Climate Change, Development & Aid, Environment, Food and Agriculture, Headlines, Latin America & the Caribbean, Tierramerica

ENERGY-ARGENTINA: Agrofuels Rev Their Engines

Marcela Valente* - Tierramérica

BUENOS AIRES, Feb 17 2010 (IPS) - In a measure that was delayed by supply problems, this year Argentina is beginning to require that gasoline be mixed with ethanol and diesel fuel with biodiesel, at a proportion of five percent, to possibly reach 20 percent by 2015.

Boom in soy production is at the heart of Argentina's biodiesel business. Credit: Greenpeace Argentina

Boom in soy production is at the heart of Argentina's biodiesel business. Credit: Greenpeace Argentina

Consumers won’t notice the difference when gasoline and diesel come blended with ethanol (or grain alcohol) and biodiesel, respectively, in the proportion required by law. However, the government and biofuel companies alike admit that it will be a year before the measure can be fully implemented.

The main advantage of these fuels is that they produce less carbon dioxide and other greenhouse-effect gases when they are burned.

In Argentina, ethanol is made from sugarcane. To meet the obligatory demand created by the law, 282,000 cubic metres of ethanol are needed, but currently there are just 202,000 cubic metres available.

Osvaldo Bakovich, biofuels coordinator at the Secretariat (ministry) of Energy, explained to Tierramérica that there are production plants not yet in operation. But he said they should soon be online, and that ethanol production is expected to be in full swing by the end of the year.

Claudio Molina, executive director of the Argentine Biofuels and Hydrogen Association, confirmed that information, and noted, “the programme for blending gasoline with ethanol began partially on Jan 1.

“Depending on availability and logistics, there will be places in the country with proportions of five or 10 percent, and others with none. But by 2011 the programme will be standard throughout the country,” he said.

Molina also cited projects for obtaining ethanol from several types of plants, such as maize or cassava, “but for now the government has granted permission only for producers of sugarcane ethanol, who have production under way in the (northern) provinces of Jujuy, Tucumán and Salta.”

But the true star among agrofuels in Argentina is not ethanol, as it is in Brazil and the United States. It’s biodiesel.

Since the Biofuels Law (26.093) was enacted in 2006, there has been heavy investment in the sector, but production has been aimed only at foreign markets where fuel-mix policies were already in force as a means to curb greenhouse gas emissions from vehicles.

In Argentina, the new law created a domestic market that will expand in the next few years. In Bakovich’s view, it will no longer be necessary to import diesel fuel. Currently, about one billion dollars a year is spent to meet the transport sector’s demand for diesel.

Diesel is the most widely used fuel in Argentina, with 12 million cubic metres consumed annually. According to the Argentine think tank CESPA, 66 percent of cars, trucks and farm machinery run on this fuel. The rest are fuelled by gasoline (17 percent) and compressed natural gas (17 percent).

To meet the requirements for the initial proportion of the fuel blend, 860,000 tonnes of biodiesel are needed. The supply is based on Argentina’s vast production of soybeans, the country’s leading export. In addition to providing the world with soybeans and soy flour, Argentina is the leading exporter of soybean oil.

This largely explains why biodiesel plans based on other, more efficient crops have not been successful. These include the physic nut (Jatropha curcas) and castor oil plant (Ricinus communis), which yield three times more oil than soybeans do, and can grow in poorer soils.

“We’re taking off with biodiesel from soy until other sources are developed,” said Bakovich.

With the existing infrastructure, the big vegetable oil producers have thrown themselves into the biodiesel business. At first they sold the new fuel on the international market, but since the national law took effect, a portion of these exports has been needed to meet the domestic quota.

Under the biofuels law, suppliers are supposed to be small or medium companies, linked to rural producers or with a portion of public capital. But when the fuel blend requirements went into effect, the producers that met the requisites outlined by the law were unable to meet demand.

The government recently reached an agreement to purchase all the biodiesel produced by the small companies – some 300,000 tonnes – and to buy the remaining 560,000 tonnes from different big exporters, in order to reach the total needed.

“For the big producers, participation in the domestic market is marginal. The bulk of their output is exported,” said Molina. The principal markets are the European Union and the United States, where fuel blends are also used, in increasing proportions.

Another factor that justifies the leading role of soy in the fuel sector is that Argentina’s soybean oil exports are taxed at 32 percent, while soy processed into biodiesel pays just a five percent tax, half of which is recovered through tax returns.

By 2015, the domestic market is predicted to operate with a mix of 20 percent biodiesel, according to the Secretariat of Energy. By then, the installed production capacity will be six million tonnes – several times more than the domestic consumption forecast for that year, said Molina.

The lower percentage of greenhouse gas emissions of biofuels depends on the efficiency of the crop and the rest of the production and logistics chain. Soy-based agrofuel, “in the most optimistic calculations, means an emissions reduction of 31 percent on average,” Carlos Villalonga, political director of Greenpeace Argentina, told Tierramérica. However, the proportion varies a great deal, depending on the yield, he pointed out.

Bakovich was even more cautious, citing an emissions reduction of 20 percent.

“For there to be a true impact, reduction should be 50 percent,” said Villalonga, warning that if a so-called “green fuel” is produced using excessive transport, irrigation and energy at the fuel production plants, the disadvantages could outweigh the benefits.

According to Villalonga, the possible competition between fuel and food production for farmland has been mitigated by the new Forests Law (26.331), which puts the brakes on the expansion of the farming frontier for monoculture crops like soybeans.

“I don’t think there is extra pressure on the land, because there are idle areas that can be used to produce biofuels. But these fuels are not miracle workers. If Argentina wants its transportation sector to emit less, it would do much better by improving rail transport – replaced in recent years by trucking – because it utilises 100 percent biofuels,” he said.

(*This story was originally published by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme, United Nations Environment Programme and the World Bank.)

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