For the specific case of sugarcane as the main feedstock for ethanol production, even the Brazilian ethanol producers recognized than oil has to be at least US$30 a barrel for their bioethanol to be competitive. Also you do need the right weather. Sugar cane needs lots of heat from sunshine and just the right amount of rain. This kind of weather is found mostly in the warm region between the Tropics of Cancer and Capricornio. This means that the countries better positioned to produce bioethanol from sugarcane are Australia and most of the developing countries in Central America, the Caribbean, part of South America, Sub-Saharan Africa, and Southeast Asia. For the US, only in Hawaii, part of Texas, and mainly Florida and Louisiana have suitable conditions for sugar cane growth, though probably not enough land available for a significant ethanol production. Right now there are three sugarcane ethanol based production plants under construction in Louisiana, and they are expected to go online by 2009.
An important lesson learned from the Brazilian experience in the key role played by governmental support for the industry to become mainstream. As other attractive options such as hydrogen and electric cars improve their technology to make them economically feasible, ethanol flex fuel vehicles offer the opportunity for a smooth transition away from oil fuels. Furthermore, for a mid-term sustainable solution, the development of second generation biofuels produced from non-food crops is necessary, particularly for countries with limited agricultural land available, such as the US and the European countries.
For small countries, such as those in Central America and the Caribbean, their oil demand is relatively small; therefore, bioethanol offers at least an opportunity to reduce significantly their oil dependence and to reduce the burden on their economies imposed by high oil prices. As a typical example, Costa Rica earned in 2007 around US$ 2 million from foreign tourists visiting the country. Costa Rica’s oil invoice for 2008 is expected to reach that same amount. This illustrates how important ethanol can be for small development countries.
A final word. Brazil and the United States started talks in 2007 to promote ethanol production in the Caribbean Basin countries, and precisely after this year meeting between Presidents Bush and Lula da Silva at São Paulo, the food vs fuel debate heat up to an international scale, with heads of several multilateral organizations and some heads of OPEC member countries crying out to stop all bioethanol production. Now that food prices are falling as a result of the ongoing Global Financial Crisis, that lets you wonder…