Biofuels trade in Latin America:Regional and Global Perspectives  The Role of Trade and Markets in  Addressing Climate Cha...
Overview of the presentation•   Introduction•   Where do we stand? Trade pattern in Biofuels•   Opportunities and Remainin...
Introduction• Trade in Biofuels: New Hope or Phantom  Menace for mitigations• All Biofuels are not equal                  ...
TRADE PATTERN IN BIOFUELSINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
BiodieselProduction                                                        Consumption(thds barrels a day)                ...
Biodiesel Net trade (thds barrels a day) 2009  30  20  10   0 -10 -20 -30 -40 -50                                         ...
EthanolProduction                                        Consumption(thds barrels a day)                              (thd...
Ethanol Net trade (thds barrels a day) 2009  70  60  50  40  30  20  10   0 -10 -20                                       ...
Regional Production Pattern (2009) Biodiesel Production - LAC                            Ethanol Production - LAC     Hond...
Regional markets vs World Markets:         Export structure of the large exporters        Argentina Biodiesel Exports     ...
Regional markets vs World Markets: Stronger regional involvement of smaller countries         Bolivia Ethanol exports     ...
OPPORTUNITIES AND  REMAINING BARRIERSINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Regional demand will grow      Country      Biofuel                Addition of biofuel           Country     Biofuel      ...
Remaining barriers• Remaining Barriers. Protection faced by LA  exporters                                         Biodiese...
US and EU policies will matter tooReal Income effects of US and                          Net Emissions Balance of USEU man...
HOW TO MAKE IT WORKS?INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Define clear priorities• Biofuels vs common sense:      • Kill two birds with one stone vs A bird in the hand is worth two...
Different economic costs:                                   A Peruvian Illustration              0.9              0.8     ...
• Domestic policy vs Regional policy      • Domestic policies will lead to “protectionist” behaviour      • Regional appro...
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Biofuels trade in Latin America: Regional and Global Perspectives

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Presentation on the role of biofuel production, consumption and trade for Latin America.
Presentation given at the ICTSD Symposium on trade and climate change in Cancun, December 2010.

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Biofuels trade in Latin America: Regional and Global Perspectives

