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Biofuels in Brazil The Ethanol Experience PowerPoint Presentation
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Biofuels in Brazil The Ethanol Experience

Biofuels in Brazil The Ethanol Experience

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Biofuels in Brazil The Ethanol Experience

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  1. Biofuels in BrazilThe Ethanol Experience Paulo C. R. Lima, M.Sc., Ph.D. Energy Consultant for Brazilian Congress

  2. Main biofuels in Brazil • Ethanol (present and future) • Biodiesel (future) • Sugarcane bagasse • Charcoal

  3. Brazil´s potential Millions of hectares Brazil´s area ~ 850,00 Total area for agriculture 320,00 Cultivated area – all crops 60,40 with sugar cane 5,34 for ethanol2,66 Source: Ministério da Agricultura, Pecuária e Abastecimento

  4. Fonte: Carvalho L. C. C - 2005 Cultivated area: 5.5 million ha It could be 20 times greater

  5. Ethanol in Brazil • Proálcool: world´s greatest program • Started in 1975 • The addition of ethanol increases the octane number • Additive that replaces Methyl Tertiary Butyl Ether (MTBE) and Ethyl Tertiary Butyl Ether (ETBE) • More than 3 million flex-fuel vehicles (ethanol, gasoline or any mixture of them) • Gasoline with 20% a 25% of anhydrous ethanol • Ethanol is competitive

  6. Ethanol export Sugarcane production and key facts Flex-Fuel Vehicles Law nº 8.723, 1993 (22%+/- 2% e 1% allowance) 440 383 350 PROÁLCOOL 303 263 149 91 (1.000.000 t) 1975 1980 1990 1995 2003 2004 2005 Source: UNICA – União da Indústria Canavieira do Estado de São Paulo

  7. Ethanol production 2006: 17 million cubic meters 15,28 15,4 14,72 14,37 13,87 13,02 12,59 12,62 11,54 10,59 1.000.000 m3 1995/1996 1996/1997 1997/1998 1998/1999 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 Source: UNICA

  8. Ethanol market • Brazil: • 13,2% of total energy consumption in road transport sector; • 40,4% of total fuel consumption for Otto Cycle vehicles (it was 56,9% in 1988). • USA: ethanol represents just 2,5% of total fuel consumption of Otto Cycle vehicles. Source: Nastari, P. M. - 2005

  9. IMPACTS OF ETHANOL PRODUCTION Social Environment 16 million cars powered by gasoline with 25% ethanol addition More than 1 million flex fuel cars 70.000 farmers 395 distilleries 1million people 3,0 million cars powered by hydrated ethanol From 1992 to 2003, the jobs on sugarcane crop has reduced by 33%, according to PNAD (Pesquisa Nacional de Amostras Domiciliares)

  10. 80 53 1977 2003 SUGARCANE Productivity improvement (Center-South) (ton per hectare-year) Source: Amorim e Lopes - 2005

  11. ETHANOL Increase of productivity (Center-South) 7000 6500 6550 6000 liters/ha-year 5500 5300 5000 4500 4200 4000 1980 1986/1988 2004 Source: UNICA

  12. Learning curve Ethanol price at distillery Gasoline price at refinery Source: Goldemberg,J. & Macedo,I., 2005

  13. Ethanol production costs • Production cost: US$0.18–0.25 per liter • Average export price in 2003: US$ 0.23 per liter • New plants • Processing capacity: 2.1 million tons of sugarcane per year • Production capacity: 430 m3/day • Capital cost: US$ 60 million • Raw material cost: US$ 0.143 per liter of ethanol • Capital cost: US$ 0.017 per liter of ethanol Source: Nastari, P. M. - 2005

  14. NEW DISTILLERIES (around 50) New plants

  15. Energy balance of ethanol production

  16. ELECTRICAL ENERGY – Installed Power (sugarcane bagasse) (MW) Electricity consumption for sugar and ethanol processing Power capacity connected to the national grid Short term potential Medium term potential 2300 1600 6000 to 8000 15000 to 22000 Source: Aneel/Unica

  17. Cogeneration potential • Plants can generate 80 kWh/sugarcane ton in excess (low pressure systems) • Investment can be recovered in 3 to 4 years • Cogeneration can have an important impact on income of ethanol producers (25-28%) • Sugarcane bagasse, stem tips and leaves can provide great amount of energy Fonte: Nastari, P. M. - 2005

  18. Perspectives for ethanol in developing countries

  19. BIODIESEL Brazil has 90 million hectares available for producing oil crops.

  20. Law nº 11.097 / 2005 - Introduces biodiesel into the Brazilian energy matrix - 2% has to be added to diesel in 3 years (by January 2008) - 800 million liters - 5% has to be added in 8 years (by January 2013) - 2 billion liters - Oil and gas royalties can be used to finance biofuels R&D projects

  21. Law 11.116 / 2005 - Special monophase regime for federal taxation (PIS/PASEP and COFINS) - Biodiesel producers has to be authorized by ANP (National Agency for Oil, Gas and Biofuels) - Special record at Secretaria da Receita Federal (Ministry of Finances) Decree nº 5.297 - Defines the value of PIS/PASEP and COFINS - Creates the “Social Fuel Stamp”

