Rising oil prices making biofuels viable (moved from ATSNN)

today.reuters.com
PARIS (Reuters) - Biofuels would be increasingly competitive if crude oil prices, which are back near all-time highs, were to go beyond $60 a barrel, officials at the International Energy Agency (IEA) said on Tuesday.

Soaring oil prices have encouraged major consumers worldwide to sharply increase their use of "green" biofuels, made from sugar cane, vegetable or grain oils.

But in most parts of the world the additional costs for producing biofuels make the fuel uncompetitive without hefty tax rebates from governments.

"Biofuels are getting more competitive due to the surge in oil prices but these would need to be somewhere between $60 and $100 a barrel for biofuels to be competitive without subsidies," IEA biofuel specialist Lew Fulton said after a seminar on biofuel options.

U.S. crude oil futures hit another all-time record on Monday at $59.52 a barrel as worries over fuel demand festered amid limited U.S. refinery capacity.

An exception is Brazil where ethanol, made from sugar cane, is competitive without subsidy when oil prices are at $35 a barrel, said Brazil's ambassador to Paris, Sergio Silva do Amaral.

The IEA renewed its estimate that all biofuels -- ethanol and biodiesel -- had the potential to reach 10 percent of world fuel use for transport by 2025.

But Fulton said a more realistic estimate was that global ethanol consumption should be between four and five percent of gasoline use by the end of the decade.

"That would be a very big achievement but a lot will depend on oil prices," he said.


Please visit the link provided for the complete story.