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Abstract

In 2010 we published the first of our series of outlook papers, which projected future demand for sugar to 2030 building upon the UN’s projections for global population growth. The paper highlighted the growth in demand that will come from the Asian economies and those in Central Africa as a result of rising populations and growing economies. With sugarcane today part of the global energy market as well as part of the food market we wanted to understand how these same macro economic dynamics would impact demand for bio-energy. Global demand for commodities is rising and what is clear is that the demand for energy is growing in much the same way as the demand for food. In order to examine growth in energy demand Czarnikow decided to partner with CASS Business School and model the outlook for energy demand to 2030.

Today demand for bio-fuels is dominated by the Americas. In the United States the Renewable Fuels Standard (RFS) sets out a clear path way for the increased use of bio-fuels and the United States is already the largest global user of bio-ethanol as a result of this policy. In Brazil, the economic framework and distributor network has long been in place to support strong bio-ethanol consumption and, as we have already modelled in our paper Brazil’s Need for Growth: The call for investment capital, the potential for significant growth in use is a challenge for the sector given the scale of investment required. What we therefore wanted to understand from CASS was from where the additional demand for energy would come from and how that could relate to both demand for bio-energy.

The linkage between agriculture and energy has always been present as biomass provided the world's energy prior to the development of fossil fuels. During the past century fossil fuels came to increasingly dominate and with the advent of mechanised farming the relationship swung full circle with fossil fuels powering agricultural development. That relationship is now changing again as the value of bio-energy is being recognised. Today the sugar industry uses cane residues as power with some mills today in a position to generate and export surplus power. Cane as biomass is where the future of the industry is likely to be found, especially if new technologies can result in the commercial recovery of sugars from cellulose. This is important given the demands that a growing global population will place upon land use.

During the past decade there has been a huge surge in demand for commodities led by fast paced economic growth in non-OECD countries. Industrialisation, urbanisation and rising incomes in these countries has changed the energy market and there has been a surge in demand for energy led by non-OECD markets. As a consequence the focus of this paper and its supporting analysis has been on the fast growing markets in Asia that are behind that growth and ethanol’s role in the future of fuel.

Publication Type:	Report
Additional Information:	© 2012 Czarnikow. All rights reserved. Reproduction without acknowledgement is strictly prohibited.
Subjects:	T Technology > TP Chemical technology
Departments:	Bayes Business School > Finance

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