PROSPECTS FOR THE SUGARCANEPROSPECTS …PROSPECTS FOR THE SUGARCANEPROSPECTS FOR THE SUGARCANE...

BIOEN Workshop on the Impact of Land Use Changeand Biofuel Crops on Soils and the Environment

PROSPECTS FOR THE SUGARCANEPROSPECTS FOR THE SUGARCANE BIOENERGY SECTOR

Marcos S. JankP id t B ili S I d t A i tiPresident, Brazilian Sugarcane Industry Association

São PauloJune 16, 2009

ABOUT UNICA

• UNICA is the leading sugarcane industry association representing 127 mills inassociation, representing 127 mills in Brazil

R ibl f 60% f ll th l d• Responsible for 60% of all ethanol and sugar production in Brazil

• Emerging as a leader in the generation of bioelectricity already meeting 3% of Brazil’s electricity demandBrazil s electricity demand

• International presence, now in Washington & Brussels, to engage in constructive dialogue

OUTLINE

I. Brazilian sugarcane sector: an overview The Brazilian ethanol evolution: building blocks of energy g gy

security.

The increasing FFV fleet.g

II. Sugarcane´s next frontiers BioelectricityBioelectricity.

Other uses for ethanol.

III Current issues regarding the sustainability of theIII. Current issues regarding the sustainability of the sugarcane sector.

IV. Proposed research agenda.

KEY NUMBERS OF BRAZILIAN SUGARCANE SECTOR

Annual gross earnings US$ 23 billion

Foreign revenue US$ 7.9 billion (2008)

Direct investments more than US$ 20 bln (2006-2009)

Composition 380 plants nationwide

Sugarcane growers 70,000

People directly employed 845,000p y p y ,

Participation in Brazilian energy matrix 16.4%, ahead of hydroelectricity

Sugarcane production 562 mln tonSugarcane production 562 mln ton

Sugar production 31.2 mln ton

Eth l d ti 27 bl litEthanol production 27 bln liters

Avoided CO2 emissions 45 mln tons since 2003

Elaboration: UNICA. Note: data refers to the 2008/09 crop year

BRAZILIAN ENERGY MATRIX INPUT

RENEWABLEOther renewable sources

Wood and other biomass

41% 45% Hydroelectricity

SugarcaneUraniumCoal

Natural gas

Petrole m and deri ati esPetroleum and derivatives

Renewable energy supply structuresupply structure

World (2006): 12,9%OECD (2006): 6,7%

Source: BEN (2009). Elaboration: UNICA

PROJECTIONS FOR THE BRAZILIAN SUGARCANE INDUSTRY

2008/09* 2015/16 2020/21

INDUSTRY

Sugarcane production (million t) 562 829 1,038 Sugar (million t) 31.2 41.3 45.0

Internal market and stocks 10.2 11.4 12.1Surplus Export 21.0 29.9 32.9

Ethanol (billion l) 27 0 46 9 65 3Ethanol (billion l) 27.0 46.9 65.3Internal market and stocks 22.2 34.6 49.6Surplus Export 4.8 12.3 15.7p p

Bioelectricity (MW average) 1,800 8,158 13,158Bioelectricity in Brazilian energy matrix (%) 3% 11% 14%

Note: * - preliminary . Sources UNICA, Copersucar and Cogen.

BRAZILIAN LIGHT VEHICLES SALES (OTTO-CYCLE)

90% of new cars sold are Flex90% of new cars sold are Flex Fuel, representing

over 25% of the Brazilian fleet

Source: ANFAVEA. Elaboration: UNICA

GASOLINE AND ETHANOL CONSUMPTION IN BRAZIL

Gasoline

Ethanol

Source: ANP and UNICA.

BRAZILIAN ETHANOL EXPORTS BY DESTINATIONS

3,4 bi litersUS$ 1,6 bi

3,5 bi litersUS$ 1,5 bi

5,1 bi litersUS$ 2,4 bi Total exports

Source: SECEX. Elaboration: UNICA

OUTLINE

I. Brazilian sugarcane sector: an overview The Brazilian ethanol evolution: building blocks of energy g gy

security.

The increasing FFV fleet.g

II. Sugarcane´s next frontiers BioelectricityBioelectricity.

Other uses for ethanol.

III Current issues regarding the sustainability of theIII. Current issues regarding the sustainability of the sugarcane sector.

IV. Proposed research agenda.

BREAKDOWN OF SUGARCANE’S ENERGY

Energy equivalent ofAlcochemical

Bio-plastic

Energy equivalent of 1 ton of sugarcane

= 1.2 oil barrel

Source: UNICA

SUGARCANE PRODUCTS

ETHANOL USE: NOT LIMITED TO PASSENGER CARSEthanol po eredEthanol-powered

buses (E95) - still a pilot project in Brazil

Biobutanol

Bio-plastics (PHB,

Brazilian-made crop dusting planes running

polyethylene, PVC)