  1. 1. Biofuels trade in Latin America:Regional and Global Perspectives The Role of Trade and Markets in Addressing Climate Change and Sustainable Development Cancun, December 8th 2010 David Laborde – d.laborde@cgiar.org
  2. 2. Overview of the presentation• Introduction• Where do we stand? Trade pattern in Biofuels• Opportunities and Remaining barriers• How to make it works?INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  3. 3. Introduction• Trade in Biofuels: New Hope or Phantom Menace for mitigations• All Biofuels are not equal From Valin, 2010INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  4. 4. TRADE PATTERN IN BIOFUELSINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  5. 5. BiodieselProduction Consumption(thds barrels a day) (thds barrels a day)350 350 Asia & Oceania Asia & Oceania Africa Africa300 Middle East 300 Middle East Eurasia Eurasia250 Europe 250 Europe North America North America Uruguay Uruguay200 200 Peru Peru Paraguay Paraguay150 Honduras 150 Honduras Guatemala Guatemala100 Colombia 100 Colombia Brazil Brazil Argentina Argentina 50 50 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2001 2002 2003 2004 2005 2006 2007 2008 2009 EIA, 2010 EIA, 2010INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  6. 6. Biodiesel Net trade (thds barrels a day) 2009 30 20 10 0 -10 -20 -30 -40 -50 EIA, 2010INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  7. 7. EthanolProduction Consumption(thds barrels a day) (thds barrels a day)1400 Asia & Oceania 1400 Asia & Oceania Africa Africa Middle East1200 1200 Middle East Eurasia Eurasia Europe Europe North America1000 1000 North America Virgin Islands, U.S. Virgin Islands, U.S. Uruguay Uruguay Trinidad and Tobago Trinidad and Tobago 800 Peru 800 Peru Paraguay Paraguay Jamaica Jamaica 600 Guatemala 600 Guatemala El Salvador El Salvador Ecuador Ecuador 400 Cuba 400 Cuba Costa Rica Costa Rica Colombia Colombia 200 Brazil 200 Brazil Bolivia Bolivia Argentina Argentina 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2001 2002 2003 2004 2005 2006 2007 2008 2009INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  8. 8. Ethanol Net trade (thds barrels a day) 2009 70 60 50 40 30 20 10 0 -10 -20 EIA, 2010INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  9. 9. Regional Production Pattern (2009) Biodiesel Production - LAC Ethanol Production - LAC Honduras Trinidad and 0.0% Tobago Paraguay Peru 0.6% 0.2% 2.1% Guatemala Uruguay Colombia 0.0% 0.2% 1.1% Peru Uruguay Jamaica Paraguay 0.2% 0.4% 0.0% 1.5%Colombia Virgin 9.8% Islands, Guatemala U.S. 0.3% 0.1% El Salvador Brazil Other 0.5% Argentina 94.6% 2.8% 0.1% Brazil Bolivia 47.8% 0.3% Ecuador Argentina 0.0% 39.9% Cuba Costa Rica 0.1% 0.3% EIA, 2010 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  10. 10. Regional markets vs World Markets: Export structure of the large exporters Argentina Biodiesel Exports Brazil Ethanol exports (2009) (2009) EU Costa Rica EU USA Brazil Peru China Rest of the World El Salvador Jamaica Colombia Trinidad and Tobaggo Mexico USA Asia 28% 33% 4.0%94.3% 5.7% 0.6% 3% 0.9% 0.2% 3% 0.1% 10% 5% 3% 15% F.O. Licht (2010) 0% F.O. Licht (2010)INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  11. 11. Regional markets vs World Markets: Stronger regional involvement of smaller countries Bolivia Ethanol exports Ecuador Ethanol Exports (2009) (2009) EU Peru Rest of the world EU Colombia Peru Rest of the world 10% 0% 0% 4% 6% 90% 90% F.O. Licht (2010) F.O. Licht (2010)INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  12. 12. OPPORTUNITIES AND REMAINING BARRIERSINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  13. 13. Regional demand will grow Country Biofuel Addition of biofuel Country Biofuel Addition of biofuel Ethanol 5% Argentina 7% on August 2010 Goal of replacing 15% of the Biodiesel 10% since July 2011 Honduras Biofuel consumption of fossil fuels Ethanol No goals Bolivia 2,5% since 2007 Ethanol 10% Biodiesel Jamaica 20% on 2015 Biodiesel No goals. Ethanol 25% México Biofuel No goals. Brazil Biodiesel 5% since 2010 Ethanol Between 2-5% since 2008 Chile Goal of replacing 15% of the Biodiesel Between 2-5% since 2008 Nicaragua Biofuel consumption of fossil fuels 10% Ethanol 20% on 2012 Till 8% by 2010 Goal of replacing 15% of the 10% in Santander, Cesar Panamá Biofuel consumption of fossil fuels Colombia South, Antioch and West 10% of ethanol since 2009. Biodiesel of the country. Ethanol 18 - 24% 7% in Bogota in central Paraguay Biodiesel 5% and eastern plains region. Ethanol 7,8% Ethanol till 2% by 2010 Costa Rica Peru 2% since 2009 Biodiesel Biodiesel 5% by 2011 Ethanol 10% Ecuador República Ethanol 15% by 2015 Biodiesel 2,5% Dominicana Biodiesel 2% by 2015 Goal of replacing 15% of Ethanol No goals. El Salvador Biofuel the consumption of fossil Uruguay B2 by 2008 – 2011 fuels. Biodiesel B5 by 2012 Goal of replacing 15% of Guatemala Biofuel the consumption of fossil fuels.. = x5 regional demand – FIESP-IICA, 2010 without Brazil - for biofuelsINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  14. 14. Remaining barriers• Remaining Barriers. Protection faced by LA exporters Biodiesel Ethanol Africa 4.20% 24.22% Asia 3.42% 85.89% Europe 0.49% 37.60% North America 3.09% 40.86% Latin America 1.15% 57.72%• But also: • Domestic subsidies • Export taxes structure (e.g. Argentina)INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  15. 15. US and EU policies will matter tooReal Income effects of US and Net Emissions Balance of USEU mandates, % and EU mandates (grCO2/MJ) -30 -20 -10 0 US 10 SSA Mandate -20.8 LAC Mandate and trade IndoMalay liberalization Mandate without -28 EU27 sugarcane ethanol CIS China 7.92 CAMCarib Brazil EU and US Mandates -1.0% -0.5% 0.0% 0.5% EU and US Mandates and trade liberalization EU and US Mandates without sugarcane ethanol Al Riffai, Dimaranan and Laborde, 2010INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  16. 16. HOW TO MAKE IT WORKS?INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  17. 17. Define clear priorities• Biofuels vs common sense: • Kill two birds with one stone vs A bird in the hand is worth two in the bush • Environmental policy? Energy policy? Farm policy? Policy Reduction Strategy? • One rule in economy: One goal=one tool • International and domestic inefficiencies (e.g. combination of mandates and subsidies)• Decisions to make about • The type of biofuels, the type of feedstocks • The scale of production & the degree of concentrationINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  18. 18. Different economic costs: A Peruvian Illustration 0.9 0.8 0.7 0.6 USD/liter 0.5 0.4 0.3 0.2 0.1 0 Palm Oil - Palm Oil - Small Jatropha Jatropha Sugar Cane Sugar Cane Ethanol made Commercial Holder Commercial Smallholder Ethanol (Coastal Ethanol from molasses Region) (Amazonian (average) Region, including Deforestation small holders) Laborde and Al Riffai, 2010 & FAO DeforestationINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  19. 19. • Domestic policy vs Regional policy • Domestic policies will lead to “protectionist” behaviour • Regional approach requires coordination • Managing • Small countries, Large countries • Agricultural exporters vs Agricultural importers • Biofuel exporters vs Oil exporters• If Latin America, find a regional agreement (e.g. phasing out of trade barriers and subsidies, sustainability criteria), it can export the model to a global basis. Otherwise, it will strongly undermine the possibility to reach a global agreementINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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