By Flávia Ribeiro
A new European Union (EU) bill is challenging Brazilian ethanol trade balance. This market insight details environmental and commercial issues regarding the impact this bill will have on Brazilian bioethanol production.
The EU has been a major consumer of Brazilian ethanol, and it has a large potential to further increase its participation in Brazil's trade balance.
Figure 1-1 shows share of EU exports in the Brazilian Bioethanol market from 2005 to 2007.
EU share of Brazilian Bioethanol Exports from 2005 to 2007
Source: Ministério da Agricultura, Pecuária e Abastecimento – MAPA (Brazilian Ministry of Agriculture, Livestock, and Food Supply)
In order to reduce oil dependency and greenhouse gas emissions, the EU wishes to reach the target of a 20 percent share of energy from renewable sources in the overall energy mix within 12 years from 2008. According to this new policy, the EU Commission is expected to increase the current target of 5.75 percent of biofuels in total fuel consumption for transportation by 2010, to a 10 percent share by 2020. This would certainly increase Brazilian ethanol exports to EU, benefiting the country's trade balance. Furthermore, it is likely to be environmentally valuable to the global community.
The New Restraint
At present, the EU is considering the restraint of imports of ethanol due to the lack of reliability regarding environmental issues. Consequently, the EU has announced that the target to fuel 10 percent of its vehicles by biofuels within 12 years can be postponed under the ecologists' pressure.