dusting planes running on ethanol

Fle f el Production of diesel fromFlex-fuel motorcycles

Honda 150 cc Flex in the market

Production of diesel from sugarcane at commercial

scale after 2010in the market

NEW PLAYERS IN THE BRAZILIAN SUGARCANE SECTOR

T t

Energy sector

Rede GroupAutomobile sector

ToyotaMitsubishi Corporation

Companhia de Energia Renovável

Other sectors

TGM Turbinas ConstrucapEncalso Pactual Bank

Grandene

Bioplastic company

Dow Chemical B k / ETH Bi i Grandene

Concessionárias Rodovias SPBraskem/ ETH Bioenergia

Solvay

Bertin Bunge Cargill ADM

Agro-food industry and trading companiesOil company

g gAdecoagro Louis Dreyfus Commodities

Noble Group Tereos

BPPetrobrás

BIOELECTRICITY: POTENTIAL IN BRAZIL

2 It i2 Itaipus

Notes: 1 ton of sugarcane produces 250 kg of bagasse and 204 kg of straw, 1 ton of sugarcane (bagasse + straw) generates 199,9 KWh for exporting; the strawinferior calorific value = 1,7 bagasse inferior calorific value; capacity factor = 0,5 (Koblitz). It is assumed that 75% of the bagasse is used for cogeneration. Thepercentage of straw use starts at 5% (2008) going up to 70% (2015) . Until 2010 the potential market prediction consider the regulated energy auctioning; for 2011an increase of 1600 MW is assumed, for subsequent years a 2000 MW increase per year is assumed. Source: Cogen, UNICA., q y p y g ,

BENEFITS OF BIOELECTRICITY

Experience and know how Units are self-sufficient in energy

Reduced construction period Reduced construction period Construction in 24-30 months

Renewable and clean energygy Low environmental impact Provide carbon credits

íí Synergy with hydro production pattern Bioelectricity is produced during the dry season

Smaller projects and broader range of in estors

íí

Smaller projects and broader range of investors Eliminate risks of delay and construction problems

Strengthen the national equipment industry and create jobs Strengthen the national equipment industry and create jobs

Location close to main load centers

Source: PSR, Cogen, UNICA, Elaboration: UNICA,

OUTLINE

I. Brazilian sugarcane sector: an overview The Brazilian ethanol evolution: building blocks of energy g gy

security.

The increasing FFV fleet.g

II. Sugarcane´s next frontiers BioelectricityBioelectricity.

Other uses for ethanol.

III Current issues regarding the sustainability of theIII. Current issues regarding the sustainability of the sugarcane sector.

IV. Proposed research agenda.

MECHANIZED HARVEST IN THE STATE OF SÃO PAULO

Source: INPE UNICA and SMASource: INPE, UNICA and SMA.

MITIGATING GLOBAL WARMING

Energy balance: 9.3Productivity: 7,000 liters/ha

A CARBON ABSORBING MACHINE?

2 METERS

3 METERS

2 METERS

1 METER

22-36 tons C/hatons C/ha

5-7 years

1 METER

3-5

5-7 years

2 METERStons C/ha

3 METERS

4 METERS

Source: Polo de Biocombustivel (Weber Amaral) from various sources.

U.S. RENEWABLE FUELS STANDARD (RFS)

LO GLO G

Sugarcane ethanol with +50% GHG

reductionOWER

GHG

OWER

GHG

RR

Sources: EISA of 2008, Dept of Energy, ITC; E-10 Blend Wall Limit based on EIA’s projections of gasoline consumption and do not include bottleneck and other infrastructure concernsand other infrastructure concerns.

CALIFORNIA’S LOW CARBON FUELS STANDARD (LCFS)

em

egaj

oule

f CO

2pe

r

usin

g A

P

Gra

ms

of

ILU

C

GTA

Source: California Air Resources Board’s Low Carbon Fuel Standard, March 2009.

1% OF ARABLE LAND DISPLACES 50% GASOLINE

Millions of Hectares (2007)%

l%blBRAZIL 851 total

landarable land

BRAZIL 851

TOTAL ARABLE LAND 354.8

1 T t l C L d 76 7 9 0% 21 6%1. Total Crop Land 76.7 9.0% 21.6%

Soybean 20.6 2.4% 5.8%

Corn 14 0 1 6% 3 9%Corn 14.0 1.6% 3.9%

Sugarcane 7.8 0.9% 2.2%

Sugarcane for ethanol 3.4 0.4% 1.0%Sugarcane for ethanol 3.4 0.4% 1.0%

Orange 0.9 0.1% 0.3%

2. Pastures 172.3 20% 49%

3. Available area Total arable land – (crop land + pastures)

105.8 12% 30%

Sources: IBGE, UNICA

EPA: “INDIRECT LAND USE” EFFECT

Source:s See Figure 2.1-2. “Lifecycle GHG Results Using 100-Year Net Present Value with 2% Discount Rate” in page 282 of Discussion Draft of Environmental Protection Agency (EPA) Regulatory Impact Analysis, May 2009. Range shows net emissions if EPAassumes all land conversion from forest (upper bound) and all from grassland (lower bound).

EU DIRECTIVE ON RENEWABLE ENERGIES

The Directive establishes the adoption of a 10% mandatory target by 2020 for renewables in the transport sector.

The majority of this 10% is expected to be fulfilled by biofuels and this could represent a market for ethanol up to 14 billion liters.

