China-U.S. Potential Non-food Ethanol Exportation

To reduce national oil dependency, ethanol has been given a center stage of U.S. energy sources. The Renewable Fuel Standard (RFS) program was launched to increase the volume of renewable gasoline from 9 billion gallons in 2008 to 36 billion gallons by 2012, among which 15 billion are corn-based ethanol, while U.S. corn-based ethanol can hardly achieve this level. There is a trend that indicates U.S. importing ethanol from other countries, so a bilateral trade system has been established between U.S. and Brazil since 2003. The annual import is 211 million gallons in 2008 (USDC, 2009). Nevertheless, this amount is far away from the target, and the worldwide food shortage called us to divert our attention from fuel to food. China, as the third largest ethanol producer, has extreme ethanol growth potential with low production costs and large sources of cassava, which is a non-food feedstock for ethanol. This paper uses Data Envelopment Analysis (DEA) to measure and compare the efficiency of ethanol production in China and Brazil. To estimate the extent output can be proportionally expanded without altering the input quantities employed in each country. The output orientated method has been developed with annual ethanol production from the inputs-- land for ethanol crops, agricultural labor force and capacity of ethanol production. The DEA results show that China has been more efficient in ethanol production than Brazil since the year 2007. This means China has comparative advantage over Brazil in producing ethanol, hence U.S. can import from China instead of Brazil in the future.

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 Record created 2017-04-01, last modified 2018-01-22

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