Mexico to introduce sugarcane ethanol as additive in Guadalajara, Mexico City and Monterrey

In Mexico, Pemex said that it projects domestic ethanol demand  to reach 230 Mgy  by 2012 when the state oil company begins to use ethanol as a fuel additive in Guadalajara in 2010, and Mexico City and Monterrey by 2012. Pemex said that it would buy, not produce, sugarcane ethanol which it said would be grown on 300,000 hectares of Mexican lands by 2012.

Mexico background

Algenol Biofuels announced an $850 million investment from Mexico’s BioFields, using the company’s technology to produce ethanol from micro-algae. The company uses a process developed by CEO Paul Woods in the 1980s to produce ethanol from algae cells, and the company says that its process bypasses the costly step of drying and pressing algae to extract oil for biodiesel.

The company said that it plans to initially produce 100 Mgy of ethanol at its first plant using saltwater, in the Sonoran Desert of Mexico, and will increase production by 2012 to 1 billion gallons, with a projected yield of 6,000 gallons per acre. The company reported that it had received $70 million from undisclosed private investors in addition to the BioFields proceeds. BioFields said that it has already signed an off-take agreement with Pemex, the Mexican state oil company.

Last year, President Calderon vetoed the Mexican biofuels bill, saying that it places too much emphasis on corn and sugarcane feedstocks. Mexico has been the subject of protects over the rising price of sweet white corn and the resulting impact on tortilla prices. The President called for a bill that placed more emphasis on algae and cellulosic biofuels. The President also said that the Ministry of Energy should be responsible for fuel production, transportation and marketing, instead of the Ministry of Agriculture.

Earlier this year, as many as 100,000 farmers took to the streets in Mexico City to protest the end of corn tariffs, saying that the United States would put Mexican corn out of business. On January 1, tariffs on sugar, milk, beans and corn were eliminated under the NAFTA agreement. The US sugar industry and Mexican corn industry are considered to face the greatest risk from this round of tariff eliminations. Last year, food riots erupted in Mexico over the rising price of white corn, which is produced primarily by Mexican producers for the domestic market.

Last year’s protests in Mexico sparked the “food vs. fuel” debate over ethanol.

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