EU Ethanol Production Outlook & Potential for African Imports March 2009

Presented by Massimo Marletto Partners for Euro-African Green Energywww.pangealink.org

In January 2008, the European Commission proposed to establish a 10% binding minimum target for renewables in road transport, calculated on energy content

This target has to be achieved by each of the Member States by 2020 through a combination of domestic EU production and imports from third countries

The aim of the report is to define the amount of ethanol the EU would need to produce or import in order to meet the proposed target

EU Ethanol Production Capacity Today There are 51 ethanol factories currently operating in the EU with a total production capacity of: 5.8 billion litres in volume 5.8 billion litres in volume billion MJ in energy content billion MJ in energy content (Note: 1 litre of ethanol contains 23.4 MJ) (Note: 1 litre of ethanol contains 23.4 MJ)

EU Petrol Consumption Today The current EU petrol consumption for road transport is: 142 billion litres in volume 142 billion litres in volume 4,543 billion MJ in energy content 4,543 billion MJ in energy content (Note: 1 litre of gasoline contains 32 MJ) (Note: 1 litre of gasoline contains 32 MJ)

Therefore, current ethanol production capacity corresponds to: Therefore, current ethanol production capacity corresponds to: only 2.9% of gasoline consumption for road transport in energy content only 2.9% of gasoline consumption for road transport in energy content

Ethanol Production Capacity in the EU by ethanol factories currently operating with total production capacity of 5.8 billion litres 51 ethanol factories currently operating with total production capacity of 5.8 billion litres 10 ethanol factories under construction: Total new production capacity should reach 1.4 billion litres by ethanol factories under construction: Total new production capacity should reach 1.4 billion litres by ethanol factories are planned with an estimated total of new ethanol production capacity of 7.1 billion litres by ethanol factories are planned with an estimated total of new ethanol production capacity of 7.1 billion litres by 2020

Ethanol Production Capacity in the EU by 2020 Therefore, there could be a total of 111 ethanol factories operating in the EU by 2020 and their combined production capacity could reach: 14.3 billion litres in volume 14.3 billion litres in volume billion MJ in energy content billion MJ in energy content

Petrol Consumption for Road Transport in the EU in 2020 Low scenario: it stays at the same level as in 2008 Low scenario: it stays at the same level as in 2008 Most likely scenario: it increases by 7% compared to 2008 Most likely scenario: it increases by 7% compared to 2008 High scenario: it increases by 15% compared to 2008 High scenario: it increases by 15% compared to 2008

LOW SCENARIO Ethanol production capacity and petrol consumption for road transport in the EU in 2020 Ethanol production capacity and petrol consumption for road transport in the EU in 2020 In the low scenario, expected EU ethanol production in 2020 would correspond to: In the low scenario, expected EU ethanol production in 2020 would correspond to: only 7.37% of gasoline consumption for road transport in energy content only 7.37% of gasoline consumption for road transport in energy content

LOW SCENARIO For the low scenario, the EU would need to produce or import an additional 5.1 billion litres of ethanol: For the low scenario, the EU would need to produce or import an additional 5.1 billion litres of ethanol: Producing this amount of ethanol in the EU would require the construction of 40 more ethanol factories with an average capacity of 129 million litres each in addition to those already planned Producing this amount of ethanol in the EU would require the construction of 40 more ethanol factories with an average capacity of 129 million litres each in addition to those already planned

MOST LIKELY SCENARIO In the most likely scenario, expected EU ethanol production in 2020 would correspond to: In the most likely scenario, expected EU ethanol production in 2020 would correspond to: Only 6.89% of petrol consumption for road transport in energy content. Only 6.89% of petrol consumption for road transport in energy content.

MOST LIKELY SCENARIO For the most likely scenario, the EU would need to produce or import an additional 6.5 billion litres of ethanol: For the most likely scenario, the EU would need to produce or import an additional 6.5 billion litres of ethanol: Producing this amount of ethanol in the EU would require the construction of a further 50 ethanol factories with an average capacity of 129 million litres each Producing this amount of ethanol in the EU would require the construction of a further 50 ethanol factories with an average capacity of 129 million litres each

HIGH SCENARIO In the high scenario, expected EU ethanol production in 2020 would correspond to: In the high scenario, expected EU ethanol production in 2020 would correspond to: Only 6.41% of petrol consumption for road transport in energy content. Only 6.41% of petrol consumption for road transport in energy content.

HIGH SCENARIO For the high scenario, the EU would need to produce or import 8 billion litres of ethanol: For the high scenario, the EU would need to produce or import 8 billion litres of ethanol: Producing this amount of ethanol in the EU would require the construction of a further 62 ethanol factories with an average capacity of 129 million litres each Producing this amount of ethanol in the EU would require the construction of a further 62 ethanol factories with an average capacity of 129 million litres each

If as a whole the EU would have an ethanol deficit in 2020, it could be interesting to see the situation at Member State level, that is if a Member State is going to have an ethanol surplus / deficit in 2020 compared to the 10% target

By Member State In all of the three scenarios analysed we have found that, compared to the 10% target, in 2020: In all of the three scenarios analysed we have found that, compared to the 10% target, in 2020: 19 EU Member States would have an ethanol deficit 19 EU Member States would have an ethanol deficit Only 8 EU Member States would have an ethanol surplus Only 8 EU Member States would have an ethanol surplus

Member States with possible ethanol surplus in 2020 compared to 10% target Hungary Hungary France France Lithuania Lithuania Belgium Belgium Estonia Estonia Czech Republic Czech Republic Slovak Republic Slovak Republic Latvia Latvia

Member States with possible ethanol deficit in 2020 compared to 10% target AustriaBulgariaCyprusDenmarkFinlandGermanyGreeceIrelandItalyLuxemburgMalta The Netherlands PolandPortugalRomaniaSpainSweden United Kingdom

Through the analysis of three possible scenarios for gasoline consumption and ethanol production capacity in the EU in 2020, we have seen that the EU, in order to reach the 10% target, would probably have an ethanol deficit that could go from a minimum of 5.1 billion litres to a maximum of 8 billion litres

In other words, in order to fill this ethanol deficit the EU would have to build a further 40 to 62 ethanol factories with an average capacity of 129 million litres each

The construction of those “further factories” is quite improbable, given the fact that the EU does not plan to achieve the 10% target only through domestic production, but through a combination of domestic EU production and imports from third countries

Therefore, it is safe to assume that the EU’s Member States will need to import between 5.1 billion and 8.1 billion litres annually between 2010 and 2020.

Thank you for your attention.