grains, sugar crops and other starches can fairly easily be fermented to produce ethanol, which can be used either as a motor fuel in pure (“neat”) form or as a blending component in gasoline.
- Oil-seed crops (e.g. rapeseed, soybean and sunflower) can be converted into methyl esters, a liquid fuel which can be either blended with conventional diesel fuel or burnt as pure biodiesel.
- Cellulosic materials, including grasses, trees, and various waste products from crops, wood processing facilities and municipal solid waste, can also be converted to alcohol but the process is more complex relative to processing sugars and grains. Techniques are being developed, however, to more effectively convert cellulosic crops and crop wastes to ethanol.
- Organic waste material can also be converted into energy forms which can be used as automotive fuel: waste oil (cooking oil) into biodiesel; animal manure and organic household wastes into biogas (methane); and agricultural and forestry waste products into ethanol. Raw materials for these processes are generally low cost. Converting organic waste material to fuel can also diminish waste management problems.


Ethanol Production - First Generation

According to the IEA (2004) ethanol can be produced from any biological feedstock that contains appreciable amounts of sugar or materials that can be converted into sugar such as starch or cellulose. Sugar beets and sugar cane are obvious examples of feedstock that contain sugar. Corn, wheat and other cereals contain starch (in their kernels) that can relatively easily be converted into sugar. Similarly, trees and grasses are largely made up of cellulose and hemicellulose, which can also be converted to sugar, though with more difficulty than conversion of starch.

According to Rothkopf (2007) there are a variety of methods that can produce ethanol. The initial steps of each method tend to be feedstock-specific, but in all processes, the starch is extracted, fermented and distilled into ethanol. These key steps in the feedstock-to-ethanol conversion process, by feedstock type, are shown in figure 3 and discussed below.

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Fig. 3Ethanol Production steps by feedstock and conversion technique
Source: IEA (2004)

Rothkopf (2007) offered a comprehensive description of the steps of the ethanol production process as follows:

Sugarcane Ethanol

The process of producing ethanol from sugarcane entails:

1) Extraction – the sugarcane must be broken up to make the juice more easily accessible; this is typically accomplished using a roller press. The juice is then collected, and the leftover bagasse, comprised mostly of sugarcane stalks and water, can be burned in boilers to co-generate power for the processing plant. Additional steps such as imbibation or diffusion can maximize extraction. These steps involve extracting the remaining sucrose by adding water to the bagasse.
2) Purification – there are a number of impurities contained in the juice once it is extracted, including dirt and small pieces of bagasse. Once extracted, the juice is typically filtered through a variety of methods such as straining, sedimentation, and centrifuge force. It is then chemically treated, heated and put through a process of evaporation to extract excess water.
3) Saccharification – lime is added to the juice mixture and the liquid is then heated and cooled again. After this phase, the juice is pasteurized and sterilized.
4) Fermentation – the sugars are transformed into ethanol and carbon dioxide through a biochemical process where yeast is added to ferment the sugars. This process includes several stages of fermentation and can last from 4-12 hours. Afterwards, the yeast is removed from the ethanol by centrifuge.
5) Distillation – the mixture now contains 7-10% alcohol and unfermented solids. It is processed in a series of distillation columns to remove the unfermented matter. The ethanol leaves through the top of the final column with strength of 96%, and the leftover phlegm leaves through the bottom of the final column. At this stage, ethanol contains some small percentage of water, typically 4%, and is calledhydrousethanol.
6) Dehydration – to achieve maximum strength ethanol, the 96% mixture is dehydrated using benzol, which is later removed, leaving a mixture of 99.7% ethanol, calledanhydrousethanol. The quality of the cane determines the amount of juice extracted. For good-quality sugarcane, 100 kilograms of crop can yield up to 50 kilograms of juice made up of 22% sugar, using the three-roller method. Sugarcane that has been harvested early would typically yield less—roughly 40 kilograms —with a sugar content of 17% (Rothkopf 2007).

