Abstract
Fostered by environmental and economic drivers, liquid biofuels are expanding in the global energy matrix. However, many countries with biofuel potential, such as Guatemala, have yet to develop domestic biofuels markets. During the last decade, ethanol production in Guatemala has increased significantly, yet a domestic market does not appear to be in the horizon. It is a kind of paradox: a world class sugarcane producer and ethanol exporter does not use any blend of ethanol and gasoline in vehicles. This paper presents a techno-economic analysis and review of barriers that have delayed ethanol-gasoline blends in Guatemala. The cost assessment considers data from an existing distillery in Guatemala. Results show that Guatemala could produce annually a maximum of 250 million liters of ethanol from molasses, more than the amount required to introduce E10. For the current conditions, results from the modelling indicate that the cost of ethanol has minimal impact on the price of E10, but taxes could represent one third of the cost of E10 at the retail level. Since supply conditions are favourable and technical barriers are not relevant, strong government intervention and a coherent price structure for ethanol-gasoline blends is needed to create an ethanol market in Guatemala.
Highlights
Since the 1970s, biofuels have been promoted as a substitute for liquid transport fuels
An innovative sector (Melgar, 2012) and ethanol ex ports to several countries indicate that ethanol production is cost competitive
Based on the amount of cane crushed in Guatemala in 2019, and under the assumptions made in Section 3.1, it is Investment required to upgrade the fuel distribution system, including
Summary
Since the 1970s, biofuels have been promoted as a substitute for liquid transport fuels. Guatemala’s transport sector meets most of its internal demand with petroleum derivatives imported from USA (ECLAC, 2010; MEM, 2017), due to the limited supply capacity of the local refinery. This high dependency on imported fuels places a burden on the national economy and environment. Several studies (CEPAL, 2006; Cutz, and Nogueria, 2018; USDA, 2013) have evaluated the potential of sugarcane ethanol for transportation in Guatemala, indicating that the current installed capacity of the sugar industry is sufficient to supply a 10% ethanol blend in gasoline. An innovative sector (Melgar, 2012) and ethanol ex ports to several countries indicate that ethanol production is cost competitive
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