brazil’s ethanol experience...
TRANSCRIPT
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Brazil’s Ethanol Experience & Accomplishments ‐‐
Towards the Geopolitics of Clean EnergyTowards the Geopolitics of Clean Energy Dr. Plinio Nastari
DATAGRODATAGRO
Governors Biofuels Coalition MeetingGovernors Biofuels Coalition MeetingThe National Press Club
Washington, DC d
Governors Biofuels Coalition, WDCFebruary 2010
February 22nd, 2010
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The History of Ethanol Use
4
The History of Ethanol Use Started in the US
Henry Ford and hisHenry Ford and his automobile using pure ethanol as fuel, in 1896,
Governors Biofuels Coalition, WDCFebruary 2010
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In Brazil, regular ethanol use as a blend component (E5) dates back to 1931;
First tests using higher blends, up to E100, g g pwere made in 1925.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil
• Ethanol is used as a blend component in gasoline starting 1931.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil
• Ethanol is used as a blend component in gasoline starting 1931.• During IIWW, ethanol represents up to 43% of gasoline pool.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil
• Ethanol is used as a blend component in gasoline starting 1931.• During IIWW, ethanol represents up to 43% of gasoline pool.• First oil crisis (1973) triggers creation of government plan to increase
ethanol use (Proalcool), in 1975.ethanol use (Proalcool), in 1975.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil
• Ethanol is used as a blend component in gasoline starting 1931.• During IIWW, ethanol represents up to 43% of gasoline pool.• First oil crisis (1973) triggers creation of government plan to increase
ethanol use (Proalcool), in 1975.ethanol use (Proalcool), in 1975.
• Blend levels raised to E12 (1976), E18 (1977), E23‐25 (1978), and since 2002 by Federal Law blend level is defined in the range E20‐25.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil
• Ethanol is used as a blend component in gasoline starting 1931.• During IIWW, ethanol represents up to 43% of gasoline pool.• First oil crisis (1973) triggers creation of government plan to increase
ethanol use (Proalcool), in 1975.ethanol use (Proalcool), in 1975.
• Blend levels raised to E12 (1976), E18 (1977), E23‐25 (1978), and since 2002 by Federal Law blend level is defined in the range E20‐25.
• Neat ethanol cars, capable of using hydrous ethanol (E100) are launched in Aug/1979.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil
• Ethanol is used as a blend component in gasoline starting 1931.• During IIWW, ethanol represents up to 43% of gasoline pool.• First oil crisis (1973) triggers creation of government plan to increase
ethanol use (Proalcool), in 1975.ethanol use (Proalcool), in 1975.
• Blend levels raised to E12 (1976), E18 (1977), E23‐25 (1978), and since 2002 by Federal Law blend level is defined in the range E20‐25.
• Neat ethanol cars, capable of using hydrous ethanol (E100) are launched in Aug/1979.
• Brazil is the first country to completely ban tetra‐ethyl lead use asBrazil is the first country to completely ban tetra ethyl lead use as component in gasoline, due to the country‐wide use of anhydrous ethanol as a blend component, in 1983.
Governors Biofuels Coalition, WDCFebruary 2010
-
Landmarks of Ethanol Development in Brazil
• Ethanol is used as a blend component in gasoline starting 1931.• During IIWW, ethanol represents up to 43% of gasoline pool.• First oil crisis (1973) triggers creation of government plan to increase
ethanol use (Proalcool), in 1975.ethanol use (Proalcool), in 1975.
• Blend levels raised to E12 (1976), E18 (1977), E23‐25 (1978), and since 2002 by Federal Law blend level is defined in the range E20‐25.
• Neat ethanol cars, capable of using hydrous ethanol (E100) are launched in Aug/1979.
• Brazil is the first country to completely ban tetra‐ethyl lead use asBrazil is the first country to completely ban tetra ethyl lead use as component in gasoline, due to the country‐wide use of anhydrous ethanol as a blend component, in 1983.
• Neat ethanol cars represent >88% of total car sales between 1983 88• Neat‐ethanol cars represent >88% of total car sales between 1983‐88.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil
• Ethanol is used as a blend component in gasoline starting 1931.• During IIWW, ethanol represents up to 43% of gasoline pool.• First oil crisis (1973) triggers creation of government plan to increase
ethanol use (Proalcool), in 1975.ethanol use (Proalcool), in 1975.
• Blend levels raised to E12 (1976), E18 (1977), E23‐25 (1978), and since 2002 by Federal Law blend level is defined in the range E20‐25.
• Neat ethanol cars, capable of using hydrous ethanol (E100) are launched in Aug/1979.
• Brazil is the first country to completely ban tetra‐ethyl lead use asBrazil is the first country to completely ban tetra ethyl lead use as component in gasoline, due to the country‐wide use of anhydrous ethanol as a blend component, in 1983.