The IEA (2004) also noted that in the sugar cane process, the crushed stalk of the plant, the “bagasse”, consisting of cellulose and lignin, can be used for process energy in the manufacture of ethanol. This is one reason why the fossil energy requirements and greenhouse gas emissions of cane-to-ethanol processes are relatively low (See Chapter 6-Biofuels opportunities).

On the other hand, the steps to produce ethanol from corn were also detailed by Rothkopf (2007) as follows:

Corn Ethanol

Corn can be processed through either dry or wet milling. Thedry millingprocess includes the

following steps:

1) Milling – the feedstock is ground into a fine powder called meal.
2) Liquefaction – the meal is mixed with water and an enzyme calledalpha-amylase. It is then passed through a cooker to liquefy the starch.
3) Saccharification – the liquid starch, or mash, is cooled and a second enzyme calledgluco-amylaseis added to convert the liquid starch intodextrose, a fermentable sugar.
4) Fermentation – a biochemical process, yeast is added to the mash to ferment the dextrose into ethanol and carbon dioxide. This process entails several stages of fermentation and can last up to 48 hours.
5) Distillation – the fermented mash, now called beer and containing roughly 10% alcohol and unfermented solids left over from the feedstock and yeast, is processed in a series of distillation columns to remove the unfermented matter. The alcohol leaves through the top of the final column with a strength of 96% (hydrousethanol), and the leftover residue, usually called stillage, leaves the bottom of the final column and is moved to a co-product processing area.
6) Dehydration – The remaining water is removed from the alcohol, often using a molecular sieve, and what is left is pure at nearly 200 proof (anhydrousethanol).
7) Denaturing – a small amount of gasoline is added to the ethanol, usually 2-5%, making it ready for use as fuel as well as unfit for human consumption.

Distiller’s grain and carbon dioxide are the two main co-products of ethanol production. Distiller’s grain can be used as feed for livestock, and carbon dioxide can be compressed and sold for use in other industries.

In thewet millingprocess, the fiber, germ (oil) and protein are removed from the starch so that it can be fermented into ethanol. The first step is what differentiates wet from dry milling:

1) Steeping/ Separation – the feedstock is steeped in water and sulfur dioxide for 24 to 36 hours to separate the starch and protein connections. The corn is then ground to break apart the germ and kernel.

For corn, dry milling is more cost effective than wet milling, and it requires less equipment. Nevertheless, Rothkopf (2007) pointed out that an advantage of wet milling is that valuable co products such as corn oil can be produced. The disadvantages are that the equipment costs are high, and the process uses hazardous sulfur dioxide.

Ethanol Production: Second Generation

According to the European Biofuels Technology Platform (2006), Cellulosic ethanol (a second generation biofuel) can be produced from a wider range of feedstocks, including agricultural residues, woody raw materials or energy crops that do not compete directly with food crops for land use. It was also noted that it requires a more complex production process (cellulose hydrolysis), which is currently at the demonstration stage. However, significant investment in R&D is expected to lead to production of cellulosic ethanol on the commercial scale within the next decade.

According to the IEA (2004) the first step in converting biomass to ethanol is pre-treatment, involving cleaning and breakdown of materials. A combination of physical and chemical (e.g. acid hydrolysis) processes is typically applied, which allows separation of the biomass into its cellulose, hemicellulose and lignin components. Some hemicellulose can be converted to sugars in this step, and the lignin removed. Next, the remaining cellulose is hydrolysed into sugars, the major saccharification step. Common methods are dilute and concentrated acid hydrolysis, which are expensive and appear to be reaching their limits in terms of yields. Therefore, considerable research is being invested in the development of biological enzymes that can break down cellulose and hemicellulose. An important process modification made for the enzymatic hydrolysis of biomass was the introduction of simultaneous saccharification and fermentation (SSF), which has recently been improved to include the co-fermentation of multiple sugar substrates. In the SSF process, cellulose, enzymes and fermenting microbes are combined, reducing the required number of vessels and improving efficiency. As sugars are produced, the fermentative organisms convert them to ethanol.

