Synthetic Ethanol: Global Trends and Supply

Global Trend for Synthetic and Bio-ethanol – Producers to Merge

The global ethanol producer Tereos Group has acquired SODES, a synthetic ethanol producer, through its Bio-ethanol Nord Picardie subsidiary. The synthetic ethanol facility uses ethylene, a petroleum by-product, to produce ethanol. The company plans to expand this plant to process bio-ethanol, which is chemically and physically indistinguishable from synthetic ethanol produced in the same plant.

NCP Alcohols, the largest ethanol producer in Africa (67% of all production exported), purchased AlcoGroup, which produces synthetic ethanol and fermented alcohols for fuel and industrial use. AlcoGroup was an active participant in global ethanol trades.

The global chemicals firm INEOS Enterprises (the largest synthetic ethanol producer in the world) has begun construction of a new biofuels plant in the UK. This plant will be built on the site of INEOS Refining that produces 300,000 tons of synthetic ethanol from ethylene.

What Does This Mean?

The biofuel market does not demand high purity product in comparison to many traditional outlets. This means that, for a producer who is serving both the fuel and the traditional markets, the fuel outlet provides a home for synthetic ethanol, which would be off-specification for traditional non-fuel applications. This gives savings on re-processing synthetic ethanol for the fuel market.

Effectiveness and Use of Synthetic Ethanol as Fuel

The effect of synthetic ethanol on octane response and fuel performance of fuel mixtures was compared to that of fermented ethanol of 99.9% purity sourced from California. It was concluded that the synthetic ethanol produced from coal compared very favorably to bio-ethanol, and it is therefore a feasible alternative to the fermented alcohol in use elsewhere in the world.1

Coal-derived synthetic ethanol is currently used in South Africa as a 12% blend with gasoline.

There is a worldwide trend from ethanol-consuming nations, such as Brazil and South Africa, to use synthetic ethanol to fill gaps in supply during periods of rapid growth or dips in domestic supply. Brazil, with its mature ethanol market place, openly imported synthetic ethanol as fuel until only a few years ago when traditional supply resumed again.

Synthetic Ethanol Supply

Synthetic ethanol is readily synthesized from natural gas, coal, and ethylene, a by-product of petroleum. Synthetic ethanol from coal was half the cost of ethanol from cane (CARENSA 30/1/2003-5/2/2003 South Africa).

The production of ethanol from petroleum ethylene is a simple one-step process. The dramatic price rise of ethanol (at one point up to $4.00 per gallon in 2006) has probably encouraged petroleum product manufacturers to switch to other uses ethylene, principally from low-cost plastics to the more valued ethanol.

Saudi Arabia’s SABIC exports exclusively synthetic ethanol produced from ethylene. Between 1999 and 2003, the company was the largest exporter of ethanol to the United States.

According to the United States International Trade Commission, in 2005 CBI (Caribbean Basin Initiative) imports, which are tariff-free and receive state tax incentives, again represented more than half of all bio-ethanol imports. This ethanol is not tested for synthetic ethanol content.

Countries that have shown awareness and concern about this issue:

  • New Zealand
  • The Netherlands
  • United Kingdom
  • Australia
  • South Africa
  • European Union

The U.S. Senate passed an energy bill that contains a provision (RFS) that would mandate the use of bio-ethanol in gasoline to 5 billion gallons by the year 2012. The Joint Committee on Taxation has estimated that this provision will cost taxpayers $5 billion over the next ten years. Proper monitoring must be put into place to verify that the spirit of the law (its bio-ethanol mandate) is not flaunted, particularly through the use of imported ethanol.

1. J.Van Heerden, J.J. Botha, P.N.J. Roets: “Comparison between Sasol fuel alcohol and pure ethanol as a gasoline oxygenate,” Presentation to the XIV International Symposium on Alcohol Fuels, Phuket, November 2002.