• Neat ethanol cars represent >88% of total car sales bet een 1983 88• Neat‐ethanol cars represent >88% of total car sales between 1983‐88. • Hydrous ethanol (E100) is distributed in all fueling stations in a
continental‐size country.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil
• In 1988, 56.9% of all gasoline is substituted by ethanol! In 2009, this proportion is 50 11% in gasoline equivalent and continues to rise againproportion is 50.11%, in gasoline equivalent, and continues to rise again.
Governors Biofuels Coalition, WDCFebruary 2010
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% OF ETHANOL IN OTTO CYCLE FUEL DEMAND% OF ETHANOL IN OTTO CYCLE FUEL DEMAND(in % of gasoline equivalent)
52.60%
60.00%
45.20%
37.80%
23.00%
30.40%
Survey & Analysis: DATAGRO
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil
• In 1988, 56.9% of all gasoline is substituted by ethanol. In 2009, this proportion is 50.11%, in gasoline equivalent, and continues to rise again.
• Ethanol use enables drastic reduction of vehicle emissionsEthanol use enables drastic reduction of vehicle emissions.
Governors Biofuels Coalition, WDCFebruary 2010
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Carbon Monoxide Historic Emissions
54 CarbonMonoxide Historic Emissions/k
42
48
54 Carbon Monoxide Historic Emissions Light Duty Vehicles
g/km
0 81
24
30
36
00,20,40,60,8
12
18
24 2003 2004 2005 2006 2007 2008
0
6
Gasoline Ethanol Flex-Gasol.C Flex-EthanolSurvey & Analysis: DATAGROBasic Data: CETESB
Governors Biofuels Coalition, WDCFebruary 2010
Basic Data: CETESB
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Hydrocarbon Historic Emissionsy
4.8 HydrocarbonHistoric Emissions
3.6
4
4.4
4.8 Hydrocarbon Historic Emissions Light Duty Vehiclesg/km
0 15
0.2
2.4
2.8
3.2
0
0.050.1
0.15
1.2
1.6
2 2003 2004 2005 2006 2007 2008
0
0.4
0.8
Gasoline Ethanol Flex-Gasol. C Flex-EthanolSurvey & Analysis: DATAGROBasic Data: CETESB
Governors Biofuels Coalition, WDCFebruary 2010
Basic Data: CETESB
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Landmarks of Ethanol Development in Brazil• In 1988, 56.9% of all gasoline is substituted by ethanol. In 2009, this
proportion is 50.11%, in gasoline equivalent, and continues to rise again.
• Ethanol use enables drastic reduction in vehicle emissions.• Local automotive engineering is created based on ethanol engine
developmentdevelopment.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil• In 1988, 56.9% of all gasoline is substituted by ethanol. In 2009, this
proportion is 50.11%, in gasoline equivalent, and continues to rise again.
• Ethanol use enables drastic reduction in vehicle emissions.• Local automotive engineering is created based on ethanol engine
developmentdevelopment.
• Fuel specification is developed for ethanol to be used as a sole fuel in fuel injected cars, in 1990.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil• In 1988, 56.9% of all gasoline is substituted by ethanol. In 2009, this
proportion is 50.11%, in gasoline equivalent, and continues to rise again.
• Ethanol use enables drastic reduction in vehicle emissions.• Local automotive engineering is created based on ethanol engine
developmentdevelopment.
• Fuel specification is developed for ethanol to be used as a sole fuel in fuel injected cars, in 1990.
• Flex cars, capable of using any % of E100 and E25 are launched in Mar/2003.
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil• In 1988, 56.9% of all gasoline is substituted by ethanol. In 2009, this
proportion is 50.11%, in gasoline equivalent, and continues to rise again.
• Ethanol use enables drastic reduction in vehicle emissions.• Local automotive engineering is created based on ethanol engine
developmentdevelopment.
• Fuel specification is developed for ethanol to be used as a sole fuel in fuel injected cars, in 1990.
• Flex cars, capable of using any % of E100 and E25 are launched in Mar/2003.• In Jan/2008, consumption of ethanol overcomes (again) pure gasoline (A) in
volume termsvolume terms.
Governors Biofuels Coalition, WDCFebruary 2010
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Gasoline A Vs. Ethanol Consumption - Brazil2.0
p
1 6
1.8
iters
1.3
1.6
Billion L
1.1
0.9
Gasoline A (pure gasoline) Ethanol (Hydrous + Unhydros)Survey & Analysis: DATAGRO
Governors Biofuels Coalition, WDCFebruary 2010
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Total Fuels Consumption in Brazilp
2008 2009 % changemillion gallons per year
Fuels 2008 2009 % changeDiesel oil 11,825 11,702 ‐1.0%
Biodiesel 297 413 39.1%Gasohol 6 651 6 712 0 9%
Fuels
Gasohol 6,651 6,712 0.9%Pure gasoline (A) 4,988 5,034 0.9%Anhydrous ethanol fuel 1,663 1,678 0.9%
Hydrous ethanol fuel 3 511 4 351 23 9%Hydrous ethanol fuel 3,511 4,351 23.9%Total Ethanol fuel 5,174 6,029 16.5%LPG 3,238 3,200 ‐1.2%Fuel oil 1 366 1 322 3 2%Fuel oil 1,366 1,322 ‐3.2%Jet fuel 1,381 1,434 3.8%Aviation gasoline 16 16 1.6%Kerosene 6 4 33 3%Kerosene 6 4 ‐33.3%Total liquid fuels 27,995 28,743 2.7%CNG 1,752 1,666 ‐4.9%S & h DATAGRO
Governors Biofuels Coalition, WDCFebruary 2010
Survey & research: DATAGRO
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Landmarks of Ethanol Development in Brazil• In 1988, 56.9% of all gasoline is substituted by ethanol. In 2009, this
proportion is 50.11%, in gasoline equivalent, and continues to rise again.
