“Sustainable Bioenergy: Challenges and Opportunities”

Suani Teixeira CoelhoSão Paulo State Secretariat for the Environment

Deputy Secretarysuaniteixeira@sp.gov.br

Bonn, 12-13 October, 2006

Keynote address Keynote address

Outline

Brazilian Ethanol Program

Ethanol Fuel (Social and Environmental Sustainability)

Replication of Brazilian Ethanol Program – Possible or not ?

Some Myths about Ethanol

1. Brazilian experience is unique; 2. incompatible with existing fleets; 3. low energy balances of biofuels;4. high pollutant emissions; 5. competition with food for land,

unsustainable practices, deforestation;6. only subsidized production is possible; 7. energy efficiency alone would preserve

oil resources and fulfill Kyoto targets.

The Brazilian Alcohol Program

The world largest commercial program on biomass 916 billion liters produced in 2005 – 2,5 billion liters exported)

Decision (1975) from Brazilian Federal Government to produce ethanol in addition to sugar (from sugarcane): objective of reducing petroleum imports (High prices).

High-octane fuel in vehicles, replacing lead and/or MTBE.

4,000,000 cars running on pure (hydrated) ethanol in Brazil

1,800,000 flex-fuel vehicles (both ethanol and gasoline, any blend)

all gasoline blended with (anhydrous) ethanol: 20 to 25% of ethanol in volume basis – gasohol

Nowadays - economically competitive to gasoline

Compatibility of Existing Fleets with Ethanol-gasoline

Blend

Source: ANFAVEA, 2005

Ethanol Content in the Fuel

Carb

ureto

r

Fu

el Injectio

n

Fu

el Pu

mp

Fu

el Pressu

re D

evice

Fu

el Filter

Ign

ition

System

Evap

orative S

ystem

Fu

el Tan

k

Catalytic C

on

verter

Basic E

ng

ine

Mo

tor O

il

Intake M

anifo

ld

Exh

aust S

ystem

Co

ld S

tart System

≤ 5%

5 ~ 10%

10 ~ 25%

25 ~ 85%

≥ 85%

- - - - - - - - - - - - - - - - - - - For any vehicle NN - - - - - - - - - - - - - - - - - -

- - - - - For relatively new fleets (10 ~ 15 years old) - - NN- - -

- - - - - - - Brazilian Application - PN - - - -

- - - - - - - - - - - - - - - - - Brazilian Application PN- - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - USA Application PN - - -- - - - - - - - - - -

- Not Necessary - Probably Necessary

- - - - - - - - NN - - - - - - -

- NN-

Ethanol Production Costs (Brazil)

Production costs: US$0.18–0.25 per liter of gasoline-equivalent: – average export price of ethanol (2001-2003): US$ 0.23 per liter

Initial investment for new plants: US$ 60 million (2005 prices)– 40 new plants in São Paulo State; 100 in Brazil– Average processing capacity: 2.16 million tonnes of sugarcane

per year – average yield 79.39 liters of anhydrous ethanol equivalent (82.86

liters of hydrous) per tonne of sugarcane (Sao Paulo = 100-110 liters/ha)

– average price paid per tonne of sugarcane is US$11.4 (UNICA, 2005)

– plant lifetime of 25 years – feedstock cost of US$ 0.143 per liter of ethanol – investment cost around US$ 0.017 per liter of ethanol.

2006 ALL NEW INVESTMENTS ARE PRIVATE

0

100

200

300

400

500

600

700

800

900

1000

0 50000 100000 150000 200000 250000 300000

Ethanol Cumulative Production (thousand m 3 )

pri

ce p

aid

to

eth

ano

l pro

du

cers

; g

aso

line

pri

ces

(20

04)

US

$ / m

3

Ethanol prices in Brazil Rotterdam regular gasoline price BR regular gasoline price

2000

1990

1980

1980

1990

2000 20052005

2000

2004

1990

1980

Brazilian ethanol international competitiveness

Source: Nastari, 2005 updated

Ethanol Learning Curve (Hydrated Ethanol)

Ethanol international competitiveness

WHY BRAZILIAN ETHANOL IS COMPETITIVE?