The mandatory 10% target includes sustainability criteria:

Requirements for greenhouse gas emissions savings compared to fossil q g g g pfuels: from 35% when the Directive enters into force in 2010, to 50% by 2017 and 60% for new projects launched as of 2017.

Establishment of areas of high biodiversity and carbon stock as “no go areas” - where the production of biofuels is prohibitive.

F t tl d d t ith hi h bi di it ( till d Forests, wetlands and pastures with high biodiversity (still under discussion the correct definition of these geographical areas).

DEFORESTATION UNRELATED TO SUGARCANE 0 04­0,04

0 84-0,84

-0,38

1992 2008

Source: INPE and UNICA. Deforestation data is calendar year while sugarcane production is based on harvest.

CANASAT PROJECT P id dibl f l i f ti di th ti l di t ib ti f lti t d Provides credible, useful information regarding the spatial distribution of cultivated

sugarcane area in South-Central region, using remote sensing satellite images

Examines evidences on the relationship between agricultural land-use Examines evidences on the relationship between agricultural land usechanges, soil productivity and indicators of environmental sensitivity

Several inquiries can be performed about sugarcane location, amount ofcultivated area and sugarcane crop evolution over the past years at bothmunicipality and State levels

Initiative of INPE, UNICA and CTC

http://www.dsr.inpe.br/mapdsr/

SUGARCANE AGRO-ENVIRONMENTAL ZONING IN SÃO PAULO STATEPAULO STATE

São Paulo State, where 60% of i h f dsugarcane is grown, has performed

and adopted an agro-environmental zoning that induces sugarcane

expansion in the most appropriate areas and prohibit new planting in

sensitive areas

Sustainability initiatives for biofuels:A universe in constant expansion

SUSTAINABLE BIOFUELS

EU Directives

GLOBAL MULTISTAKEHOLDER

INITIATIVESNATIONALINITIATIVES

INTERNATIONALBODIES 

EU Directives 

G8 +5 UNEPOCDE IEA FAOIFC ISOIDB

CRAMER

NL UK DE SE

LCFS

USA

RTFO PBCB

BR

kSEI Equator Prop

Scorecard

CRAMERCramer 

Commission 

LCFSLow Carbon Fuel Standard 

Renewable Transport Fuel Obligation 

RTFO PBCB T ask 39Liquid Biofuels from Biomass

Stockholm Environment Institute

SEIBrazilian Biofuels 

Certification Program

EquatorPrinciples 

PRIVATE BANKS

CEN

Prop.ABNT+DIN

Renewable

RFS

Meó/ISCC Biofuel Quota Law‐

Ordinance  for sustainability requirements 

GBEPGlobal Bioenergy 

Partnership 

RSBRound Table on Sustainable 

Biofuels

INMETROGreenergy

SEKABBAFF

Low CVP Fuels RTRSRSPO

Roundtable on Responsible Soy

Roundtable on Sustainable Palm Oil 

BSIBetter Sugarcane 

Initiative

CENEuropean 

Committee for Standardization

VERIFIED SUSTAINABLEETHANOL

Renewable Fuel Standard 

WWFSDG

Sugarcane Discussion Group

Prepared by UNICAv. mar09

IBSistema de Verificação. da Atividade Agropecuária

OUTLINE

I. Brazilian sugarcane sector: an overview The Brazilian ethanol evolution: building blocks of energy g gy

security.

The increasing FFV fleet.g

II. Sugarcane´s next frontiers BioelectricityBioelectricity.

Other uses for ethanol.

III Current issues regarding the sustainability of theIII. Current issues regarding the sustainability of the sugarcane sector.

IV. Proposed research agenda.

SUGARCANE SECTORS’ RESEARCH AGENDA

International markets

Certification schemes

Climate change

“Food vs fuel” and

“deforestation” debate

Emission reductions

2nd and 3rd

generations

debate

reductions

R&DLUC and

iLUC

generations

Lifecycle analysis

GTAP

R&DHCVA and

HBGBioelectricity

BLUM GREETInternational deforestation

Mechanized harvest

CANASATCarbon stock

patterns Degraded pastures

data

a est

Database

measurements

involved not yet involvedIndustry’s participation:

SUGGESTIONS FOR RESEARCH AGENDA1 Proliferation of low impact projects must be avoided Focus on1. Proliferation of low impact projects must be avoided. Focus on

multidisciplinary initiatives to concentrate and maximize research’s results: Coordination and information exchanges are extremely important to avoid

duplication of work.

From laboratory experiments to commercial scale testing needs an expressive From laboratory experiments to commercial scale testing needs an expressive amount of resources.

2. Research structure cannot be exclusively based on public institutions, it y p ,cannot rely only on the private sector either. A new cooperation model is needed (for research and funding)

3. We should (A) map all of the current initiatives (what is the situation today), (B) define 3 or 4 main objectives and (C) define each actors’ role.

There must be a common agenda involving private sector government and There must be a common agenda, involving private sector, government and universities/research institutes.

4. To expand cooperation under the MoU US-Brazil on biofuels.

Thank you y

www unica com brwww.unica.com.br