• Ethanol use enables drastic reduction in vehicle emissions.• Local automotive engineering is created based on ethanol engine
developmentdevelopment.
• Fuel specification is developed for ethanol to be used as a sole fuel in fuel injected cars, in 1990.
• Flex cars, capable of using any % of E100 and E25 are launched in Mar/2003.• In Jan/2008, consumption of ethanol overcomes again gasoline in volume
termsterms.
• 2009: flex cars represent 88.2% of total vehicle sales, and >35% of existing fleet. It is expected that by 2020, >90% of fleet will be flex.
Governors Biofuels Coalition, WDCFebruary 2010
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Flex‐Fuel VehiclesAllows use of any blends of hydrous ethanol (E100) and gasoline with anhydrous ethanol(E25).
January 2010: sales of flex fuel cars accounted for 85.3% of total vehicle sales in thecountry.
Total ac m sales of fle f el cars (2003 2009) 9 60 million ehiclesTotal acum sales of flex-fuel cars (2003-2009): 9.60 million vehicles.
Consumers opt for E100 io E25 whenever price of E100 is
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Vehicle Sales by Type of FuelJanuary 2003 to December 2009
260,000
280,000
300,000January 2003 to December 2009
200,000
220,000
240,000
140,000
160,000
180,000
60 000
80,000
100,000
120,000
0
20,000
40,000
60,000
0
Jan/
03
Apr
/03
Jul/0
3
Oct
/03
Jan/
04
Apr
/04
Jul/0
4
Oct
/04
Jan/
05
Apr
/05
Jul/0
5
Oct
/05
Jan/
06
Apr
/06
Jul/0
6
Oct
/06
Jan/
07
Apr
/07
Jul/0
7
Oct
/07
Jan/
08
Apr
/08
Jul/0
8
Oct
/08
Jan/
09
Apr
/09
Jul/0
9
Oct
/09
Flex Fuel Ethanol GasoolSurvey & Analysis: DATAGRO
Governors Biofuels Coalition, WDCFebruary 2010
Flex Fuel Ethanol GasoolSurvey & Analysis: DATAGRO
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All major Auto‐makers produce j pFlex Cars in Brazil
Governors Biofuels Coalition, WDCFebruary 2010
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Landmarks of Ethanol Development in Brazil• In 1988, 56.9% of all gasoline is substituted by ethanol. In 2009, this
proportion is 50.11%, in gasoline equivalent, and continues to rise again.
• Ethanol use enables drastic reduction in vehicle emissions.• Local automotive engineering is created based on ethanol engine
developmentdevelopment.
• Fuel specification is developed for ethanol to be used as a sole fuel in fuel injected cars, in 1990.
• Flex cars, capable of using any % of E100 and E25 are launched in Mar/2003.• 2009: flex cars represent 88.2% of total vehicle sales, and >35% of existing
fleet It is expected that by 2020 >90% of fleet will be flexfleet. It is expected that by 2020, >90% of fleet will be flex.
• Regulation/deregulation phases:– 1931‐1989: period of strong government intervention (production quotas, sales quotas,
t k t l t t l t f i t ll d b th t)stock controls, state monopoly on exports of sugar, prices controlled by the government).
– 1989‐1999: deregulation phase, from Federal Constitution of 1988.– 1999 onwards: minimal government intervention (intervention left is definition of blend
level in the range of 20 25%; import/export tariffs)
Governors Biofuels Coalition, WDCFebruary 2010
level in the range of 20‐25%; import/export tariffs).
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Ethanol Production in BrazilMillion Gallons
Deregulation periodStrong government intervention Minimal govt intervention
7,000
8,000g pg g g
Launching ofFlex cars
7,867
5,000
6,000
Golden days of neat‐ethanol cars sales (79‐93)
3,000
4,000
1,000
2,000
0
Anhydrous HydrousSource: DATAGRO in million gallons
Governors Biofuels Coalition, WDCFebruary 2010
Source: DATAGRO, in million gallons.
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THE SUGAR & ETHANOL INDUSTRIES ARE FULLY INTEGRATEDARE FULLY INTEGRATED.
THIS SYNERGY ENABLEDBRAZIL TO BECOME THE LEASTBRAZIL TO BECOME THE LEAST
COST PRODUCER IN THE WORLD.COST PRODUCER IN THE WORLD.
