Colombia sees ethanol output doubling by 2014

Colombia's ethanol output is on track to nearly double by 2014 as the country seeks to meet growing domestic fuel demand while limiting pricey energy imports, the head of Colombia's biofuels association said in an interview. The Andean nation has spurred on ethanol projects to lower its import bill while creating jobs in rural areas rife with cocaine production, helping make it Latin America's No. 2 maker of ethanol - though output is still a fraction of that in regional biofuels giant Brazil.
Three new projects in development will boost ethanol output by 1.05 billion liters per year to reach 2.2 billion liters per year in 2014, said Jorge Bendeck, executive president of FedeBiocombustibles. "If we don't have an alternative fuel to diversify our sources of liquid energy, we are destined to import expensive fuel," he said in an interview. "Biofuels are the cushion that protects us from an uncertain future."
The output increase could provide additional fuel equivalent to roughly a quarter of 2011 fuel imports by state oil company Ecopetrol. Colombia produces ethanol almost entirely from sugar cane, and also produces biodiesel from palm oil. The country's biofuels push is in part meant to help replace the cultivation of coca, the main ingredient of cocaine, with legal crops. Supporters say the effort has created legitimate businesses in areas once dominated by leftist guerrillas and right-wing paramilitaries involved in the drug trade.
Critics say the palm-oil boom has spurred violent land-grabs by demobilised paramilitary leaders and pushed peasant farmers out of their homes. "Having land under cultivation is the best guarantee of peace in that area," Bendeck said. Increasing biofuels output will require tapping new land without cutting down forest or taking over land now used for food production, he added. The industry is eyeing expansion in areas currently used for low-density ranching.
"There are 43 million hectares (106 million acres) being used for ranching, this could be reduced by half by increasing the number of cattle per hectare," he said. Colombia's oil industry has enjoyed rapid expansion thanks to improved security conditions delivered by a decade-long US-backed military crackdown on Marxist rebels.
But at the same time, economic growth has expanded the middle class, spurring fuel demand as more Colombians buy cars and leaving policy-makers keenly focused on maintaining self-sufficiency in oil. Fuel imports from the United States jumped ten-fold in the last five years, according to US Department of Energy data. Ecopetrol imported 44,100 barrels per day of fuel in 2011.
New biofuels output could let the government raise the mandatory mix of ethanol in gasoline to 15 percent by 2015 from the current maximum of 10 percent and to 20 percent by 2020, Bendeck said. The minimum mix of biodiesel in fossil diesel could be increased by a similar amount over the same period.
Weather patterns such as La Nina have complicated production of energy crops, with devastating floods in 2010 leading to a broad decrease in both ethanol and biodiesel from the year earlier. The lack of adequate roads to transport raw materials from rural cultivation areas also represents a considerable challenge for the industry, particularly during heavy rains, he said.
Colombia hopes eventually to become a biofuels exporter as demand grows around the world, but is still focused on supplying the domestic market. "We can't compete in the international market because we are a very young industry, we are still paying off our initial investments," he said, in contrast to Brazil's biofuels operations which have existed for decades.
New ethanol projects include a 480,000 liter-per-day mill led by the firm Bioenergy, a Colombian firm majority owned by Ecopetrol, and a 350,000 liter-per-day facility in northern Colombia that includes investment from Israeli firm Merhav, Bendeck said. Colombian sugar-maker Riopaila Castilla is also developing a 300,000 l.