Falling Ethanol Prices in Europe May Support the Ambitious Agenda Toward a Net-Zero Emission

The Ethanol prices in the second week of August have witnessed a free fall of about 3.1 % from the past week. The Ethanol price ending 11th of August has stood at USD 805 per metric ton, FD Antwerp, Belgium. Ethanol production and sales volumes both have been at a pick in major sugarcane exporting countries as announced by UNICA, the Brazilian sugarcane industry association, and appreciable initiatives taken by European energy associations have helped the Ethanol market to be eased. However, despite a significant fall, Ethanol has not regained its competitiveness against gasoline in the European market.

According to 2021 data, Brazilian sugarcane-based feedstock represents 73% of Belgium's total market share for Ethanol-based biofuels. Mills in the Latin American region produced a record 52.96 million metric tons of sugarcane in the second half of July, 7.81% higher than the previous year's July. Approximately 649.87 million gallons (2.46 billion liters) of Ethanol have been produced in mills in the south-central region of Brazil in the last two weeks of July, up 1.36% compared to the previous year, 2022.

The current subject of debate is the role of biofuels, specifically Ethanol, in reducing carbon emissions from car fleets and transforming from a fossil-based economy to a zero-carbon-based economy. European policymakers have given a sign of consciousness about renewable energy usage, and their contenders around the world have already been a step ahead. They know the importance of energy independence, future food storage, and precautions against climate change in the current world.

EU countries have evidenced a couple of positive signs. One such development is the announcement by the Group of Seven (G7) countries asserting the importance of biofuels such as Ethanol in transport decarbonizations. This statement has been given a promising sign to reduce GHG emissions worldwide.

Another positive signal is Europe's ambitions to ban new sales of internal combustion engine cars after 2035. According to the European Courts of Auditors report, dependency on electric vehicles as the only way to decarbonize road transport and to phase out other alternative options has left it vulnerable to long-term dependency on major Lithium-ion battery makers in China and U.S. This potential decision will allow Europe in reducing CO2 emission from cars.

However, the major concerning factor here is the EU's political approach to biofuels. The EU's inconsistent approach to biofuel blending applications reduces fuel prices. Sometimes they did not meet climate targets. At the same time, the EU's Renewable Energy Directive has strengthened the sustainability criteria for crop-based biofuels by stating the important role of biofuel in keeping the world greener.