  22. Source: Gomide, R. B. - 2006

  23. Social Fuel Stamp – IN 01 / 2005 Ministério do Desenvolvimento Agrário - MDA Requirement for concession: • Buying of raw material of family farming • 50% NE • 10% North and CW • 30% SE and South • Formal contracting • Technical assistance and training

  24. Resolution nº 3 / 2005 Conselho Nacional de Política Energética - CNPE - Public auctions to anticipate the 2% goal. Raw material from family farming and “Social Fuel Stamp” Portaria nº 483 / 2005 Ministério de Minas e Energia - MME - Guidelines for public auctions to be executed by Oil, Gas and Biofuel National Agency

  25. Resolution nº 31 / 2005 Agência Nacional do Petróleo, Gás Natural e Biocombustíveis - ANP Auction Bidding nº 061 / 2005 Auction Bidding nº 007 / 2006 Agência Nacional do Petróleo, Gás Natural e Biocombustíveis - ANP

  26. 1º Auction

  27. 2º Auction

  28. 3º and 4º Auctions Agência Nacional do Petróleo, Gás Natural e Biocombustíveis - ANP - Estimated volume: 850 million liters to fill 2% - Brazil’s diesel consumption is near 40 billion liters

  29. BIODIESEL PLANTS Source: Gomide, R. B. - 2006

  30. CONCLUSION - Brazil has a great potential for biofuel production but a small potential to promote citizenship - Biofuels legal framework is confusing and inconsistent - Ethanol and biodiesel are subject to different public policies - Ethanol can be treated as “social fuel” like biodiesel - The Brazilian legislation does not define any incentive for cooperativism and small distilleries or production units - Family farming depends on industrial producers

  31. Tributos Federais: Decretos nº 5.297/04 e 5.457/05 Biodiesel Biodiesel Diesel Diesel Tributos Tributos de de Agricultura Agricultura federais federais Norte, NE e Norte, NE e Petr Petr ó ó leo leo Familiar no Familiar no Semi Semi - - á á rido rido Norte, NE e Norte, NE e Agricultura Agricultura com com Regra Geral Regra Geral Semi Semi - - á á rido com rido com Familiar Familiar mamona ou mamona ou mamona ou mamona ou palma palma palma palma Al Al í í quota quota Al Al í í quota quota Al Al í í quota quota Al Al í í quota quota IPI IPI Al Al í í quota Zero quota Zero Zero Zero Zero Zero Zero Zero Zero Zero CIDE CIDE R$ 0,070 R$ 0,070 Inexistente Inexistente Inexistente Inexistente Inexistente Inexistente Inexistente Inexistente Redu Redu çã çã o de o de Redu Redu çã çã o de o de Redu Redu çã çã o de o de = = diesel diesel PIS/COFINS PIS/COFINS R$ 0,148 R$ 0,148 100% 100% 68% 68% 31% 31% mineral mineral R$/litro R$/litro R$/litro R$/litro R$/litro R$/litro R$/litro R$/litro R$/litro R$/litro Total tributos Total tributos federais federais R$ 0,00 R$ 0,00 R$ 0,070 R$ 0,070 R$ 0,151 R$ 0,151 R$ 0,218 R$ 0,218 R$ 0,218 R$ 0,218

  32. Recursos Renováveis 43.6% Biomassa 29.1% Hidreletricidade 14.5% Urânio (U O ) 3 2 1.5% Carvão Mineral 6.5% Gás Natural Petróleo e 8.7% Derivados 39.7% Matriz Energética Brasileira

  33. BIODIESEL Áreas não exploradas de 90 milhões de ha estão disponíveis para produção de grãos no Brasil

  34. Matriz de Energia Elétrica

  35. Produção de Energia Primária 106 tep

  36. Miscellaneous thoughts/quotes/notes…addendum by James Page • “There is a required trade-off between energy and food production. With half of the world hungry, this is not a good idea at all.” • The “green revolution” began in the ’70s. It’s taken 30 years to take off. • Q: “What’s the better alternative? Nuclear? With all the risks? Or do we continue to flatten pristine environments of the Amazon?” • A: “We need technology to change this and increase yields and product in traditional areas where markets function better.”

  37. Cont’d • Improvements in this technology will lead to 300,000 of Brazil’s poorest losing their jobs by 2014. • “There is no way for Brazil to use renewable energy…costs are way too high.” Nastari / Datagro @ NIPE Unicamp

  38. “The Amazon is the world’s air conditioning system.” “The free market will lead us to the end.”

  39. “The world is watching the United States and waiting for a change on their position on the omission of the gases with regard to global warming……of course, I’m not a defender of Mr. Bush, but the United States has great technological capability and we are going to need this.”

  40. Citation for Addendum • Brazilian Chamber of Deputies. Personal Interviews and Presentation. July 2007. Nastari / Datagro @ NIPE Unicamp