Guatemala Faces Biofuels Policy Obstacles

06.08.2013

Guatemala is the strongest potential biofuels producer in Central America given the high yields of sugarcane and palm oil and its efficient local industries, however the domestic market for biofuels consumption has not been developed.

Guatemala is the number one producer of sugarcane in the region. During marketing year (MY) 2012, the country produced 2.5 million metric tons (MT) of raw sugar, of which 1.6 million MT were exported, due to a combined milling capacity of 130,000 MT per day for the fourteen sugar mills.

At present, five out of the fourteen sugar mills are also producing ethanol with an installed capacity of 269 million liters for calendar year (CY) 2011. On average, Guatemala is producing close to 850,000 liters of alcohol on a daily basis. Nearly all of the dehydrated ethanol is exported to Europe. The domestic market for biofuels consumption has not been developed.

The Guatemalan sugar industry could easily supply the ethanol required for a ten per cent ethanol-gas blend for domestic consumption, with a 0.8 per cent increase over its present production. However, there are several obstacles that Guatemala must overcome in order to implement a viable biofuels policy and the various involved sectors need to reach consensus.

Guatemala is already producing biodiesel from different oil seeds and recycled vegetables. Combined processing capacity for these minor operations is estimated at 5,000 liters per day. Jatropha utilization has been practically discarded.

Given that Guatemala is the second largest palm oil producer in the region (after Honduras), with 260,000 MT of crude palm oil produced in CY 2012 exclusively for the international food processing sector, Guatemala could also produce biodiesel from palm oil.

The challenge for supplying the local market with biodiesel is greater than for ethanol given the incipient status of feedstock production for such purposes. Guatemala would need to produce close to 100 million liters per year to supply the local market with a five per cent blend of biodiesel, which implies a significant increase to meet demand by 2020.

Guatemala´s inclusion in the US-Brazil Biofuels Initiative, as well as Inter-American Bank (IDB) funding for Guatemala to promote the development of renewable sources of energy, might encourage adoption of an effective biofuels policy and regulation. Developing the domestic market for biofuels consumption could turn out to be a key opportunity for economic development in Guatemala, providing new opportunities for the rural areas and benefiting the rural and urban environment.


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