Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
The Development of Bioethanol Markets under Sustainability Requirements
KTH, School of Industrial Engineering and Management (ITM), Energy Technology, Energy and Climate Studies, ECS.
2015 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis is a theoretical and empirical examination of the developmentof bioethanol markets since 2005 when sustainability regulations forbiofuels were introduced globally. The experiences of Brazil and Sweden,and the influence of European regulations on the development ofbioethanol markets receive special attention. The work is based onprimary and secondary data sources gathered between 2009 and 2014,including interviews, field research, data from public and private sources,as well as an extensive literature review. The thesis uses case examples ofcountries that have adopted bioethanol as a transport fuel, such as Braziland Sweden.The research is structured using a bottom-up approach, and addressesthree specific angles of the complex issue of how bioethanol marketshave developed under sustainability requirements.The first part introduces an economic sustainability view of ethanol. Thecharacteristics of bioethanol fuel are presented together with conceptsand a theoretical framework for analysing biofuel sustainability. Policytools are also discussed, particularly those used to introduce fuel ethanolin the transport sector. The discussion is centred on the competitionbetween ethanol and gasoline, considering the hypothesis that consumersare sensitive to prices and tend to choose fuels based on their cost-perenergyunit. The analysis is supported by the case examples of Brazil andSweden, with special focus on the delicate balance between fueleconomies of bioethanol and gasoline systems in the face of differentways oil products are priced in those countries. Findings show thatdrivers tend to choose between bioethanol (E85/E100) or gasoline (E5-E25) depending on the relative prices between the two fuels. Theresearch results suggest that different pricing strategies for bioethanoland gasoline affect how consumers perceive the attractiveness of eachfuel. The examples of E100 in Brazil and E85 in Sweden provide insightson the elastic consumer behaviour that new markets may experience,serving to guide strategies in different contexts.The second part of this work bridges experiences in national contextswith the recent trend for biofuel sustainability regulation in internationalmarkets. Based on the hypothesis that the ethanol industry is responsiveto sustainability regulations, an examination of the development of theiiBrazilian bioethanol industry is carried out. This provides a comparisonframework drawing patterns between the industry's reaction to nationalregulations (past) and international regulations (recent). For this purpose,a comparison between the European sustainability requirements forethanol and the industry’s status quo is explored. Findings show that theEU sustainability criteria for biofuels are likely to have three effects onthe bioethanol industry: (i) compliance through incrementalimprovements in sustainability practices and certification; (ii) riskdiversification by engaging in multi-output production models; and (iii)market leakage towards less-regulated markets.The third part of the thesis brings together the first two parts. Itexamines how in a fuel competition context, the incorporation of costsrelated to sustainability certification can change the attractiveness ofhigh-bioethanol blends for consumers. The model of sustainabilityadopted by major international markets is based on regulations enforcedby mandatory certification. As biofuel market share increased, producerswere faced with costs for sustainability certification in order to obtainmarket access. While it was expected that ‘sustainably’ produced biofuelswould be rewarded with higher prices in the EU, this work found thatprice premiums for ethanol have in general been very small or inexistent,with certified fuels becoming the new norm in the market. New costsbrought into the market through sustainability certification can make itdifficult to balance between national policies heavily reliant on consumerchoice between fuels (and associated price-elasticities), and thedeployment of high blends of ethanol, such as E100 and E85.By analysing the three aspects (consumer behaviour and marketdynamics for ethanol in Brazil and Sweden, the introduction ofsustainability criteria for biofuels, and the implications of sustainabilityfor consumer choice between fuels) this work seeks to increaseunderstanding of the highly complex issue of biofuel market formationin the face of sustainability requirements. The key finding is thatsustainability certification has a cost, which needs to be orchestrated withother sectors of the economy to achieve the desired objectives. Thisthesis suggests that crucial areas of economic and environmentalsustainability have been often dealt with separately in biofuelpolicymaking, which has created weaknesses that deserve attention infuture policy efforts in order to improve biofuel systems.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2015. , xxvi, 130 p.
Series
Trita-ECS-Report, 15:1
Keyword [en]
Bioethanol, Biofuels, Consumer choice, Sustainability Criteria, International Trade, European Union, Brazil, Sweden, Policy.
National Category
Energy Systems
Research subject
Energy Technology
Identifiers
URN: urn:nbn:se:kth:diva-163406ISBN: 978-91-7595-475-2 (print)OAI: oai:DiVA.org:kth-163406DiVA: diva2:800068
Public defence
2015-04-21, Sal F3, Lindstedtsvägen 26, KTH, Stockholm, 13:15 (English)
Opponent
Supervisors
Funder
EU, FP7, Seventh Framework ProgrammeSwedish Energy Agency
Note

