Economy

Chinese demand heats up Brazil’s ethanol industry

brazil ethanol industry china demand

With 332,000,000, there are more cars on the road in China than anywhere in the world. Today, most run on pure petrol, but as of next year, Chinese fuel companies will add 10 percent of ethanol, with potentially far-reaching implications for the consumption of fossil fuels.

The enormous potential of the Chinese consumer market has energized Brazil’s biofuel industry, the world’s second-largest behind the U.S. The sector, after suffering from fuel price shocks as a result of shifts in government policy, has now been buoyed by the potential of the Chinese market.

Furthermore, in May, China and Brazil resolved a Brazilian complaint to the World Trade Organization (WTO) about Chinese tariffs on sugar, paving the way for increased imports. Brazilian farmers also expect the agreement to open the door for more of the country’s ethanol on the Chinese market.

While environmentalists are optimistic that adding ethanol to Chinese petrol will massively cut greenhouse gas emissions, they are wary of other knock-on effects. The biofuel industry requires vast maize and sugarcane plantations, which may encroach on forests.

“There is the risk of trading one problem, fossil fuels, for one that is much worse: deforestation,” said Ricardo Junqueira Fujii, a conservation analyst at NGO WWF Brazil.

He added that the country’s potential to produce low-carbon fuel could double without compromising food production.

Now, Brazilian society and the government have a responsibility to establish adequate public policies for land use and conservation of the Amazon, Cerrado, and other Brazilian biomes, Fujii said.

Cleaner fuel

The Chinese government announced the new biofuel quota in September 2017 as part of its commitment to reduce fossil fuel consumption under the Paris Agreement on climate change.

“The addition increases the degree of octane in the fuel, improving mileage. It avoids the use...

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