Governors Biofuels Coalition, WDCFebruary 2010
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SUPPLY OF TOTAL SUGARS IN BRAZIL
80.00
60.00
70.00
Sugar Anhydrous Hydrous
40.00
50.00
Tonn
es
20.00
30.00
Million T
‐
10.00
Source: DATAGRO, in million tonnes of total reducing sugars equivalent.
Governors Biofuels Coalition, WDCFebruary 2010
, g g q
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IN BRAZIL, ETHANOL IS CURRENTLY 55.4% OF TOTAL SUGARS –
BUT IT REACHED AS MUCH ASBUT IT REACHED AS MUCH AS 72.7%, IN 89/90!
Governors Biofuels Coalition, WDCFebruary 2010
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% OF CANE GOING TO ETHANOL
80.0% 72.7%
60.0%
70.0%
55.4%
40.0%
50.0%
20.0%
30.0%% cane to ethanol
0.0%
10.0%
Source: Datagro
Governors Biofuels Coalition, WDCFebruary 2010
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BRAZIL BUILT UP NOT ONLYA FLEX FLEETA FLEX FLEET
BUT ALSO (UNDER SOME LIMITS) A FLEX INDUSTRY
Governors Biofuels Coalition, WDCFebruary 2010
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Sugarcane Production MixBrazilBrazil
60%
57%In 10/11, each 1% change in mix represents900 thousand tons of sugar or 135 million gallons of anhydrous ethanol
51%
54%
48%
45%
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11e
Cane for Ethanol Cane for SugarSurvey & Analysis: DATAGRO
This flexibility has brought the possibility for producers to arbitrate pricesin the sugar and ethanol markets
Governors Biofuels Coalition, WDCFebruary 2010
in the sugar and ethanol markets.
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FLEXIBILITY HAS ENABLED PRODUCERSTO ARBITRATE MARKETS DEPENDING
ON THE RELATIVE PRICES OFON THE RELATIVE PRICES OF SUGAR & ETHANOLSUGAR & ETHANOL
Governors Biofuels Coalition, WDCFebruary 2010
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DATAGRO Price Equivalenciesh i i /lb i l
33.0Center South Region – in USD cents/lb FOB Santos sugar equivalent
23.0
28.0
/lb
18.0
us$ c/
13.0
8.0
Sugar Domectic Market Anhydrous Hydrous Sugar NY #11Source : DATAGRO
Governors Biofuels Coalition, WDCFebruary 2010
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ETHANOL PRODUCTION CANEXPAND IN A SUSTAINED WAYEXPAND IN A SUSTAINED WAY.
SUGAR CANE (FOR SUGAR & ETHANOL) OCCUPIES 7 2 MILLION HAOCCUPIES 7.2 MILLION HAOUT OF 65.0 MILLION HA OU O 65.0 OPOSSIBLE AFTER THE
AGROECOLOGICAL ZONING.
Governors Biofuels Coalition, WDCFebruary 2010
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Agroecological Zonningfor Sugar Cane Growth in Brazilfor Sugar Cane Growth in Brazil
A l i l Z i f S C G h i B il 2009
Legend Suitability Current occupation Area (million ha)High Pasture 11,302,343
Medium Pasture 22,863,866
Agroecological Zonning for Sugar Cane Growth in Brazil ‐ 2009Areas Considered Suitable for Sugar Cane
Low Pasture 3,041,122 High Cattle 600,767
Medium Cattle 2,126,395 Low Cattle 483,326 High Agriculture 7,360,310
Medium Agriculture 16,496,736 Low Agriculture 731,077
Total Area in Brazil (H+M+L) 65,005,941 Source: MAPA, MCT. MME, MPOG, MMA, Casa Civi l ,
Embrapa, Conab, IBGE, CPRM, INPE, UNICAMP, PNUD.
Governors Biofuels Coalition, WDCFebruary 2010
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Legend Suitability Current occupation Area (million ha)
Agroecological Zonning for Sugar Cane Growth in Brazil ‐ 2009Areas Considered Suitable for Sugar Cane
Legend Suitability Current occupation Area (million ha)High Pasture 11,302,343
Medium Pasture 22,863,866 Low Pasture 3,041,122 High Cattle 600,767
Medium Cattle 2,126,395 , ,Low Cattle 483,326 High Agriculture 7,360,310
M di A i lt 16 496 736Medium Agriculture 16,496,736 Low Agriculture 731,077
Total Area in Brazil (H+M+L) 65,005,941 ( )Source: MAPA, MCT. MME, MPOG, MMA, Casa Civi l ,
Embrapa, Conab, IBGE, CPRM, INPE, UNICAMP, PNUD.
Governors Biofuels Coalition, WDCFebruary 2010
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LAND USE IN BRAZIL ‐ 2008 (MILLION HECTARES)
Brazil's territory 851Brazil s territory 851Forests & strategic biomas (Amazon, Atlantic, pantanal) 350Cultivated Forests 5Preservation areas 55Cities, rivers, lakes, roads 20Other areas (depleted, improper for agriculture) 38
C t i f i lt & li t kCurrent in use for agriculture & livestockAnnual crops 60.6
Soybeans 24.2 Corn 21 2Corn 21.2
Permanent crops 16.1 Sugar cane 7.2
Pastureland 220.0 Expected to be released to agriculture 70-90
Without any current use 86.3 Source: MAPA, Casa Civil, Datagro.
