The sugarcane is the main raw material for sugar and ethanol production; therefore, the growth of its production depends on the expansion of sugarcane production area (USDA, 2017b).For the year of 2016, the planted area in the Cauca River Valley of 232,070 hectares grew 3% in comparison to 2013 planted area (ASOCAÑA, 2013). The planted area in the last years has remained relatively stable due to the geographical limitations for the agricultural activities (CREG, 2015).
The ethanol production has been permanent since its inception in 2005, with an increased rate of 17.7% in the period of 2005 to 2014, and has had the installed capacity to produce the ethanol required for the mandatory blend of 8 to 10%. In Colombia, all the national ethanol production is intended to supply the domestic consumption. In 2014, the installed capacity of the ethanol production in the annexed distilleries of the Cauca River Valley was 456 million liters of ethanol per year. The use of the installed capacity in the same year was 89%. In 2015, the production capacity of ethanol in Colombia was of 1.25 million of liters per day, which is sufficient to meet the current national demand in the gasoline-ethanol mixture (8%). With the implementation of the Riopaila mill in the Cauca River Valley (approximately 400.000 l/day), and Bioenergy company in the Puerto Lopez city (504.000 l/day), the country could count with a production capacity of 2.13 million of liters per day of ethanol at the end of 2017 (ASOCAÑA, 2016; CREG, 2015).
The ethanol production in Colombia growth was pushed mainly by the use of oxygenated gasoline of 8% in all national territory. The growth in the ethanol demand was an outcome of the growth in the automotive fleet and the closure of the borders with Venezuela, the main supplier of non-blended gasoline in a significant part of the cities in the Venezuelan border and the Colombian Caribbean (Bendeck, 2016).
In the year of 2014 the MME with the resolution 90454 of 2014, established that the ethanol imports would take place to cover the supply deficit, and when ethanol is required to meet mandatory blended percentages. Currently, the ethanol production is not covering the
demand of 8%, and the Mines and Energy Ministry has allowed the import of ethanol between the years of 2014 and 2016.
The National Federation of Biofuels (FEDEBIOCOMBUSTIBLES) to stimulate the ethanol production proposed eliminating the ceiling price, so that the mills would not be discouraged to increase the production, and would prefer to increase the sugar production. The federation also proposed the increment in the mandatory mixture of 8 to 10-15%. According to FEDEBIOCOMBUSTIBLES (Bendeck, 2016), with this, the entrepreneurs of the sugarcane sector would have the incentives to produce more ethanol and expand their investment in this product.
One of the purposes of the Colombian biofuel program is contributing to reducing the environmental impact of fossil fuels; in concordance with this, the expansion in the ethanol production could contribute to this objective. The national government set a goal of trying to reach a blend of E20 by the end of 2020. This would imply production of 3.35 million liters per day.
It is expected that as more ethanol production enters into the market, as will occur in the case of ethanol production by Bioenergy Company, it is possible that the Ministry of Mines and Energy (MME) will decree an increase of the mandatory mixture. Taking into account that the total current gasoline consumption in the country is around 16.8 million liters per day, and the theoretical ethanol demand for a mandatory E10 blend is lower than 1.65 million liters per day, as is presented in Table 2.
Table 2 The theoretical demand of ethanol related to the mandatory mixture. Based on (CONTRALORÍA, 2016)
Mixture Ethanol demand
(liters/day) Observations
E8 1,350,000 Currently mandatory mixture in all the national territory (mandatory mixture between 2012-2017)
E10 1,600,000
Mandatory mixture from the beginning of the Biofuel program is waiting for the increase of the mixture gasoline-ethanol to E10 in all the national territory (mandatory mixture between 2005 to 2012)
E20 3,350,000 Maximum limit in the mixture proposed in the national biofuel program (on hold until 2020)
Figure 13 shows the current situation of the national ethanol market in the country. The ethanol demand curve is a direct function of gasoline demand and is calculated with the current consumption level. When entering the market, the ethanol produced by Bioenergy (504,000 liters per day, expected at the beginning of the industrial production in 2017), the total
offer will be approximately 1,730,000 liters per day, and the mandatory mixture could return to E10 in all the national territory of Colombia.
The expansion in the ethanol production has space in the Colombian market, as is the case of the ethanol production from Bioenergy Company, especially if it is considered that the biofuels program in Colombia contemplates the arriving in the future at 20% for the mandatory mixture. That is to say, twice as much as is currently allowed, so there is still space on the supply side to grow.
Figure 13 Offer and demand for ethanol in Colombia. Based on (BIOENERGY, 2015; CONTRALORÍA, 2016)
3.6.1. The commitment of Colombian government to the United Nations Framework Convention on Climate Change (COP 21)
According to the information generated by the Colombian Hydrology, Meteorology and Environmental Studies Institute (IDEAM), in the context of the country´s First Biennial Update Report and the Third National Communication on Climate Change, in 2010 the country produced estimated greenhouse gas (GHG) emissions of 224 Mt of CO2eq, which represents
just 0.46% of total global emissions for 2010 (INDC, 2015), estimative made from an approximate data of global emissions of 49 Gt of CO2eq according to the Fifth Assessment
Notwithstanding the above, Colombia's current low carbon economy may not be sustainable in the future, as the country is highly exposed and sensitive to the impacts of climate change, given its diverse geography and economy, which is highly dependent on the climatic conditions and the use of natural resources (Calderón et al., 2014; INDC, 2015).
The current development rate of Colombia is only sustainable if climate change risks are identified and faced. Therefore, for Colombia to develop and ensure its peace, equity, and education objectives, and to sustain them in the long-term, it is essential to identify and utilize opportunities to increase competitiveness, productivity and efficiency following a low- carbon pathway in different sectors of the economy (PND, 2011a, 2011b). Figure 14 presents the GHG emissions, accordingly with the Intended Nationally Determined Contribution (iNDC) for Colombia in 2010 (IDEAM, 2015).
Figure 14 GHG emissions, accordingly with the Intended Nationally Determined Contribution (iNDC) for Colombia in 2010 (IDEAM, 2015).
Colombia national government in its report to the United Nations Framework Convention on Climate Change UNFCCC (COP 21) estimates an increase in overall GHG emissions from 224 to 335 MtCO2eq between 2010 and 2030 (INDC, 2015). Furthermore, the
government commits to a 20% reduction in GHG emissions (−67 MtCO2eq) by 2030, as is
presented in Figure 15. To achieve its environmental commitment, Colombia needs to increase the ethanol production. Currently, the contribution in the reduction of GHG emissions by the ethanol production and use is 12.5% of the target set by Colombia in the COP 21 (ASOCAÑA,
130,4 71,2 13,7 8,7 0 20 40 60 80 100 120 140 Agricultural, foresty, and other land uses
Energy Waste Industrial
process GH G em iss ions (M t CO 2 eq)
2016), and there is the possibility of increasing the ethanol production, and the contribution to decreasing the GHG emissions from the transport sector.
Figure 15 Reductions of greenhouse gas emissions in 20% concerning the projected Business- as-Usual Scenario for Colombia (BAU) for the year of 2030 (INDC, 2015)
3.7. Comparison of the Cauca River Valley scenario of sugarcane production and the