Chile Biofuels Activities
Biofuels are receiving increased attention in Chile, driven primarily by the desire to reduce dependence on imported fossil fuels. Chile imports 72% of its fuel as oil, gas, and coal. Chile also hopes to alleviate serious air pollution problems in the capital and promote agricultural development through alternative fuels.
Currently, there is no production or consumption of biofuels in Chile. According to the government's preliminary estimates, there are 170,000 hectares (ha) in Chile that could be farmed to produce the raw materials for biodiesel and ethanol. An introduction of E10 (10% ethanol and 90% gasoline) in Chile would require 142,000 ha of arable land and 616,000 ha for B10 (10% biodiesel and 90% petroleum diesel) (ECLAC 2007).
Chile produces corn, wheat, and sugar beet, all of which are potential feedstock for ethanol. However, given the limited land available in Chile and the current need to import significant quantities of food, second-generation biofuels, particularly from forestry resources, appear to be more promising. Rapeseed is the likely candidate for biodiesel production. Today, Chile has approximately 40,000 ha of land dedicated to rapeseed production, enough to cover a supply for B2 (2% biodiesel with 98% petroleum diesel) (ECLAC 2007). Jatropha, algae, and animal fat are also mentioned as possible biodiesel feedstock. The University of Tarapaca has planted 1,500 ha of jatropha as a pilot project.
Given the economics for ethanol production from corn (US$0.80/liter), sugar beet (US$0.90/liter), and from wheat (US$0.92/liter), it is unclear whether Chile would be better off importing biofuels from its neighbors and if the domestic production of biofuels should be subsidized (ECLAC 2007).
The Chilean government seems determined to develop a biofuels industry. The Ministry of Agriculture recently devoted $1 million to study the optimal feedstock for a biofuels industry. This effort has not yet yielded definitive conclusions, but it is the first significant sign of government interest. The Ministry of Agriculture and the Ministry of Mines and Energy have joined forces to assess the potential for a sustainable industry. In addition, the Chilean government passed a Renewable Law, but it will require considerable elaboration before it can become a viable blueprint for development of the industry (IADB). The government plans to introduce voluntary E5 (5% ethanol and 95% gasoline) and B5 (5 percent biodiesel and 95 percent petroleum diesel) in 2008 as part of a trial program. The blending will occur at refineries, such as ENAP - the National Oil Company of Chile - or at point of distribution, such as Copec, which holds 50% of the market (ECLAC).