Governors Biofuels Coalition, WDCFebruary 2010
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CATTLE RANCHING IS BECOMINGCATTLE RANCHING IS BECOMINGINCREASINGLY EFFICIENT, ,
THUS RELEASING LAND FOR AGRICULTURE.
Governors Biofuels Coalition, WDCFebruary 2010
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Cattle Ranching Efficiencyg yState of Sao Paulo, Brazil
1 4
1.5
The State of Sao Paulo accounts for66 5% of all sugar cane grown in Brazil
1.3
1.4
ttle
/ HA
66.5% of all sugar cane grown in Brazil
1.2
ads
of c
at
1.1
Hea
Between 1985 & 2008, while the cattle herd in SP grew 10.4%, pastureland reduced by 2 05 million hectares
1.0
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
reduced by 2.05 million hectares.
Governors Biofuels Coalition, WDCFebruary 2010
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2
-
Cattle Ranching Efficiencyg yin Brazil
1.00 In 2006, there were 172.3 million hectaresoccupied with pastureland, by 169.9 million
0.80
0.90
e/H
A
p p yheads of cattle.
0.70
ds o
f cat
tle
0.60 Hea
d
0.50 1970 1975 1980 1985 1995 2006
Governors Biofuels Coalition, WDCFebruary 2010
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Fuel Distribution (2009)( )
• 457 sugar cane processing plants/mills;• 198 fuel distributors;198 fuel distributors;• 37,627 fuel retailers.
– All gasoline contains 20‐25% anhydrous ethanol –gasohol.
– Hydrous ethanol is sold in all of them.
Governors Biofuels Coalition, WDCFebruary 2010
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The Industry is Becoming Rapidly y g p yInternationalized
28 0%
25.3%
24.0%
26.0%
28.0%
Top 5 companies crush 21.6% of cane,Top 25 companies crush 50 1% of cane
20.0%
22.0%
24.0% Top 25 companies crush 50.1% of cane,4 out of Top 5 companies are multinationals.
18.4%16.0%
18.0%
12 1% 12 4%12.0%
14.0%
12.1% 11.9% 12.4%10.0%
06/07 07/08 08/09 09/10 10/11Source: DATAGRO
Governors Biofuels Coalition, WDCFebruary 2010
Source: DATAGRO
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Energy Companies and Agrindustrial gy p gGiants are the new investors
Governors Biofuels Coalition, WDCFebruary 2010
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WHY ARE THESE COMPANIESWHY ARE THESE COMPANIESINVESTING IN BRAZIL?
Governors Biofuels Coalition, WDCFebruary 2010
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Likely reasons for investment…y
• Even though already cost competitive with gasoline without any subsidy, its cost is not yet optimized.
Governors Biofuels Coalition, WDCFebruary 2010
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Energy Contained in 1,000 tons of Sugar Canee gy Co ta ed ,000 to s o Suga Ca e(in tons of oil equivalent)
Sucrose Bagasse Tops and Leaves
51.11
55.05 56.43
Only sucrose part is used
Source: Nastari, Lisbon, 2000
Only sucrose part is usedefficiently today. Bagasse is used inefficiently andleaves are wasted.
Governors Biofuels Coalition, WDCFebruary 2010
leaves are wasted.
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Likely reasons for investment…y
• Even though already cost competitive with gasoline without any subsidy, its cost is not yet optimized.
• Brazil has a growing domestic market.• Good industrial base for supply of equipments.Good industrial base for supply of equipments.• Dynamic agriculture research capacity.• Minimal government intervention• Minimal government intervention.• Sugarcane ethanol has been proven to be efficient for GHG mitigation.
Governors Biofuels Coalition, WDCFebruary 2010
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SUGAR CANE ETHANOL AS
1. EPA ruling on Feb 3rd, 2010 (40 CFR Part 30):
• Sugarcane ethanol met the 50% GHG reduction requirement for unspecified advanced biofuel: 61.2% savings over gasoline baselinesavings over gasoline baseline.
• This means that sugarcane ethanol qualifies as advanced biofuel for purposes of RFS2, in spite of land use change impact calculations.
• Advanced biofuels target is 21 bi gallons by 2022 (79 5 bi liters) including celulosic ethanol biomass(79.5 bi liters), including celulosic ethanol, biomass diesel, and other advanced biofuels (15.1 bi liters).
2. CARB in California had also concluded in favor of sugarcane ethanol for its environmental qualities.
Governors Biofuels Coalition, WDCFebruary 2010
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HOWEVER, IN THE WORLD OF FUELS, ETHANOL IS STILL A DROP IN THEETHANOL IS STILL A DROP IN THE
BUCKET!