QC 20150401

Available from: 2015-04-01 Created: 2015-04-01 Last updated: 2015-04-01Bibliographically approved
List of papers
1. Consumer choice between ethanol and gasoline: Lessons from Brazil and Sweden
Open this publication in new window or tab >>Consumer choice between ethanol and gasoline: Lessons from Brazil and Sweden
2011 (English)In: Energy Policy, ISSN 0301-4215, E-ISSN 1873-6777, Vol. 39, no 11, 6936-6942 p.Article in journal (Refereed) Published
Abstract [en]

The introduction of flex-fuel vehicles since 2003 has made possible for Brazilian drivers to choose between high ethanol blends or gasoline depending on relative prices and fuel economies. In Sweden, flex-fuel fleets were introduced in 2005. Prices and demand data were examined for both Brazil and Sweden. Bioethanol has been generally the most cost-efficient fuel in Brazil, but not for all states. In any case, consumers in Brazil have opted for ethanol even when this was not the optimal economic choice. In Sweden, a different behavior was observed when falling gasoline prices made E85 uneconomical in late 2008. In a context of international biofuels expansion, the example of E85 in Sweden indicates that new markets could experience different consumer behavior than Brazil: demand falls rapidly with reduced price differences between ethanol and gasoline. At the same time, rising ethanol demand and lack of an international market with multiple biofuel producers could lead to higher domestic prices in Brazil. Once the limit curve is crossed, the consumer might react by shifting back to the usage of gasoline.

Place, publisher, year, edition, pages
Elsevier, 2011
Keyword
Ethanol, gasoline, consumer choice, Sweden, Brazil
National Category
Economics
Research subject
SRA - Energy
Identifiers
urn:nbn:se:kth:diva-48308 (URN)10.1016/j.enpol.2010.09.024 (DOI)000298120200024 ()2-s2.0-80054875539 (Scopus ID)
Funder
StandUp
Note
QC 20111124Available from: 2011-12-08 Created: 2011-11-17 Last updated: 2017-12-08Bibliographically approved
2. Ethanol or gasoline?: Consumer choice in face of different fuel pricing systems in Brazil and Sweden
Open this publication in new window or tab >>Ethanol or gasoline?: Consumer choice in face of different fuel pricing systems in Brazil and Sweden
2010 (English)In: Biofuels, ISSN 1759-7269, Vol. 1, no 5, 685-695 p.Article in journal (Refereed) Published
Abstract [en]

In the context of high biofuel blends and flex-fuel fleets, consumers are faced with variations in the attractiveness of high-ethanol blends (E85 and E100), which depend, among other factors, on the different price mechanisms applied to gasoline. This research article examines scenarios in which different levels of oscillation in oil prices are transmitted to final gasoline markets in Brazil, influencing the attractiveness of ethanol to consumers. Our analysis suggests that the consumer might prefer more constant price advantages (e.g., in Brazil), while reacting negatively to very volatile markets (e.g., in Sweden). Since consumers apparently use more biofuels in a context of less price volatility, price stability might be an important aspect for policy makers to consider when designing policies to promote biofuel markets.

Place, publisher, year, edition, pages
London: Future Science, 2010
Keyword
Flex-fuel, gasoline pricing systems, ethanol, gasoline, fuel economy, Brazil, Sweden.
National Category
Energy Systems
Research subject
SRA - Energy
Identifiers
urn:nbn:se:kth:diva-48309 (URN)10.4155/BFS.10.49 (DOI)2-s2.0-80054848161 (Scopus ID)
Funder
StandUp
Note
QC 20111124Available from: 2012-02-16 Created: 2011-11-17 Last updated: 2015-04-01Bibliographically approved
3. When is pure ethanol attractive as a fuel option? Quantifying the gasoline vs ethanol dilemma faced by consumers in Brazil
Open this publication in new window or tab >>When is pure ethanol attractive as a fuel option? Quantifying the gasoline vs ethanol dilemma faced by consumers in Brazil
2011 (English)In: Journal of Academy of Business and Economics, ISSN 1542-8710, Vol. 11, no 3, 109-115 p.Article in journal (Refereed) Published
Abstract [en]