Finally, researchers are now looking at the possibility of producing all required enzymes within the reactor vessel, thus using the same “microbial community” to produce both the enzymes that help break down cellulose to sugars and to ferment the sugars to ethanol. This “consolidated bioprocessing” (CBP) is seen by many as the logical end point in the evolution of biomass conversion technology, with excellent potential for improved efficiency and cost reduction.

Biodiesel Production - First Generation

As it will be discussed in further chapters, biodiesel’s production is much lower worldwide than ethanol (Rothkopf 2007).

According to the European Biofuels Technology Platform (2006) vegetable oils are obtained classically by simple pressing of oilseeds, such as rapeseeds, sunflower, soybeans, etc. The oil, however, offer too much viscosity and a cetane number (the ability to auto-ignition) too low, making their direct use in traditional diesel engine difficult. Therefore, in order to obtain similar characteristics with respect to conventional fossil diesel fuel, such vegetable oils must undergo a reaction of transesterification. Nevertheless, Rothkopf (2007) noted that before, pre-treatment of the oil is necessary filtering and processing to remove water and impurities. The European Biofuels Technology Platform (2006) noted that the transesterification process is carried out with an alcohol (usually methanol, CH3OH) in the presence of a catalyst, usually potassium hydroxide (KOH) or sodium (NaOH). It was also specified that the reaction is carried out at moderate temperature (20-80 °C) and atmospheric pressure. The IEA (2004) suggested that the oil molecules (triglycerides) are broken apart and reformed into esters and glycerol, which are then separated from each other and purified. The resulting esters are biodiesel.

Rothkopf (2007) added that presscake animal feed and glycerin are the main co-products of this process. Glycerin, in particular, is a valuable chemical, the capture and sale of which improves the economic viability of biodiesel production. Glycerin can be used to make cosmetics, pharmaceuticals, and food, among other things. It can also be used as a fuel to power the production process.

Biodiesel Production - Second Generation

According to Rothkopf (2007) the second-generation biodiesel production is usually performed through gasification and Fischer-Tropsch, or gas-to-liquids, processing. Together, this process is often referred to as biomass-to-liquids production. The process involves the liquefaction of natural gas and other gasified energy sources, such as coal or biomass, into clean-burning, colorless fuel. This transformation is accomplished through the conversion of synthesis gas made up of hydrogen and carbon monoxide, using iron or cobalt as a catalyst, into liquid hydrocarbons through a heat intensive process. For conversion into synthesis gas, biomass must be heated with little or no oxygen present. Residues, leftover kernels and shells, and waste oil constitute the biomass used in this production.

Third Generation Biofuels

According to Hartman (2008) biofuel from algae is a promising oil alternative since algae are low-input, high-yield feedstock to produce biofuels. It was also mentioned that it produces 30 times more energy per unit than land crops such as soybeans. In addition, it was stated that although the development of processing technology for algae fuel is improving, it is still years away from reaching the gas pumps.


According to the IEA (2004) biofuels have the potential to overcome a number of traditional entry barriers faced by other alternative fuels because they are liquid fuels, largely compatible with current vehicles and blendable with current fuels. Moreover, they can share the long-established gasoline and diesel motor fuel distribution infrastructure, in many cases with little required modification to equipment. About this topic, the IEA (2004) provided a set of broad explanations summarized within this subsection.


Efforts to introduce ethanol into the transport fuel market has, in most countries, focused on low percentage blends, such as ethanol E10, a 10% ethanol to 90% gasoline volumetric blend (sometimes known as “gasohol”). More recently, research and road tests have examined higher-percentage ethanol blends and pure (neat) alcohol fuels, and have focused on the modifications that must be made to conventional gasoline vehicles in order to use these blends.

Materials Compatibility

Alcohols tend to degrade some types of plastic, rubber and other elastomer components, and, since alcohol is more conductive than gasoline, it accelerates corrosion of certain metals such as aluminium, brass, zinc and lead (Pb). The resulting degradation can damage ignition and fuel system components like fuel injectors and fuel pressure regulators. As the ethanol concentration of a fuel increases, so does its corrosive effect.

