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The Economics of Brazil’s Sugarcane-Ethanol/Sugar Complex and Policies

In: The Economics of Biofuel Policies

Author

Listed:
  • Harry Gorter
  • Dusan Drabik
  • David R. Just

Abstract

The previous chapter emphasized the importance of the complex structure of the US mandate and how the nested mandates interact with one another. Brazilian sugarcane ethanol is central to the outcome, being an advanced biofuel. Brazil was the world’s largest ethanol producer until the United States surpassed it in the mid-2000s, but Brazil is still the world’s largest net exporter of ethanol. However, this may not last either as our discussion in the previous chapter showed how the ethanol blend wall in the United States has made biomass-based diesel the biofuel of choice (especially because of the 1.5 to 1.7 ethanol equivalence values) and has converted the United States into a significant net exporter of ethanol in recent years. Brazilian sugarcane-ethanol, in 2013 and 2014, has to compete head on with corn-ethanol (before, it received higher D5 RIN prices as an advanced biofuel). The only advantage Brazil’s sugarcane ethanol receives is higher prices with the California Low Carbon Fuel Standard (LCFS); thus, there is still two-way trade: Brazil exports sugarcane-ethanol to the United States and the United States exports ethanol to Brazil. These types of ethanol are identical products; it is just that their greenhouse gas (GHG) emissions thresholds differ and, therefore, the way in which binary GHG emission thresholds operate in the US renewable fuel standard (RTS along with the California LCFS) causes the two-way trade (Meyer et al. 2012).

Suggested Citation

  • Harry Gorter & Dusan Drabik & David R. Just, 2015. "The Economics of Brazil’s Sugarcane-Ethanol/Sugar Complex and Policies," Palgrave Studies in Agricultural Economics and Food Policy, in: The Economics of Biofuel Policies, chapter 0, pages 191-206, Palgrave Macmillan.
    • Handle: RePEc:pal:psachp:978-1-137-41485-4_12
    DOI: 10.1057/9781137414854_12
    as

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