Governors Biofuels Coalition, WDCFebruary 2010
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HOWEVER, IN THE WORLD, ETHANOL IS STILL A DROP IN THE BUCKET (1)
>> Brazil stands out as the country where the use of biomass ethanol>> Brazil stands out as the country where the use of biomass ethanol represents a large share of energy consumption:
‐ 50.11% (in gasoline equivalent) of the total consumption of Otto‐cycle fuels in 2009 (this % reached 56.9% in 1988).
>> In the US, where ethanol production is larger in volume than in Brazil, ethanol represents ~7.8% of Otto‐cycle fuel demand (2009).
>> In the world: biomass ethanol still represents only‐ 5.4% of consumption of gasoline, and5.4% of consumption of gasoline, and‐ 1.3% of oil demand, which explains why it is considered an exotic fuel to many.
Governors Biofuels Coalition, WDCFebruary 2010
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HOWEVER, IN THE WORLD, ETHANOL IS STILL A DROP IN THE BUCKET (2)
>> But, world fuels demand is expected to grow 40% until 2020.
>>Considering that E10 is technically feasible (World Fuels Chart) in world´s gasoline today, potential market taking into account only E10 is:
• = 117 billion liters • = 202 million tons of sugar • = 123% of current world sugar demand. 123% of current world sugar demand.
>>Where most of gasoline is consumed today:US t f 46% f ld´ d d f li 540 billi•US accounts for 46% of world´s demand for gasoline: 540 billion liters, or 9.2 million barrels/day, or 46% of world demand, of 20.1 million b/d.
Governors Biofuels Coalition, WDCFebruary 2010
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THE EXPLOSIVE EXPANSION IN THE US
20092009
Production of ~42.0 billion liters, from 6.5 billion liters in 2000.
B 2013 ll li d i h US h ld b E10By 2013, all gasoline used in the US should be E10.
Old target (2012): 28.4 billion liters.
Governors Biofuels Coalition, WDCFebruary 2010
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New Targets for Renewables in the USgPres. Bush (State of Union 2006)
C ll d f 20% li b tit ti b 2017• Called for 20% gasoline substitution by 2017 =132 billion liters of renewables (AFS).
US Congress approved RFS2 (HR6)US Congress approved RFS2 (HR6) defining target of 136 billion liters by 2022.
Governors Biofuels Coalition, WDCFebruary 2010
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DEMAND FOR RENEWABLE FUELS ‐ RFS1 & RFS2(IN BILLION LITERS)(IN BILLION LITERS)
120
140 136
100
60
80
40
0
20
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Source: Datagro
Governors Biofuels Coalition, WDCFebruary 2010
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DEMAND OF RENEWABLE FUELS – RFS2 (HR 6)
33
36
24
27
30
33Undifferentiated Advanced Biofuel
Biomass- based Diesel
Cellulosic Biofuel
18
21
24
on G
allo
ns Conventional Biofuel
9
12
15
Bill
io
-
3
6
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Nota: Em tons de verde são indicados os "Advanced biofuels" (cell biofuel, und advanced biofuel, biomass diesel).
Governors Biofuels Coalition, WDCFebruary 2010
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THE POTENTIAL IS ENORMOUS BUTTHE POTENTIAL IS ENORMOUS, BUTETHANOL MARKET EXPANSION
DEPENDS FUNDAMENTALLY ON:
• COMPETITIVENESS WITH GASOLINE• OVERCOMING THE BLEND WALL
•IMPROVING LOGISTICSIMPROVING LOGISTICS•A MORE OPEN MARKET
Governors Biofuels Coalition, WDCFebruary 2010
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Learning Curve – Anhydrous Ethanol100
2002
Learning Curve Anhydrous EthanolSource: Nastari, P.M. "Competitividade da Produção de Etanol de Cana-de-açúcar no Brasil: as três ondas de desenvolvimento", V Conferência Internacional da Datagro sobre Açúcar e Álcool, Grand Hyatt São Paulo, 20 de setembro de 2005, São Paulo, SP.
10$ / G
J út
eis
198620041980
2005
10
(200
4) U
S$
2002
1999
1990
1995
11
0 50000 100000 150000 200000 250000 300000Produção Acumulada de Etanol (mil m3 )
Ethanol prices in Brazil Rotterdam regular gasoline price
trend (Rotterdam gasoline prices) trend (Ethanol prices)
Governors Biofuels Coalition, WDCFebruary 2010
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THE BLEND WALL
• In the US, expansion of ethanol demand is currently limited by the 10% blend wall, mostly due to the small engines issue.
• In Brazil, small engines (boats, lawn‐moars) have been using E20‐25 since 1978without any problemsince 1978 without any problem.
• In 2008, Honda launched in Brazil flex motorcycles (125 cc) capable of using E100 ‐ E25. g
Governors Biofuels Coalition, WDCFebruary 2010
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Ethanol use can go beyond E10g y• Increasing blend level above 10%.• Flex fuel fleet, Brazilian style, in tropical and sub tropical countriessub‐tropical countries.
• Flex fuel fleet in the US, lacking distributionnetwork for E85.
• Production of bio‐plastics and substitutes forProduction of bio plastics and substitutes for other petrochemical products.