When a vehicle is operated on higher concentrations of ethanol, materials that would not normally be affected by gasoline or E10 may degrade in the presence of the more concentrated alcohol. In particular, the swelling and embrittlement of rubber fuel lines and o-rings can, over time, lead to component failure. These problems can be eliminated by using compatible materials, such as Teflon or highly fluorinated elastomers. Corrosion can be avoided by using some stainless steel components, such as fuel filters.

The cost of making vehicles fully compatible with E10 is estimated to be a few dollars per vehicle. To produce vehicles capable of running on E85 may cost a few hundred dollars per vehicle. It is widely accepted in the literature, as well as by the fuels and car manufacturer communities, that nearly all recent-model conventional gasoline vehicles produced for international sale are fully compatible with 10% ethanol blends (E10). These vehicles require no modifications or engine adjustments to run on E10, and operating on it will not violate most manufacturers’ warranties. However, many vehicle operators may not be aware of this high degree of compatibility and concerns about using this fuel blend are still common. One legitimate source of concern is with older models – many manufacturers have increased the ethanol compatibility of their vehicles in recent years (e.g. during the 1990s) and in some countries a higher share of older models still on the road may not be fully compatible with ethanol blends like E10.

In countries like Brazil, where higher blend levels are used, vehicle costs are higher. Experience in the US with flex-fuel vehicles indicates that vehicles can be made compatible with up to 85% ethanol for a few hundred dollars per vehicle (much lower than the several thousand dollars of incremental cost to produce vehicles running on compressed natural gas, LPG or electricity). This cost is likely to come down over time, with technological improvements and with mass production.


Biodiesel blending with diesel appears to require few or no modifications to diesel engines while it yields an “effective” energy content which is probably just a few percentage points below diesel.

Unlike ethanol, biodiesel can be easily used in existing diesel engines in its pure form (B100) or in virtually any blend ratio with conventional diesel fuels. For instance, Germany, Austria and Sweden have promoted the use of 100% pure biodiesel in trucks with only minor fuel system modifications. Pure biodiesel acts as a mild solvent. Therefore, in general, the higher the blend level, the more potential for degradation. In particular, the use of B100 may require rubber hoses, seals and gaskets to be replaced with more resistant materials, other non-rubber seals or biodiesel compatible elastomers. Conversely, biodiesel blends also improve lubricity. Even 1% blends can improve lubricity by up to 30%, thus reducing engine “wear and tear” and enabling engine components to last longer. Lower-level (e.g. 20% or less) biodiesel blends can be used as a direct substitute for diesel fuel in virtually all heavy-duty diesel vehicles without any adjustment to the engine or fuel system.



According to the World Watch Institute (2006), the production and use of biofuels have entered a new era of global growth, experiencing acceleration in the scale of the industry. It was also stated that the global fuel ethanol production more than doubled between 2000 and 2005, while production of biodiesel, starting from a much smaller base, expanded nearly fourfold as shown in the figures 4 and 5 below:

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Fig. 4World fuel ethanol production, (1975-2005)

Source: Berg, as quoted by World Watch Institute (2006)

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Fig. 5World biodiesel production, (1975-2005)

Source: Berg, as quoted by World Watch Institute (2006)

The Fuel ethanol and biodiesel production is highly concentrated. The World Bank (2008) suggested that of the global fuel ethanol production of around 40 billion litres in 2006, about 90 percent was produced in Brazil and the United States, and of over 6 billion litres of biodiesel, 75 percent was produced in the EU—mainly in France and Germany, as shown on the figure 6 and the tables 1 and 2.

As it will be portrayed in chapter 4, three decades of government support and private investment have allowed Brazil to make ethanol economical for consumers. The United States has been the leader in converting grains (mainly corn) into ethanol fuel and Germany has been a leader in the large-scale production of biodiesel fuel from rapeseed and sunflower seed, crops commonly used to produce vegetable oil for human consumption (World Watch Institute 2006).