The Brazilian light vehicle fleet runs mainly on two energy carriers: Gasoline and Ethanol (E100). While inBrazil bioethanol is used both as a low blend with gasoline (E20-25) and in a pure, separate option(E100), a large share of the fleet is flex-fuel capable, meaning cars can take pure ethanol, gasoline or anymixture of both. The choice on which fuel to use depends on consumer preferences when presented withboth choices at the pump. Previous research indicates that prices are a major factor influencing the fuelchoice at any given moment. Gasoline prices were relatively stable between 2005 and 2011, whileethanol prices experienced strong fluctuations based on sugarcane harvest seasons, suboptimalregulatory stocks and increasing demand due to the rising share of flex-fuel cars as well as exports to theUS and European Union markets. Therefore, depending on relative prices between ethanol and gasoline,the consumer appears to decide on the economic attractiveness of each fuel. The limit ratio betweenethanol and gasoline prices is considered to lie between 0.6 and 0.7 (due to different energy content andengine efficiencies characteristic to ethanol and gasoline). This study enhances previous investigationson consumer behavior in face of high biofuels blends, in form of an in-depth statistical analysis of thechoice phenomenon. The study focuses on the price-trigger which leads to fuel shift based on demandand price data from the Brazilian Agency for Oil, Natural Gas and Biofuels (ANP), the Ministry ofAgriculture and the Brazilian Statistical Institute (IBGE) for the period between January 2005 and January2011, with monthly resolution. Relative prices and consumption between ethanol and gasoline priceswere calculated for all 27 Brazilian states (1971 observations). The analysis proceeded in form ofcorrelations and non-linear regressions in order to determine the quantitative reaction from the market inface of different price variations faced by consumers at the pump, in different seasons of the year. Theresulting regressions from the Brazilian case serve as a tool for policy-makers to seek efficient biofuelspromotion strategies, which specially guarantee the economic sustainability of the competing fuels,specially the attractiveness of biofuels when used as high-blends.

Place, publisher, year, edition, pages
USA: International Academy of Business and Economics, 2011
Keyword
Consumer choice, quantification, ethanol, gasoline, flex fuel, Brazil
National Category
Economics
Research subject
SRA - Energy
Identifiers
urn:nbn:se:kth:diva-48310 (URN)
Funder
StandUp
Note
QC 20111123Available from: 2011-11-17 Created: 2011-11-17 Last updated: 2015-04-01Bibliographically approved
4. The European Biofuels Policy: from where and where to?
Open this publication in new window or tab >>The European Biofuels Policy: from where and where to?
2013 (English)In: European Energy Journal, ISSN 2211-9175, Vol. 3, no 1, 1-36 p.Article in journal (Refereed) Published
Abstract [en]

This paper analyzes the development of the European biofuels policy, from its origins in the form of scattered national initiatives tocurrent directives enforced at EU level. Future trends are discussed based on a forecastingexercise for biofuels consumption in the EU27 following three steps. Firstly, the origins and evolution of biofuels policy in Europe arepresented, with particular attention to thegradual shift from national initiatives toEU-level directives after 2003. Secondly, theEuropean Energy Journal | Volume 3 | Issue 1 | January 2013The European Biofuels Policy: from where and where to18paper analyses recent developments, such asthe implementation of the RED, the RenewableEnergy Action Plans (NREAPs), the mandatorysustainability criteria for biofuels and thedevelopment of certification schemes. Toconclude, the paper provides projections forthe future use of biofuels in the EU27 based onthe policy framework in place as well as recent information from member states’ strategies.These projections serve as a tool for policy benchmark and baseline for policy adjustments.

Place, publisher, year, edition, pages
Deventer: Claeys & Casteels, 2013
Keyword
Biofuels, European Union, Forecasts, renewable Energy, Transport
National Category
Economics Energy Systems
Research subject
SRA - Energy
Identifiers
urn:nbn:se:kth:diva-116761 (URN)
Funder
StandUp
Note

QC 20130125

Available from: 2013-01-25 Created: 2013-01-25 Last updated: 2017-01-13Bibliographically approved
5. Innovation subject to sustainability: the European policy on biofuels and its effects on innovation in the Brazilian bioethanol industry
Open this publication in new window or tab >>Innovation subject to sustainability: the European policy on biofuels and its effects on innovation in the Brazilian bioethanol industry
2012 (English)In: Journal of Contemporary European Research, ISSN 1815-347X, E-ISSN 1815-347X, Vol. 8, no 3, 367-397 p.Article in journal (Refereed) Published
Abstract [en]