• Fuel cells– Ethanol is preferred liquid fuel.
Governors Biofuels Coalition, WDCFebruary 2010
p q
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Logisticsg
• In Brazil ethanol has been transported in• In Brazil, ethanol has been transported in multi‐product pipelines without pigs, for over 3030 years.
• Brazilian logistics experts do not understand g pwhy there is still controversy over this issue in the USthe US.
• Ethanol absorbs and dries out all condensation water in the system, maintaining it water‐free afterwards.
Governors Biofuels Coalition, WDCFebruary 2010
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IN THIS DECADE, ETHANOL HAS GROWN
MUCH FASTERMUCH FASTER THAN SUGAR.
Governors Biofuels Coalition, WDCFebruary 2010
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World Sugar Production(raw sugar equivalent)
160
170(raw sugar equivalent)
150
Tonn
es
130
140
Milli
on T
120
100
110
1 2 3 4 5 6 7 8 9 e
00/0
01/0
2
02/0
3
03/0
4
04/0
05/0
06/0
07/0
08/0
9
09/1
0e
Survey & Analysis: DATAGROBasic Data:DATAGRO / ISO
Governors Biofuels Coalition, WDCFebruary 2010
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87 0World Ethanol Production
76.7
87.0
66.3
Lite
rs
45 7
56.0
Bill
ion
35.3
45.7
25.0
0/01 /0
2
2/03
3/04
4/05
5/06
6/07
7/08
8/09 10
e
00 01 0 2 03 04 05 06 07 08 09/1
Survey & Analysis: DATAGRO
Governors Biofuels Coalition, WDCFebruary 2010
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World Sugar & Ethanol Production(raw sugar equivalent)
140
160 (raw sugar equivalent)
100
120
80
100
on Ton
nes
40
60
Millio
20
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10e
World Ethanol Production World Sugar ProductionSurvey & Analysis: DATAGROBasic Data:DATAGRO / ISO
Governors Biofuels Coalition, WDCFebruary 2010
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Potential Market is Very Large! y gNew Trends
• The world of fuels and petrochemical applications is MUCH larger than the world of sugar.
• Biofuels and renewable feedstocks can become raw material for polyethilene, PET, textile fibers, bio‐derived gasoline and di ldiesel.
Governors Biofuels Coalition, WDCFebruary 2010
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PRODUCTION IS STILLPRODUCTION IS STILLMUCH CONCENTRATED IN THE US AND BRAZIL
Governors Biofuels Coalition, WDCFebruary 2010
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WORLD ETHANOL PRODUCTION2009 - 85.15 BILLION LITERS
0 9%
S ill h 8 4%
3.2%0.9%
0.3%
Still much concentrated in the US & Brazil 9.4%
8.4%
the US & Brazil
48.3% U.S.A
>> In 2009, world ethanol production
29.4%Brazil
Asia>> In 2009, world ethanol production
was 85.15 billion liters, or151.2 million tons of raw sugar
equivalent.
EU
Other Americas
Governors Biofuels Coalition, WDCFebruary 2010
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Sugarcane Ethanol can increase gincome from agriculture in many
other countries• Price of sugars in molasses are, in general,Price of sugars in molasses are, in general, much below the ruling price of sugar in each marketmarket.
• This is why sugar producers tend to extract from molasses as much sugars as they can: 1st, 2nd & 3rd strike sugars.1st, 2nd & 3rd strike sugars.
Governors Biofuels Coalition, WDCFebruary 2010
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Ethanol: increasing income from gagriculture
• In this decade, world price of molasses withIn this decade, world price of molasses with 55% sugars has varied in the range of:$65 180 / t FOB– $65‐180 / ton FOB, or
– $120 to 330 / ton of sugar equivalent.
• Price of white sugar has varied from $ 250 toPrice of white sugar has varied from $ 250 to 830 / ton!
Governors Biofuels Coalition, WDCFebruary 2010
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P i f Bl k t M lPrice of Blackstrap MolassesUS$ / metric ton of molasses FOB - US ports
120.00
130.00
100.00
110.00
120.00
on
DATAGRO
70.00
80.00
90.00
US$
/ m
etric
to
40.00
50.00
60.00
U
30.00
jan/
95
jul/9
5
jan/
96
jul/9
6
jan/
97
jul/9
7
jan/
98
jul/9
8
jan/
99
jul/9
9
jan/
00
jul/0
0
jan/
01
jul/0
1
jan/
02
jul/0
2
jan/
03
jul/0
3
jan/
04
jul/0
4
jan/
05
jul/0
5
jan/
06
NEW ORLEANS HOUSTON SOUTH FLORIDA
Governors Biofuels Coalition, WDCFebruary 2010
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Price of White Sugar vs Price of Sugars in MolassesPrice of White Sugar vs. Price of Sugars in Molasses Molasses Basis New Orleans - in US$/ metric ton of sugar
450.00
500.00
350.00
400.00
450.00
on
DATAGRO
200.00
250.00
300.00
S$ /
met
ric to
100.00
150.00
US
0.00
50.00
n/95
ul/9
5
n/96
ul/9
6
n/97
ul/9
7
n/98
ul/9
8
n/99
ul/9
9
n/00
ul/0
0
n/01
ul/0
1
n/02
ul/0
2
n/03
ul/0
3
n/04
ul/0
4
n/05
ul/0
5
n/06
jan ju jan ju jan ju jan ju jan ju jan ju jan ju jan ju jan ju jan ju jan ju jan
SUGAR (LN 5) NEW ORLEANS
Governors Biofuels Coalition, WDCFebruary 2010
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Ethanol: increasing income from gagriculture
M l h l B ili d bl• Molasses to ethanol: Brazilian producers were able to value almost all sucrose for a price nearly equivalent to that of sugarequivalent to that of sugar.
