Ethanol Revolution
As a follow-up to the piece I wrote about inflation driven by high gas prices, the implications of ethanol in the future currently occupy my thoughts.
It is clearly positioned as the fuel of the future.
You see, a few months ago, I caught a feature on CNN, hosted by that loquacious and very funny (without really trying to be) Brit Richard Quest, about Brazil.
I was quite surprised how successful Brazil apparently is in taking full advantage of its rich natural resource, sugar cane, and distilling ethanol to run on cars. As recent as three years ago, Ford and VW introduced flex fuel (short for flexible fuel) engines into Brazil, giving drivers a choice between traditional gasoline and ethanol.
And since ethanol was not even half the price of gasoline, the idea caught like wildfire in the Amazon jungles: from barely 6% market share three years ago, flex fuel cars now command a staggering 73% share in the Brazilian market.
Big name car manufacturers like Nissan, Mercedes, Ford, VW and GM, among others are joining the band wagon and increasingly outfit flex fuel engines into their models.
The benefits are obvious: It’s cheaper because you won’t need any costly exploration and drilling. You just need land to grow your sugar cane.
There are environmental costs, too. There is a real possibility that forests will be cleared to make way for land available for growing these crops, as in the case of Brazil.
The US has already started laying out the ground work for mass ethanol production, with the government providing a US$0.51 per-gallon subsidy to ethanol refiners. Consequently, there are reportedly around 33 plants under various stages of construction in the US.
The biotech industry is likely to benefit immensely from this ethanol revolution. With genetic engineering in very advanced stages, growing crops that contain high starch levels ideal for distilling ethanol, such as corn and cassava (am I right?) can mean higher output, driving down over all production costs.
Which is good news for our ailing sugar haciendas in Negros, Batangas and Tarlac. Even corn and cassava growers will stand to benefit (ethanol is not exclusive to sugar). This will be a good time for Victoria Milling to make a comeback, along with Cory Aquino’s Hacienda Luisita as well as the Spanish-era Central Azucarera (I think).
Not surprisingly, I read an article published in the Philippine Star (or was it Bulletin Today) regarding the skepticism of oil firms about the acceptability of ethanol as a fuel alternative and their opposition to the fuel-flex engine scheme. Their complaints can be summed in one word: Nothing. It’s pretty obvious they simply want the status quo, their hefty profit margins and market shares maintained by downplaying the threat posed by ethanol to gasoline.
Since the Middle East remains a tinderbox, it is imperative that alternatives - hydrogen, electric, fuel cells, ethanol, even coco diesel (don't laugh, who knows!) - be given their due importance. That way, we don’t end up needlessly being hostage to the never-ending bloody tensions in that part of the world.
As a follow-up to the piece I wrote about inflation driven by high gas prices, the implications of ethanol in the future currently occupy my thoughts.
It is clearly positioned as the fuel of the future.
You see, a few months ago, I caught a feature on CNN, hosted by that loquacious and very funny (without really trying to be) Brit Richard Quest, about Brazil.
I was quite surprised how successful Brazil apparently is in taking full advantage of its rich natural resource, sugar cane, and distilling ethanol to run on cars. As recent as three years ago, Ford and VW introduced flex fuel (short for flexible fuel) engines into Brazil, giving drivers a choice between traditional gasoline and ethanol.
And since ethanol was not even half the price of gasoline, the idea caught like wildfire in the Amazon jungles: from barely 6% market share three years ago, flex fuel cars now command a staggering 73% share in the Brazilian market.
Big name car manufacturers like Nissan, Mercedes, Ford, VW and GM, among others are joining the band wagon and increasingly outfit flex fuel engines into their models.
The benefits are obvious: It’s cheaper because you won’t need any costly exploration and drilling. You just need land to grow your sugar cane.
There are environmental costs, too. There is a real possibility that forests will be cleared to make way for land available for growing these crops, as in the case of Brazil.
The US has already started laying out the ground work for mass ethanol production, with the government providing a US$0.51 per-gallon subsidy to ethanol refiners. Consequently, there are reportedly around 33 plants under various stages of construction in the US.
The biotech industry is likely to benefit immensely from this ethanol revolution. With genetic engineering in very advanced stages, growing crops that contain high starch levels ideal for distilling ethanol, such as corn and cassava (am I right?) can mean higher output, driving down over all production costs.
Which is good news for our ailing sugar haciendas in Negros, Batangas and Tarlac. Even corn and cassava growers will stand to benefit (ethanol is not exclusive to sugar). This will be a good time for Victoria Milling to make a comeback, along with Cory Aquino’s Hacienda Luisita as well as the Spanish-era Central Azucarera (I think).
Not surprisingly, I read an article published in the Philippine Star (or was it Bulletin Today) regarding the skepticism of oil firms about the acceptability of ethanol as a fuel alternative and their opposition to the fuel-flex engine scheme. Their complaints can be summed in one word: Nothing. It’s pretty obvious they simply want the status quo, their hefty profit margins and market shares maintained by downplaying the threat posed by ethanol to gasoline.
Since the Middle East remains a tinderbox, it is imperative that alternatives - hydrogen, electric, fuel cells, ethanol, even coco diesel (don't laugh, who knows!) - be given their due importance. That way, we don’t end up needlessly being hostage to the never-ending bloody tensions in that part of the world.
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