Competitiveness of Brazilian Sugarcane Ethanol Compared to US Corn Ethanol

33 Pages Posted: 9 Jun 2010

See all articles by Christine L. Crago

Christine L. Crago

University of Illinois Urbana-Champaign; Energy Biosciences Institute

Madhu Khanna

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Jason Barton

University of British Columbia (UBC)

Eduardo Giuliani

Venture Partners do Brasil

Weber Amaral

University of São Paulo (USP)

Date Written: June 9, 2010

Abstract

Corn ethanol produced in the US and sugarcane ethanol produced in Brazil are the world’s leading sources of biofuel. Current US biofuel policies create both incentives and constraints for the import of ethanol from Brazil and together with the competitiveness and greenhouse gas intensity of sugarcane ethanol compared to corn ethanol will determine the extent of these imports. This study analyzes the supply-side determinants of this competitiveness and compares the greenhouse gas intensity of corn ethanol and sugarcane ethanol delivered to US ports. We find that while the cost of sugarcane ethanol production in Brazil is lower than that of corn ethanol in the US, the inclusion of transportation costs for the former and co-product credits for the latter changes their relative competitiveness. We also find that the relative cost of ethanol in the US and Brazil is highly sensitive to the prevailing exchange rate and prices of feedstocks. At an exchange rate of US$1 = R$2.15 the cost of corn ethanol is 15% lower than the delivered cost of sugarcane ethanol at a US port. Sugarcane ethanol has lower GHG emissions than corn ethanol but a price of over $113 per ton of CO2 is needed to affect competitiveness.

Keywords: economic competitiveness, renewable fuel standard, ethanol trade policy

JEL Classification: Q13

Suggested Citation

Crago, Christine Lasco and Crago, Christine Lasco and Khanna, Madhu and Barton, Jason and Giuliani, Eduardo and Amaral, Weber, Competitiveness of Brazilian Sugarcane Ethanol Compared to US Corn Ethanol (June 9, 2010). Available at SSRN: https://ssrn.com/abstract=1622922 or http://dx.doi.org/10.2139/ssrn.1622922

Christine Lasco Crago (Contact Author)

Energy Biosciences Institute ( email )

Institute for Genomic Biology
1206 West Gregory Drive
Urbana, IL 61801
United States

University of Illinois Urbana-Champaign ( email )

Department of Agricultural and Applied Economics
1301 W Gregory Drive
Urbana, IL 61801
United States

Madhu Khanna

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics ( email )

1301 W. Gregory Drive
Urbana, IL 61801
United States
217-333-5176 (Phone)
217-333-5502 (Fax)

Jason Barton

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4
Canada

Eduardo Giuliani

Venture Partners do Brasil

Rua Iguatemi 354 #82
Sao Paulo
Brazil

Weber Amaral

University of São Paulo (USP)

Rua Luciano Gualberto, 315
São Paulo, São Paulo 14800-901
Brazil

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