Despite the fear that the government might set lower than optimal market prices, companies have been encouraged to produce bioethanol and biodiesel in response to developments in the domestic and inte
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MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S.
Required Report - public distribution
GAIN Report Number: Biofuels 2011
Ecuador 2011 Biofuels (Biodiesel, Biotethanol, Biomass) Sector
Policy Development and Outlook
Ecuador’s executive branch of government, through President Rafael Correa himself, has
been very keen on speaking up about the need for a biofuels policy and programs.
However, despite the interest of the private sector as well, no biofuels policy exists at the
moment and pilot projects undertaken by the Government of Ecuador have not been
successful although projects undertaken by Ecuador’s private sector using palm and
jathropha oils appear to be more promising.
Thanks to its geographic location, Ecuador has an advantage in agricultural production
that could be used for biofuels and renewable energy. Ecuador’s private sector has shown
a strong interest in investing in biofuels production, mainly in response to high petroleum
prices in recent years. Despite the fear that the government might set lower than optimal
market prices, companies have been encouraged to produce bioethanol and biodiesel in
response to developments in the domestic and international markets. At the moment,
there is not a clear picture of what the regulatory environment of the biofuels sector will
look like in the long term. Lower petroleum prices, combined with the uncertainty in the
regulatory regime, have resulted in the private sector not further investing in biofuels
There are several agricultural crops that could be destined to the production of biofuels:
sugarcane, African palm, and jathropha although domestic consumption of bioethanol and
biodiesel is practically non-existent at the moment. There have been sporadic exports of
biodiesel produced from African palm in the past, when petroleum reached record-high
values. Production of biodiesel from jathropha grown in non-utilized arid lands seems
U.S. government agencies have been working with the Government of Ecuador, as well as
with private firms, in the assessment of the potential of Ecuador’s biofuels sector. Ecuador
is a member of the U.S. initiative Energy and Climate Partnership of the Americas that
aims at assisting countries in the Western Hemisphere to reduce their greenhouse gas
emissions and improve economic growth.
POLICIES AND OVERVIEW OF THE SECTOR
Ecuador’s geographic location and weather give it a natural advantage in agricultural
production as crops can be grown throughout the year and luminosity is constant (12-
hour days). Ecuador’s executive branch of government, through President Rafael Correa
himself, has been very keen on speaking up about the need of a biofuels policy and
programs. However, despite the interest of the private sector as well, no biofuels policy
exists at the moment and pilot projects undertaken by the Government of Ecuador have
not been successful. Projects undertaken by Ecuador’s private sector using palm and
jathropha oils appear to be more promising. Because the development of a biofuels
project requires heavy investments in research and development, from agricultural
practices to refining of the raw fuel, in general the private sector has been willing to
invest resources while the public sector has lacked the financial resources as well as the
know-how to successfully produce biofuels.
In January 2010, the Government of Ecuador launched a pilot program to mix 5 percent
of bioethanol in a fuel blend to be marketed as E5 Ecopaís gasoline in several provinces.
The first stage of the pilot project was started in the city of Guayaquil, Guayas province.
The goal was to replace all gasoline sold in Guayaquil with Ecopaís in a period of two
years, requiring a supply up to 50,000 liters of anhydrous ethanol per day by 2014 and
1.5 million liters by 2025. Due to high prices of sugar for human consumption, the
program has not been fully successful and the levels needed for production have not been
In 2007 President Correa created the National Biofuels Council which was composed of
five ministers: Agriculture, Energy and Mining, Finance, Environment, and Industries
(today there are six ministers after the split of the Energy and Mining Ministry into the
Ministry of Electricity and Renewable Energy and the Ministry of Non-Renewable Natural
Resources). Subsequently, a Biofuels Technical Committee was formed to draft a biofuels
policy. This Committee could not agree on a biofuels policy framework due to conflicting
interests among Committee members. In 2008, President Correa delegated responsibility
on all biofuels policy issues to the Coordinating Ministry of Production. While this ministry
is in charge of coordinating activities related to formulating biofuels policy, the executing
agencies are the Ministry of Agriculture (MAGAP) and the Ministry of Industries.
Ecuador’s biofuels policy would fit into a larger policy framework designed to promote the
development and use of renewable energies. For instance, Article 15 of Ecuador’s
Constitution says the State shall promote the use of clean alternative energy with low
environmental impact and Article 413 indicates that the State will promote the
development and use of renewable energy without threatening food sovereignty.
