TY - JOUR
T1 - Understanding the failures in developing domestic ethanol markets
T2 - Unpacking the ethanol paradox in Guatemala
AU - Cutz, L.
AU - Tomei, J.
AU - Nogueira, L. A.H.
PY - 2020
Y1 - 2020
N2 - Fostered by environmental and economic drivers, liquid biofuels are expanding in the global energy matrix. However, many countries with biofuel potential, such as Guatemala, have yet to develop domestic biofuels markets. During the last decade, ethanol production in Guatemala has increased significantly, yet a domestic market does not appear to be in the horizon. It is a kind of paradox: a world class sugarcane producer and ethanol exporter does not use any blend of ethanol and gasoline in vehicles. This paper presents a techno-economic analysis and review of barriers that have delayed ethanol-gasoline blends in Guatemala. The cost assessment considers data from an existing distillery in Guatemala. Results show that Guatemala could produce annually a maximum of 250 million liters of ethanol from molasses, more than the amount required to introduce E10. For the current conditions, results from the modelling indicate that the cost of ethanol has minimal impact on the price of E10, but taxes could represent one third of the cost of E10 at the retail level. Since supply conditions are favourable and technical barriers are not relevant, strong government intervention and a coherent price structure for ethanol-gasoline blends is needed to create an ethanol market in Guatemala.
AB - Fostered by environmental and economic drivers, liquid biofuels are expanding in the global energy matrix. However, many countries with biofuel potential, such as Guatemala, have yet to develop domestic biofuels markets. During the last decade, ethanol production in Guatemala has increased significantly, yet a domestic market does not appear to be in the horizon. It is a kind of paradox: a world class sugarcane producer and ethanol exporter does not use any blend of ethanol and gasoline in vehicles. This paper presents a techno-economic analysis and review of barriers that have delayed ethanol-gasoline blends in Guatemala. The cost assessment considers data from an existing distillery in Guatemala. Results show that Guatemala could produce annually a maximum of 250 million liters of ethanol from molasses, more than the amount required to introduce E10. For the current conditions, results from the modelling indicate that the cost of ethanol has minimal impact on the price of E10, but taxes could represent one third of the cost of E10 at the retail level. Since supply conditions are favourable and technical barriers are not relevant, strong government intervention and a coherent price structure for ethanol-gasoline blends is needed to create an ethanol market in Guatemala.
KW - Biofuel policies
KW - Ethanol
KW - Institutional analysis
KW - Sugarcane
UR - http://www.scopus.com/inward/record.url?scp=85088376591&partnerID=8YFLogxK
U2 - 10.1016/j.enpol.2020.111769
DO - 10.1016/j.enpol.2020.111769
M3 - Article
AN - SCOPUS:85088376591
SN - 0301-4215
VL - 145
JO - Energy Policy
JF - Energy Policy
M1 - 111769
ER -