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Prospect of greenhouse gas reduction drives biofuels market

San Jose, Calif.--December 10, 2002-- The market for biofuels is driven by the need for security of fuel supply and the recognition that greenhouse gas emissions are causing global warming. In the US, the transportation sector is responsible for more than 70 percent of the petroleum consumed and one-third of the carbon dioxide emissions.

Statistics are similar in Europe where a Commission to the European Parliament put out a proposal to promote the use of biofuels for transport in November 2001 that introduced the objective of 20 percent substitution of alternative fuels in the road transport sector by the year 2020. The Commission issued the proposed directives in response to Kyoto Protocol emission reductions goals and to gain energy security for the members of the European Union.

Biofuels are alternatives for petroleum-based fuels, produced from domestic renewable resources. Fuel ethanol is the most widely used biofuel for transportation applications.

Ninety five percent of the fuel ethanol produced in the US comes from corn. 100 percent of Brazil's ethanol is produced from sugarcane juice and molasses. Brazil produces 50 percent of the world's fuel ethanol, and produces over 300 million tons of sugarcane a year, which represents about 25 percent of all sugarcane production worldwide. Canada produces ethanol from wheat, corn and barley.

"Biodiesel can be used without engine modification. Biodiesel is produced from just about any vegetable oil by a transesterification process," says Technical Insights' Analyst Miriam Nagel. "Pure vegetable oil can be used in diesel engines, but it is more viscous than biodiesel. If it is used straight in diesel engines, it can create some problems with fuel injectors without some fuel system modification."

New analysis by Technical Insights, a business unit of Frost & Sullivan (www.Technical-Insights.frost.com),
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Contact: Julia Rowell
jrowell@frost.com
210-247-3870
Technical Insights
9-Dec-2002


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