United States corn-based ethanol industry Vs Brazil sugar cane-based ethanol industry

Brazil’s sugar cane-based industry is far more efficient than the U.S. corn-based industry.

Sugar cane ethanol has an energy balance 7 times greater than ethanol produced from corn. Brazilian distillers are able to produce ethanol for 22 cents per liter, compared with the 30 cents per liter for corn-based ethanol. Sugarcane cultivation requires a tropical or subtropical climate, with a minimum of 600 mm (24 in) of annual rainfall. Sugarcane is one of the most efficient photosynthesizers in the plant kingdom, able to convert up to 2% of incident solar energy into biomass. Sugarcane production in the United States occurs in Florida, Louisiana, Hawaii, and Texas. The first three plants to produce sugar cane-based ethanol are expected to go online in Louisiana by mid 2009. Sugar mill plants in Lacassine, St. James and Bunkie were converted to sugar cane-based ethanol production using Colombian technology in order to make possible a profitable ethanol production. These three plants will produce 100 million gallons of ethanol within five years.

U.S. corn-derived ethanol costs 30% more because the corn starch must first be converted to sugar before being distilled into alcohol. Despite this cost differential in production, the U.S. does not import more Brazilian ethanol because of U.S. trade barriers corresponding to a tariff of 54-cent per gallon – a levy designed to offset the 51-cent per gallon blender’s federal tax credit that is applied to ethanol no matter its country of origin.

One advantage U.S. corn-derived ethanol offers is the ability to return 1/3 of the feedstock back into the market as a replacement for the corn used in the form of Distillers Dried Grain.