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In many places absolute euphoria rules over the earning possibilities of grain for the production of ethanol or burning for heat. But how much grain might be required for this? And will this help support the overall price?
 So far in Europe, seven major plants for the production of bioethanol from grain are up and running, including three in Germany which at full capacity will need around 2.1 m t grain per year. Another three plants can be found in Spain with one in Galicia and two around Barcelona. Their total annual raw material requirement is given as around 1 m t barley. In Sweden there’s a plant with a yearly capacity of 150,000 t wheat. All the other similar facilities working in Europe currently are either small plants with comparatively small grain requirement – just like the Swedish one – or producing ethanol from by-products such as molasses. For instance in France 10 smaller plants together process 300,000 t wheat and maize. For the whole European ethanol industry current grain requirement is around 3.8 m t.
By 2008 maximum demand from this sector should have risen to 6 m t and even more plants are being built, planned or announced for the following years… although how many will actually go into production is still open. It can be taken as certain that the Agrana plant in Austria will be built and this is expected to swallow 500,000 t wheat annually. In Lillibonne on the French-Belgian border the French sugar concern Tereos aims to erect a plant for 800,000 t wheat and also fairly certain is the completion of a planned 470,000 t maize ethanol plant by the Spanish producer Abengoa in Pardie, southern France. Yet another big ethanol plant is blueprinted for Alsace. Meanwhile on the Baltic coast NAWARO-Chemie aims for a 270,000 t plant at Rostock harbour with main feed grain pencilled-in as rye. Another harbour, another large-scale ethanol plant: this time the site being Rotterdam in the Netherlands. Taking these six plants together the requirement under full output (and that’s fairly unlikely before 2008) is a further 3 m t of grain, mainly wheat. With this, the reasonably certain demand for ethanol grain would be around 7 m t per year.
If one accepts that further plants expected to go into production from 2009 will lead to a tripling of the grain demand from this sector compared with the capacity now working or at least reliably planned, annual requirement in the EU for bioethanol production is then shoved up to 21 m t. Depending on the year, this represents around 8% of the EU grain harvest with 21 m t representing around 7 m t of ethanol.
 In the best case scenario, 32 m t of grain would find a market for ethanol production in the EU as from 2010. For meeting the EU target of a 5.75% biofuel proportion in total automotive fuel, the EU would need around 13.5 m t of bioethanol. Even today, 1 m t of this is imported. In the Mercosur negotiations that the EU wants to take up again in summer, import quotas for 1 m t bioethanol have already been offered by Europe. One can certainly take it that this will not be the last word on the subject. Imports from Brazil of 2 m t bioethanol are therefore not unrealistic. Speaking for this is also the announcement by Rotterdam harbour that they aim to spend € 150 m on additional ethanol unloading capacity.
With this imported bioethanol, the EU would need around 10.5 m t of own production which means some 32 m t grain or around 13% of the harvest. However, it is still uncertain whether the EU will be able to force through its aim of 5.75% biofuel proportion in every EU country, and what the final result will be. A higher biodiesel share and lower bioethanol proportion could still be possible – as, for example, currently called for by the French mineral oil concern Total.
Also, the growing of grain on set-aside land will help the supply for bioethanol production. In Germany, the 2005 harvest involved 21,000 ha of set-aside grain and this could well be 80,000 ha for the 2006 harvest.
If one imagines in the future the planting of ethanol grain on 200,000 ha set-aside in Germany, France and Spain as well as 100,000 ha in Britain and Italy with an average yield of 5.5 t/ha, this would give an additional grain harvest of just under 4 m t . On the bottom line this would mean that the maximum grain output for ethanol from non set-aside land as from 2010 could therefore be some 28 m t, or 11% of the 2005 harvest.
Conclusion. There’s no doubt that bioethanol production could support the grain market. Whether, however, enough production plants can be built so that there’s the capacity to absorb the overproduced grain , remains unclear. This certainly won’t be the case before 2010 because the German example shows such plants need three years from planning to production under full capacity. Additionally, one has to take into consideration that this development might not only go in the one direction. There are also alternatives at hand or in development: e.g. natural gas engines, BTL fuel (sunfuel) or fuel cells as power sources.
And finally one should not forget advances in cereal yield potential. An annual increase in the EU grain harvest of only 0.5% would give us by 2010 an extra 6 – 7 m t and the long term yield growth rate actually lies at 1.5 to 2% per year - so that we could reckon on an extra 20 m t of grain by 2010.
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