Biofuels are a suitable complement for fossil energy in the transport sector and bioethanol is the main biofuel traded worldwide. Based on the assumption that innovation can be influenced by regulation, the Brazilian bioethanol industry is facing new requirements from external actors while reaching for international markets. Until 2010, national environmental laws were the main sustainability instrument that the biofuel industry faced. With the introduction of sustainability criteria for biofuels in the European Fuels Quality Directive (FQD) and Renewable Energy Directive (RED) of 2009, bioethanol producers have been pressured to innovate in respect of the requirements of future markets. Here, the aim is to analyse the case of Brazil, given the potential exports of sugarcane-based ethanol from this country to the EU. Brazil provides an interesting overview of how a bioethanol industry innovated while facing sustainability requirements in the past. A comparison between the European requirements and the industry´s status quo is then explored. The EU criteria are likely to have effects on the Brazilian bioethanol industry and incremental improvements in sustainability levels might take place based on the sustainability requirements. In addition, the industry could follow two other paths, namely risk diversification by engaging in multi-output models; and market leakage towards less-regulated markets. At the same time, an environmental overregulation of the biofuel market may make it more difficult for emerging biofuel industries in other countries, especially in Africa, by creating a barrier rather than contributing to its expansion. The results of this analysis show the main challenges to be addressed and the potential positive and negative impacts of the European Union biofuels policy on the Brazilian bioethanol industry.

Keyword
Bioethanol, Innovation, Sustainability, Sugarcane, European Union, Brazil
National Category
Economics
Identifiers
urn:nbn:se:kth:diva-109442 (URN)2-s2.0-84872916737 (Scopus ID)
Note

QC 20130107

Available from: 2013-01-07 Created: 2013-01-03 Last updated: 2017-12-06Bibliographically approved
6. The price for biofuels sustainability
Open this publication in new window or tab >>The price for biofuels sustainability
2013 (English)In: Energy Policy, ISSN 0301-4215, Vol. 59, 898-903 p.Article in journal (Refereed) Published
Abstract [en]

The production and usage of biofuels has increased worldwide, seeking goals of energy security, lowcarbonenergy and rural development. As biofuels trade increased, the European Union introducedsustainability regulations in an attempt to reduce the risks associated with biofuels. Producers were thenconfronted with costs of sustainability certification, in order to access the EU market. Hopes were thatsustainably-produced biofuels would be rewarded with higher prices in the EU. Based on a review ofrecent literature, interviews with traders and price data from Platts, this paper explores whethersustainability premiums emerged and if so, did they represent an attracting feature in the market forsustainable biofuels. This article finds that premiums for ethanol and biodiesel evolved differentlybetween 2011 and 2012, but have been in general very small or inexistent, with certified fuels becomingthe new norm in the market. For different reasons, there has been an apparent convergence betweenbiofuel policies in the EU and the US. As market operators perceive a long-term trend for full certificationin the biofuels market, producers in developing countries are likely to face additional challenges in termsof finance and capacity to cope with the sustainability requirements.

Keyword
Biofuels, Sustainability, Premiums
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:kth:diva-143905 (URN)10.1016/j.enpol.2013.03.042 (DOI)000323235700081 ()2-s2.0-84880166962 (Scopus ID)
Note

QC 20140519

Available from: 2014-04-02 Created: 2014-04-02 Last updated: 2015-04-01Bibliographically approved
7. Ethanol vs. Gasoline in Brazil: what to expect when sustainability is incorporated
Open this publication in new window or tab >>Ethanol vs. Gasoline in Brazil: what to expect when sustainability is incorporated
(English)Manuscript (preprint) (Other academic)
Identifiers
urn:nbn:se:kth:diva-163410 (URN)
Note

QS 2015

Available from: 2015-04-01 Created: 2015-04-01 Last updated: 2015-04-01Bibliographically approved

Open Access in DiVA

Thesis(3395 kB)732 downloads
File information
File name FULLTEXT02.pdfFile size 3395 kBChecksum SHA-512
56ceda1e46d5929909542caf2136d4519187141787e9bd6ad3cc23806024e2ad949c4f563b50a1c6737fbda7d8d9887cad84a02efc19b355c1d4508fedddc895
Type fulltextMimetype application/pdf

Search in DiVA

By author/editor
Pacini, Henrique
By organisation
Energy and Climate Studies, ECS
Energy Systems

Search outside of DiVA

GoogleGoogle Scholar
Total: 732 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

isbn
urn-nbn

Altmetric score

isbn
urn-nbn
Total: 1376 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf