Compared to other regions, Latin America has greater advantages such as soil, weather, available land and low-labor costs for the production of both bioethanol and biodiesel. In spite of these advantages, Latin America, excluding Brazil, has not taken initiatives to explore this potential.

New analysis from Frost & Sullivan (www.chemicals.frost.com), Latin American Biofuels Market, reveals that the Brazilian Bioethanol market earned revenues of $5.41 billion in 2005 and estimates to reach $9.99 billion in 2012. Revenues from the Brazilian Biodiesel market were $ 4.5 million in 2005 and will reach $1,831 million in 2012. 

“A key factor powering Brazil’s ethanol production is its increasing capability to supply bioethanol to international customers,” say Frost & Sullivan Research Analyst Tamara Dvoskin. “Of the total ethanol output production, Brazil consumes around 80 to 85 percent internally and exports the balance.”

Brazil produces 35 percent of the worldwide ethanol supply and is also the largest exporter, shipping out more than 2.5 billion liters in 2005. Brazil has a cost advantage compared to countries such as the United States and Europe; the Center-South region of Brazil is one of the lowest-cost sugarcane-producing areas in the world while the state of Sao Paulo is the largest and the lowest-cost ethanol producer in the country.

In terms of biodiesel Brazil has an enormous potential of becoming a leading country and in Latin America it appears as the main biodiesel supplier, leveraging its expertise in the Bioethanol Market. “Brazil seems to be the only country able to meet the oilseeds demand,” observes Frost & Sullivan Research Analyst Victoria Verdier. “Biodiesel has gained a competitive edge over the other fuels not only from an environmental point of view, but also from the social point of view, as it promotes social inclusion throughout the new fuel’s production and value chain.”

Among the major barriers in the Brazilian biofuels market, low feedstock productivity restraint growth of the biodiesel market, while price volatility and uneven tax structure can generate supply shortages in the bioethanol market.

"Ethanol prices can vary substantially among countries, and in addition to tracking world prices for petroleum and sugar, ethanol prices are heavily influenced by distance from major production areas and taxes," notes Dvoskin. "In terms of overcoming biodiesel constraints; it is essential to develop new varieties that can offer more oil per hectare, as yields are still very low and biodiesel production cost is higher than that for regular diesel."

The development of the biofuels industry is bound to affect countries that spend huge amounts of money in importing fuels. Focusing on efforts to invest in biofuels can not only lead to an important economical growth, but also to a distinctive social development.