• Great edge against its competitors.E bl d i l l i li d i h• Enabled capital accumulation, applied in the modernization of industrial and agricultural processesprocesses.
• Explains average increase in agrindustrial productivity of 3 7% per year during the past 35productivity of 3.7% per year, during the past 35 years.
Governors Biofuels Coalition, WDCFebruary 2010
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General Positive Impactsp• Sugar cane ethanol has proven to be one of the few
ff ti t i bl d l t t t i teffective sustainable development strategies to:
– Generate jobs with low investment costs, and mitigate poverty in developing countries
– Address the 2 main problems faced by the developed world:
• the need to find a viable replacement to oil• control urban pollution and mitigate greenhouse p g ggas emissions.
Governors Biofuels Coalition, WDCFebruary 2010
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Ethanol can be long term solutiong• Brazil´s self‐sufficiency:
– Substituted 1.87 billion barrels of gasoline, in 35 years = 13.8% of Brazil´s current proven crude oil and condensate reservesreserves.
• Savings of over $78 billion in constant dollars of• Savings of over $78 billion, in constant dollars of 2009, measuring substituted gasoline for the price in the world market, in each year.the world market, in each year.– $241 billion savings, when foregone interests on foreign
debt are considered.– Brazil’s total foreign reserves in Dec/09: $239.5 billion.
Governors Biofuels Coalition, WDCFebruary 2010
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Extending its use is attainableg• Ethanol occupies in Brazil only 4.0 million hectares of
sugarcane (2009) enough to substitute >50% of its gasolinesugarcane (2009), enough to substitute >50% of its gasoline.
• World consumption of gasoline is currently 20.07 millionWorld consumption of gasoline is currently 20.07 million barrels/day: only 19.9 million hectares in sugar cane would be required to substitute 10% of world’s gasoline use.
• This land mass is available in many regions: in Central and South America, Africa and Southeast Asia.
Governors Biofuels Coalition, WDCFebruary 2010
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MOU US‐Brazil on Ethanol• March 09, 2007: Memorandum of Understanding (MOU) to promote greater cooperation on ethanol and other biofuels in the Western Hemisphere.
• Americas Summit (Miami, 1994): pledge to ban MTBE and substitute it with ethanol.
• Obama Administration has historicalObama Administration has historical chance to develop further policy on ethanol and biofuels in general.
Governors Biofuels Coalition, WDCFebruary 2010
ethanol and biofuels in general.
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Towards Geopolitics of Clean Energyp gy
• Biomass ethanol mostly from sugarcane can play a majorBiomass ethanol, mostly from sugarcane, can play a major role at a moment many poor nations are in need of finding alternative uses and markets for their traditional agricultural production, reduce energy dependence, and find new sources of income.
• For more developed countries, there is a new option ahead:– Promote freer trade for clean, sustainably‐produced ethanol, while at
same time providing safeguards to domestic producers andsame time providing safeguards to domestic producers, and
– Open new markets for its products and services, as fresh income is irrigated to clean‐energy‐producing less‐developed countries.
Governors Biofuels Coalition, WDCFebruary 2010
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Towards Geopolitics of Clean Energyp gy
• Brazil is part of Mercosur, where there is a intra‐zone tariff (0%) and an external tariff for ethanol imports (20%), establishing a preference for intra zone tradeestablishing a preference for intra‐zone trade.
• Brazil is considering lowering the external tariff also to 0%: decision has been postponed to June/10decision has been postponed to June/10.
• Efforts continue to promote ethanol production and use in other countries.
• It is unmistaken that the strategy is to transform clean energy into the new major platform of trade!
Governors Biofuels Coalition, WDCFebruary 2010
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d twww.datagro.com [email protected]
19th May 20104th ISO / DATAGRO New York Sugar & Ethanol Conference
The Waldorf=Astoria, Starlight Roof ‐ New York Sugar Dinner.
www.isodatagrony.com
18th ‐19th October 2010X International DATAGRO Sugar & Ethanol ConferenceX International DATAGRO Sugar & Ethanol Conference
Grand Hyatt São Paulo, Brazil.
www.conferencia.datagro.com.br
Governors Biofuels Coalition, WDCFebruary 2010
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Governors Biofuels Coalition, WDCFebruary 2010ONLINE REGISTRATION: www.isodatagrony.com