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Biofuels on the Rise in South America

In 2010, legislation that fosters the use of ethanol-gasoline and biodiesel was implemented in Argentina and Peru, according to Internacional Nacional Foro (INF)states. These countries join Bolivia and Brazil, which had regulated the use of biodiesel in 2007 and 2008, respectively. Biofuels are produced from agricultural products, organic waste, or any kind of biomass and, in order to be considered biofuels, must contain some percentage of renewable materials.
“Brazil produces nearly 30% of the world’s ethanol and is the main producer in South America, with more than 30 years of experience.3 Legislation in 2005 authorized a 2% ethanol content in diesel, which became mandatory in 2008 and will increase to 5% in 2013.4 Other countries in the region are also increasing their biofuel production and consumption."
"For example, Colombia had devoted 400,000 hectares to biofuel production in 2008 and had a potential to grow up to 3,9 million hectares.5 Peru exported US$6,2 million of ethanol and imported US$52,4 million of biodiesel in 2009, and it has plans to increase exports to US$85 million in 2010.6 And Brazil plans to duplicate its production of ethanol in the next 8 years."
“There are several pros and cons of using biofuels. Positive aspects are: 1) diversification of energy towards renewable sources; 2) less dependency on oil prices (especially for net importer countries); 3) reutilization of organic waste; 4) an alternative to coca production (explicit in Peruvian legislation); 5) lower greenhouse gas emissions from transportation; 6) source of employment; and 7) higher income for farmers. However, disadvantages include: 1) single crop farming and high use of pesticides; 2) changing soil use and products from human consumption to energy; 3) higher price of agriculture products (inflationary pressure) and higher risks for food security; 4) higher risk of conflicts associated with the use of water sources; and 5) high levels of greenhouse gas emission in the production of complementary inputs and in the industrialization process.”

Implications from INF:
“The implications of a push towards biofuels in the region are rather uncertain. The balance between costs and benefits is likely to vary by country, and will be highly dependent on complementary initiatives, including policies on food security, financing, land use, energy taxes and subsidies, among others. A balanced and level-headed assessment of future options for countries, and even regions within countries, is clearly needed before undertaking major investments in biofuels production.”

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Sources:

Internacional Nacional Foro, February 2010, page 3:
http://newsletters.clearsignals.org/FORO_Feb2010.pdf#page=3