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Biofuels and Argentina

When it comes to alternative energy generation Argentina is no beginner. According to some experts in the field, the country will produce twice as much biodiesel by the time 2010 is over compared to what the production was in 2009. In addition, it is estimated that exports of biofuels in general would increase over 35% y-o-y. It is important to note that Argentina began its domestic production very recently, 2007, and by 2009 was among the main exporters of the energy compound. These figures have been confirmed by AABH, the “Asociación Argentina de Biocombustibles e Hidrógeno” who has also estimated the 2010 production to be close to 2 million tons.

Argentina exports almost all of its production at a clip of 1,5 million tons. In numbers this represents u$d 1.3 billion, a considerable amount. Some of what is produced is also targeted to the domestic market as the government has been advancing legislation that favors the mix of biodiesel to gasoil in about 7% of the total output. This would impact local consumption in about 1 million tons a year for 2011, which will support and sustain production going forward. Specially since that ratio will increase to 10%.

The President of “Cámara Argentina de Biocombustibles (Carbio)” told a selected crowd in a recent interview why the country was making such a stride in regards to biofuels and in particular to biodiesel. The answer: Argentina has great processing infraestructure, abundant raw material and vast experience in the production of the needed crops. These benefits extend to the production of other crops such as “cártamo,  jatropha o camelina”, all of which would not compete for land with traditional crops destined to food such as soybeans. Analysts believe the prospects and the outlook for Argentina are great given the international trend of developing alternative energy sources to combat global warming as well as the recent oil spills / accidents both in GOM and Dalián, China.

There are 23 industrial processing plants devoted to the production of biodiesel, ten of which are “next generation”. Combined, they are able to produce as much as 2 - 1/2 million tons a year and there are already plans to increase capacity to 3 – 1/2 million tons a year in the near term. Still, locals continue to rely on fossil fuels being natural gas the preferred one with 49% of the market and oil with 41%.

Argentina can be criticized for many things but alternative energy production is not one of them.

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