London, 7 December 2009

Czarnikow, one of the City’s oldest commodity traders, said yesterday that sugar-cane derived ethanol has the potential to become a world’s super biofuel, but only if there is significant investment in production and infrastructure.

Analysts at Czarnikow, which produces a monthly report on biofuels, say that Government mandates for renewable energy, which are expected to be debated at this week’s Copenhagen summit, can only be satisfied if money is spent on production and infrastructure.

Toby Cohen, head of research at Czarnikow Group, said that ethanol derived from sugar cane had the capacity to become the world’s leading biofuel, but there had to be considerable investment. Czarnikow, which has been in the sugar market for close to 150 years, has been trading physical ethanol since 2005. Global trade in ethanol is currently just 4 billion metric litres, but it is expected to dramatically grow in line with rapidly expanding demand.

Czarnikow believes cane-based ethanol is the best solution for world biofuel needs. Although ethanol production to meet demand from the transport industry has more than tripled between 2000 and 2007 from 17 billion to more than 52 billion litres, the global drive for green biofuels will continue to meet the need for much greater ethanol production. Brazil is the global leader in cane based ethanol production and has the ability to make a significant contribution to renewable energy needs:

• Independent studies show a 90% reduction in green house gas emissions using cane ethanol vs gasoline.

• Sugar cane is high-yielding in terms of ethanol [7,000 litres can be produced per hectare but with new process technology this could increase to 12,000 litres].

• Brazil has 8 million hectares under cane, which produced sugar and ethanol. An increase in area to 20 million hectares would produce enough ethanol (using today’s technology) to meet 10% of the world’s gasoline needs.

• The Brazilian government has identified 65m hectares of agricultural land that could be used for sugar cane. The long term potential for cane ethanol is consequently much greater and, with new process technology, cane could play an even greater role in global renewable energy needs.

• Cane ethanol plants also generate electricity as a bi-product.

Toby Cohen, Czarnikow analyst, said: “Sugar cane based ethanol can play a significant role in reducing GHG emissions as part of the global response to climate change, providing the right sort and level of investment is made. Sugar cane derived ethanol provides one of the most effective ways of supplying the world’s demand for green fuel.”

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