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Fig. 6Percentage of global production of fuel ethanol and biodiesel (2006) Source: World’s Bank (2008)

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Table 1Top five fuel ethanol producers in 2005 (million litres)

Source: F. O. Licht, as quoted by World Watch Institute (2006)

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Table 2Top five biodiesel producers in 2005 (million litres)

Source: F. O. Licht, as quoted by World Watch Institute (2006)

Nevertheless, the World Bank (2008) also noted that new players are emerging. Many developing countries are launching biofuel programs based on agricultural feedstocks: biodiesel from palm oil in Indonesia and Malaysia, ethanol from sugarcane in Mozambique and several Central American countries, and ethanol from sugarcane and biodiesel from such oil-rich plants as jatropha, pongamia, and other feedstocks in India.


In comparison with petroleum, the use of biofuels for transport is still quite low in almost every country (IEA 2004). Nevertheless, the IEA (2004) suggested that current biofuels policies could, according to some estimates, lead to a fivefold increase of the share of biofuels in global transport energy consumption— from just over 1 percent today to around 5 to 6 percent by 2020.

According to the NNEC et al. (2007) the United States and Brazil are the largest consumers of ethanol, where similar volumes are used; the difference is that for the United States, ethanol represents less than 3% of transport fuel, while in Brazil it accounts for about 30% of gasoline demand.

The European Union and the United States have both instituted biofuel targets as a method to reduce carbon emissions. The European Union’s target of 10 percent biofuel use in transportation by 2020 is binding (Rosenthal 2008). Meanwhile, the U.S.A.’s government has proposed over 200 million dollars for research, with a goal of replacing 15 percent of their projected gasoline use with ethanol and other fuels by 2017 (Bourne 2007).

Besides, Australia has recently implemented blending targets and Japan has made clear its interest in biofuels blending, even if biofuels must be imported. Several countries, such as India and Thailand, have recently adopted pro-biofuels policies and in Latin America, major new production capacity is being developed, considering the possibility of providing exports to an emerging international market in biofuels (IEA 2004).


According to the World Watch Institute (2006) the recent pace of advancement in technology, policy, and investment suggest that the rapid growth of biofuel use could continue for decades to come and that these fuels have the potential to displace a significant share of the oil now consumed in many countries. A recent study, referred by the World Watch Institute (2006) in a document for the German Federal Ministry of Food, Agriculture and Consumer Protection (BMELV), found that advanced biofuel technologies could allow biofuels to substitute for 37 percent of U.S. gasoline within the next 25 years, with the figure rising to 75 percent if vehicle fuel efficiency were doubled during the same period.

It was also stated that the biofuel potential of EU countries is in the range of 20–25 percent if strong sustainability criteria for land use and crop choice are assumed, and assuming that bioenergy use in non-transport sectors is growing in parallel. Besides, it was mentioned that the potential for biofuels is particularly large in tropical countries, where high crop yields and lower costs for land and labour—which dominate the cost of these fuels— provide an economic advantage that is hard for countries in temperate regions to match.

This study also estimated that worldwide sugar cane production could be expanded to a level such that this crop alone could displace about 10 percent of gasoline use worldwide. This would allow advantages for low-income countries to become significant producers—and potentially exporters—of this valuable new commodity.


1 Biomass can be defined as any organic matter that is available on a renewable or recurring basis, including agricultural crops and trees, wood and wood wastes and residues, plants (including aquatic plants), grasses, residues, fibers, and animal wastes, municipal wastes, and other waste materials (Biomass Research and Development 2000).

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Biofuel development in Latin American and the Caribbean
Risks and Opportunities
Brandenburg Technical University Cottbus
Environmental and Resource Management
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ISBN (Book)
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Brandenburgische Technische Universität Cottbus Awarded as the Best Master Thesis in 2008 for the Faculty 4: Environmental Sciences and Process Engineering. VDI (Verein Deutsche Ingenieure) Price received from the National Association of German Engineers Region: Brandenburg-Berlin
Biofuel, Latin, American, Caribbean, Risks, Opportunities
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MSc. Cinthya Guerrero (Author), 2008, Biofuel development in Latin American and the Caribbean, Munich, GRIN Verlag,


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