Although Ecuador’s constitution encourages the development of renewable energy
sources, in reality there exists lack of specific legislation and regulations of biofuels
development and production. Authorities have focused their efforts on including the topic
in several white papers. For example, Ecuador’s National Energy policy addresses the
need to diversify the national energy matrix noting that the GOE will encourage energy
generation from renewable sources and promote research for the use of alternative
renewable energy, especially from geothermal, biomass, wind, and solar sources. In
addition, the National Plan of Good Living and the Agenda for Productivity, Diversification
and Productive Transformation also provide economic incentives, such as tax benefits, to
promote the formation of new firms in the bioenergy and biofuels sectors. The GOE has
also identified biomass energy as an important component in its efforts to diversify
Ecuador’s agriculture/industrial base and to increase the country’s generation of
ECUADOR’S POTENTIAL TO DEVELOP A BIOFUELS INDUSTRY
Due to Ecuador’s natural advantage for agricultural production, both the public and the
private sector have engaged in a series of pilot projects to develop a biofuels industry. In
the private sector, a few projects have culminated in adequate levels of domestically
produced biodiesel that has been exported to foreign markets. It is interesting to notice
that the lack of an overarching biofuels policy and specific regulations, combined with the
Ecuador’s natural comparative potential, have triggered the development of pilot projects.
However, in the long-term, the future of the biofuels sector is not clear.
Government of Ecuador’s Interest in Developing Biomass-based Energy
There are few projects that the Government of Ecuador has identified as potentially
feasible. These projects are considerably ambitious and require technical expertise which
is currently lacking in Ecuador’s public sector. A summary of the most relevant ones is
National and Local Government’s Projects
Project Name Provinces Estimated value tion (US$ Descrip)
Bioethanol S National project in cooperation with the everal provinces.
E razil that seeks to install cuadorian First stage: 160 Government of B million
S a plant for 150,000 liters of bioethanol overeignty Project Guayaquil, Guayas per day
Government-sponsored project in pre-
Z feasibility stage for the production of apotillo Loja 140 million 300,000 liters of bioethanol per day in an
area of 7000 ha.
Provincial Provincial government project that seeks
Government of Sucumbíos 13 Million to produce 40,000 liters of ethanol out of
Sucumbios sugarcane planted in 2,500 ha.
There are many sources of biomass fuel available in Ecuador, including biomass derived
from the production of rice, corn and sugarcane. The following table shows some
examples of biomass fuels the Ecuadorian government has been investigating:
Biomass Sources in Ecuador
Product Byproducts Percent MT
Husk 22.50 191.250
Broken rice 5 42,500
Rice flour 8 68,000
Impurities 1.50 12,750
Milled rice 63 535,500
Cane and cob 68 340,000
Impurities 1 5,000
Corn Corn 31 155,000
Tops and leaves 32 176,000
Bagasse 36 198,000
Sugarcane Other residues 11 60,500
Sugar and sugar products 21 115,500
Note: Figures are annual as reported by Ecuador’s Ministry of Agriculture
In addition, the Ecuadorian government through its Ministry of Agriculture (MAGAP) has
determined volume, physical and chemical qualities of the following agricultural products:
Palm Kernel Shell: Palm oil processing plants are located in the area between Santo
Domingo de los Tsáchilas and Quinindé.
Approximate annual volume: 50,000 MT
- Calorific value: 16.8 GJ / kg
- Humidity 12%
- Ash 2%
Wood Chips: Sawmills are located in Quevedo, Los Rios in the coastal region and in the
Approximate annual volume: 20,000 MT
- Calorific value: 13.5 GJ / kg
- Humidity 20%
- Ash 0.5%
Rice husk: Rice mills are located in the coastal provinces of Guayas and Los Rios.
Approximate annual volume: 20,000 MT
- Calorific value: 15.0 GJ / kg
- Humidity 20%
- Ash 20%
Sugarcane bagasse: Located in Guayas and Los Rios
Approximate annual volume: 100,000 MT
- Calorific value: 12.0 GJ / kg
- Humidity 10-60%
- Ash 10%
Ecuador’s Private Sector Identified Initiatives to Develop Renewable Energy
Pro ovinces Estimated ject Name Pr
value n (US$ Descriptio)
ECUANOL (E Ecuanol promotes the planting of 17.000 cuadorian
B ha of which 7000 would be sugarcane and ioethanol) Production of
b Azuay, Oro 63.3 million sorghum the remaining 10.000. It aims to ioethanol based on sugar produce 250,000 liters a day in two
cane and sweet sorghum distillation plants.
Project for the production of bioethanol
The alternative energy with a 3900 hectare agricultural
Yungu zuay 7.1 million illa V Aalley Project production and daily production of 70,000
liters of bioethanol
In the northern part of Ecuador, Iancen
Sugar Mill seeks to produce 100,000 liters
Iancen, bioethanol Imbabura 32 million of ethanol per day and co-generate 6 MW.
Sugarcane crops needed would be 3000
Proposed planting of 5000 hectares in the
Z area of El Empalme. The project could arate Garcia Guayas 70 million produce about 150,000 to 200,000 liters
of bioethanol per day.
B ion of biodiesel made of castor oil iodiesel from Casto Productr oil
p Manabí 4.7 Million plant. It would produce 6,000 liters per lant, Torres Perez day in an area of 900 hectares.