– High agricultural/industrial yields efficient technologies 150 different varieties of sugarcane for

different types of soil

– Use of renewable energy source in the process (only sugarcane bagasse for cogeneration)

– Favorable energy balance 8-10:1

GHG emissions from different types of ethanol

sources

Sources: Macedo et. alii, 2004, UK DTI, 2003 and USDA, 2004

0 10 20 30 40 50 60 70 80 90 100

Cereal ethanol

Beet ethanol

Wheat straw ethanol

Corn ethanol

Sugarcane ethanol

kg CO2eq./GJ fuel

~ 10% of total cultivated land

~ 1% of total land available for agriculture

SUGAR CANE - 5 million ha - 60,000 producers - all-year-round harvest

C-S (80% land)

harvest: april/november

N-NE(20% land)

harvest: sept/march

Sugarcane Expansion and Land Use in Sao Paulo State

2005 São Paulo State:

– Total territory: 24,800,000 ha– Used: 22,000,000 ha (cattle, agriculture, native forests

and reforestation)

Cattle (2005): 10,000,000 ha

Orange (2005): 672,000 ha

Sugarcane: 3,700,000 ha(5.5 billion liters of ethanol and 17

million tones of sugar)

Existing Environmental Legislation for Land Use – controls the use of Native Forest Land and Riparian Forests

Land use in Sao Paulo State – sugarcane crops

Sugarcane Expansion in São Paulo (1)

Sugarcane vs food crops

-

500.000

1.000.000

1.500.000

2.000.000

2.500.000

3.000.000

3.500.000

4.000.000

2000 2001 2002 2003 2004 2005 2006

ha

Wheat Soy Sugarcane Cofee Orange Corn

Source: São Paulo State Agriculture Secretariat-Database (www.iea.sp.gov.br)

Sugarcane Expansion in São Paulo (2)

Sugarcane vs cattle

-

2.000.000

4.000.000

6.000.000

8.000.000

10.000.000

12.000.000

2000 2001 2002 2003 2004 2005 2006

Cattle Sugarcane

Source: São Paulo State Agriculture Secretary Database (www.iea.sp.gov.br)

Cattle: Evolution in São Paulo State

2001 2002 2003 2004 2005Cattle(heads)Pasture(hectares)Density (heads of cattle/hectare) 1.28 1.411.361.361.33

13,773,913 14,072,447

10,010,491 10,118,143

13,154,649 13,457,460 13,764,772

10,107,540 10,102,539 10,288,887

Source: São Paulo State Agriculture Secretary Database (www.iea.sp.gov.br)

Trend to more intensive cattle-breeding

Control and Enforcement of Environmental Impacts on Sugarcane

Ethanol Production

Legislation improved and enforced specially in the State of São Paulo (60% of all Brazilian sugarcane mills);

Discharge of effluents with high organic loads replaced by controlled fertirrigation practices (CETESB);

Harvest burning practices are being phased-out, through a strict legal enforcement;

Land use strictly controlled: preserving riparian forests and other natural ecosystems and avoiding deforestation;

Industrial sugarcane and ethanol plants have their atmospheric emissions controlled;

Spill offs and other accidents are rare and of low impact;

Social Aspects Job creation (700,000 jobs in Brazil

manly in rural areas) Legislation – social/labor issues

– For example: Forbidden manual harvesting of green sugarcane

Payments for rural workers on sugarcane crops are higher than other sectors

Agroindustrial models in Brazil

Model % Trend

Sugarcane bought from farmers and

sugarcane produced by the industry

90 Increase

Sugarcane from outsourcing producers

5 In expansion

Sugarcane produced by cooperatives

5 Decrease

Perspectives for the Replication of Brazilian Ethanol Program in Other

Developing Countries

Perspectives for the Replication of Brazilian Ethanol Program in Other

Developing Countries

Feasibility studies – production costs? Technological aspects:

– Existing technology for alcohol production: efficient and commercially available (Brazil).

– Cogeneration process from bagasse efficient systems commercially available (Mauritius/Brazil).

Local capacity building + infrastructure Adequate policies (ex. Mandatory blend like in

Brazil and Malawi) Environmental aspects – sustainability is possible! Opportunities from the Clean Development

Mechanism good option for developed countries, collaborating for the sustainable development of poor countries.

Biofuels, developed and developing countries

Win-win situation for all !!

Thanks!

Obrigada!