in the Liquid Biofuels Industry

D. F. Kolling, V. F. Dalla Corte and C. A. O. Oliveira

Abstract Biofuels have emerged as a source of energy for many countries. Although the interest in developing this industrial sector might be sensitive to mar­ket issues, government policies can influence its supply and demand. This chapter provides a discussion on issues such as the supply, the demand, exports, imports, prices, and future perspectives of the global market of ethanol and biodiesel. We focus on Brazil and the USA, which are the leaders in these markets. We found evidence of a significant increase in the demand for biofuels in several countries, which contributes to their developing energy and environmental security and adds value to their agriculture sectors. Incentive programs for biofuels depend on gov­ernment policies. However, the production of biofuels differs in each country that we studied. The development of the biofuel chain is recent, and the supply depends on the whole structure of it and not exclusively on one institutional agent.

1 Introduction

Biofuel production started in the late nineteenth century when ethanol was pro­duced from corn and Rudolf Diesel’s first engine worked using peanut oil. Before 1940, biofuels were seen as viable fuels for transportation, but low fossil fuel [10] [11]

prices stopped investments and further development in biofuels. Interest in the production of these fuels re-emerged in the 1970s when Brazil and the USA began to produce ethanol on a commercial scale.

Sources of renewable energy are of great importance to national markets. The biomass and biofuel trade has been constantly growing, as it is driven by the increases in oil prices and by incentive policies for using biomass and biofuel to generate energy (Junginger et al. 2010). The dependence on oil and its derivatives has put the world’s economy, energy security, and environment at risk. In recent years, rapid growth in biofuel production has been observed around the world, and this growth has been supported by government policies.

The biofuel industry is a dynamic multi-sector that is involved in the system of fuel production and trade. The interest in developing this industrial sector is gen­erated from investor groups and is associated with economic, social, and politi­cal factors. In addition, biofuel production might be subject to market forces, as it depends on locations, the access to resources and the infrastructure for its genera­tion and distribution.

In addition to the economic aspects, the reduction of CO2 emissions has become an important driver of biofuel development. Interest in biofuels is rising because it represents an alternative fuel that shows superior environmental benefits to fossil fuels. Biofuels are also economically competitive and can be produce on a sufficient scale to impact energy demands considerably (Hill et al. 2006). This chapter provides a discussion on the relevant technical, economic, and administra­tive aspects of the global biofuel industry, and it describes initiatives in different countries.

Traditional biofuel technologies are presented in this chapter, including well — established processes for producing biofuels on a commercial scale. According to the International Energy Agency (IEA 2011), these biofuels are commonly referred to as first generation. The dynamic expansion of biofuel production pro­moted an increasing interest in economic studies that analyze the production, demand, supply, and trade of biofuels. These subjects will be discussed in this chapter.