Production of sweet sorghum as raw
BANAENERGY Santa E 14,27 Million material for the production of ethanol, lena 30,000 liters per day, in 1200 ha
Asociación de Desarrollo Production of 12,000 liters of bioethanol
Integral Imbabura 2.35 Million per day from sugarcane planted in 450
Production of 5,000,000 gallons per year
Biodiesel Ecuador Loja 4.9 Million of biodiesel from castor oil plant and
BIOETHANOL AND BIODIESEL
According to MAGAP, in 2010 there were about 79,000 ha planted with sugarcane, of
which 71.4 were harvested. Most of the crop will be used for sugar for human
consumption. There is an installed capacity to distill 185,000 liters of alcohol per day, of
which only 20,000 liters per day are used for bioethanol. High prices of sugar for human
consumption, domestically and internationally, are the reason low amounts of sugarcane
have been used for bioethanol production.
Ecuador’s Area Planted with Sugarcane
Source: MAGAP’s database and FENAZUCAR
Except for very small amounts consumed by the Government of Ecuador’s pilot project in
the city of Guayaquil, ethanol consumption is negligible.
Production: African Palm
The total area planted with African palm in Ecuador is 240,000 hectares, with about
200,000 ha currently being harvested. Ecuador could potentially plant up to 760,000 ha
of African palm according to Ecuador’s Association of African Palm Growers (ANCUPA).
Ecuador’s private sector has the capacity to refine palm oil into biodiesel. This has been
done in the past few years when oil prices reached record highs.
Based on projections from the sector in terms of production, domestic consumption and
export surplus of red oil, the surplus could grow significantly and reach more than
850,000 tons of red oil in 2025.
Ecuador’s Production and Consumption of Palm Oil
Source: U.S. Agency for International Development, Ecuador
Jatropha’s yields are lower than those of African palm, although it is considered an
alternative to African palm due to the large amount of unused arid land where it can
grow. Ecuador’s private sector has identified the most suitable areas to plant this crop;
however current profit estimates are not optimal yet. Research is ongoing to utilize all
sub-products of converting jathropha oil into biodiesel to increase profitability. There are
currently about 700 ha planted with jathropha to be used commercially.
La Fabril is the only group in Ecuador producing biodiesel out of palm oil and jatropha.
This group could potentially process up to 50,000 hectares planted with African palm and
jathropha. Other palm producers interested in producing biodiesel are DANEC, Ales, and
Local consumption of biodiesel is non-existent at this time. However, targets have been
set to blend biodiesel and introduce it to the market progressively from a 3 percent mix
requirement in 2014 to 17 percent by 2024.
U.S. GOVERNMENT AGENCIES ACTIVITIES
U.S. Agency for International Development
In 2009, USAID began a project with the Coordinating Ministry of Production to elaborate
a comprehensive biofuels policy for Ecuador. In July 2010, USAID received a draft report
produced by the Coordinating Ministry of Production. Execution will now fall to the
Ministry of Agriculture and the Ministry of Industries. The report discussed biofuels policy
and implementation, noting the need to increase the technical capacity within MAGAP to
successfully implement a new biofuels policy.
U.S. Department of Agriculture (USDA) and U.S. Department of State
Energy and Climate Partnership for the Americas (ECPA)
USDA, with funding of the Department of State is working with the Government of
Ecuador and the private sector in the identification of agricultural biomass as a
sustainable source of renewable energy. This program will provide countries such as
Ecuador an opportunity to reduce greenhouse gas emissions and improve their economic
growth, two key goals of the ECPA.
Ecuador was seen as a strong candidate for USDA’s ECPA biomass initiative because of its
existing biomass resources, geographical advantage due to its location in the equatorial
zone, its evolving policy framework, and its high level of interest.
Ecuador’s ECPA Activities
DEMONSTRATION PROJECT THEME SCIENTIFIC EXCHANGE U.S. STUDY TOUR
SUBJECT AREAS OF INTEREST SUBJECT AREAS OF
Increasing the economic feasibility of Advances in Jatropha use for energy Use of sugar cane
biodiesel production from Jatropha by and production of co-products; bagasse and other
identifying the economic benefits of Florida International University was biomass for electric
Jatropha co-products identified as a possible institution power generation.
Economic and technical feasibility of
water hyacinth as a biomass to be
used for power generation
At the moment biofuels and agro energy has become an issue of national interest because
of Ecuador’s new constitutional mandate to replace Ecuador’s current energy matrix with
energy produced from renewable resources.
Most key players would seem to have the intention to bring this sub-sector to the next
level. However, while the rules of the game remain unclear —particularly regarding a
pricing scheme that would not jeopardize profits and defines if the GOE will have a role in
setting up prices and if so how the price system will work—considerable private long-term
investments are not likely to occur.