Brazilian Biofuels Experience

8/9/2019 Brazilian Biofuels Experience

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Iberoamerican Ministerial Meeting

BRAZILIAN BIOFUELS EXPERIENCE

Suani Teixeira CoelhoDeputy State Secretary for the Environment

So Paulo State Secretariat for the [email protected]

CENBIO Brazilian Reference Center on BiomassUniversity of Sao Paulo

[email protected]

Patricia GuardabassiSo Paulo State Secretariat for the Environment

[email protected]

Montevideu, September 26thto 27th, 2006

ABSTRACT

Ethanol from sugarcane is an efficient and renewable biofuel that

appears as a solution to the problems of rural development, diversification ofenergy sources, fossil fuel savings, as well as contributing to the reduction of

local pollutants from vehicle exhausts and net reductions in greenhouse gas

(GHG) emissions. During the 30 years of the Brazilian Alcohol Program, Brazil

has developed a significant experience in the various aspects of sugarcane

ethanol production.

Therefore the Brazilian experience is considered as a good example to

be replicated in other developing countries. When discussing this replication

some issues must be addressed:

1. the environmental sustainability of sugarcane and alcohol

production

2. the economic competitiveness of ethanol compared to gasoline

and, if necessary, adequate policies to improve it.


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3. adequate infrastructure for sugarcane and alcohol production,

as well as to transport and distribute the ethanol fuel in the

country and to export to other countries.

Keywords: Brazilian sugarcane ethanol, impacts, biofuels


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INDEX

1. INTRODUCTION....................................................................................4

2. THE ENVIRONMENTAL SUSTAINABILITY OF SUGARCANE

AND ALCOHOL PRODUCTION......................................................................53. THE ECONOMIC COMPETITIVENESS OF ALCOHOL FUELCOMPARED TO GASOLINE.........................................................................10

4. PERSPECTIVES FOR THE REPLICATION OF BRAZILIANETHANOL PROGRAM IN OTHER DEVELOPING COUNTRIES..................13

5. CONCLUSIONS ...................................................................................23

6. REFERENCES.....................................................................................25

ANNEX..........................................................................................................29


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4

1. INTRODUCTION

Sugarcane ethanol is already well known as an efficient and renewable

biofuel. In Brazil, since 1975 when the alcohol program (Proalcool) started, it

has promoted rural development, diversification of energy sources, lower

dependence on oil imports, reduction in local pollutants from vehicle exhausts

and net reductions in greenhouse gas (GHG) emissions.

These objectives were reached with the development of Proalcool

through the several lessons learned, as discussed in this paper. Proalcool

was created to increase the production of alcohol for fuel purposes in face of

rising oil prices on the international market. In the early stages of the alcohol

program, sugarcane ethanol use became viable to consumers through a

pricing policy applied to fuels in Brazil. As the efficiency and cost

competitiveness of ethanol production evolved over time, and fuel prices were

liberalized, the need for this support declined and the support was eliminated

in 1999. Thus, governmental incentive did exist in the past, but today the

industry has matured significantly and relies exclusively on private investments.

The positive results of the ethanol production program were possibledue to the technological achievements, infrastructure investments and

management in both sugarcane and ethanol production. Due to these

developments, Brazil is nowadays the global benchmark in sugarcane-based

ethanol production (Goldemberg et al, 2003). As a consequence of the

observed cost reduction, subsidies were fully eliminated by 1997 and are no

longer applied on anhydrous nor on hydrated ethanol. Hydrated ethanol is

sold to consumers for less than 70 per cent (by volume) of the gasoline price,corresponding to ethanol break-even price vis--vis gasoline. Thus, alcohol is

economically competitive with gasoline without any subsidies. These are the

two main fuels used in cars in Brazil, since diesel vehicles manufactures in the

country are heavy duty, commercial.

Brazilian lessons can indeed be reproduced in many regions of some

other developing countries, contributing to a global expansion of ethanol

biofuel, considering:


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The sustainability of sugarcane and alcohol production

The economic competitiveness of alcohol fuel compared

to gasoline and, adequate policies to improve it.

Adequate infrastructure for sugarcane and alcohol

production, as well as to transport and distribute the

ethanol fuel in the country and to export to other countries

2. THE ENVIRONMENTAL SUSTAINABILITY OF SUGARCANE ANDALCOHOL PRODUCTION

Sugarcane ethanol is a commercial success in Brazil, a situation that

can also occur in many other countries with improved technologies and a

more open trading of bioenergy commodities. Security and climate change

are two among other important reasons for the promotion of biofuels. EU

countries and regions, as well as some North American States are aware of

the situation and have approached So Paulo recently for improved

sustainability assessments. Taking this into account, sugarcane sustainability

issues are being addressed in a serious way by the So Paulo State

Environmental authorities.

Sixty three percent of all Brazilian sugarcane is produced in the State

of So Paulo. Approximately half of it is allocated to sugar production and the

other half to ethanol. The State produces 10 million cubic meters of ethanol

per year (62.5% of total national production).

Competition for land between biofuels crops and food crops is an issue

often discussed and doubts have been raised about which is the better use for

land. In this case too the Brazilian experience can contribute to the discussion.

The sugarcane average productivity in Brazil was around 65 t/ha by

1998 (Moreira and Goldemberg, 1999) but it was as high as 100-110 t/ha in

the State of So Paulo (Braunbeck et al., 1999). Since the beginning of

PROALCOOL yields have grown about 33 per cent in the State of So Paulo


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due to the development of new species and to the improvement of agricultural

practices.

Sugarcane crops productivity gains from 1977 to 2004 allowed sparing

two million additional hectares of land, equivalent to around US$ 5-7 billion1.

Also genetic improvements allow cultures to be more resistant, more

productive and better adapted to different conditions. Such improvements

allowed the growth of sugarcane production without excessive land-use

expansion.

Nowadays sugarcane occupies 3.6 million hectares of land in So

Paulo and there are plans to increase such areas by 50% until 2010, a

process that will be followed up closely by the environmental licensing

authorities. Existing assessments show that there is space for it, without

putting pressure on natural environments. Without urban and infrastructure

areas, the State of So Paulo has 22 million hectares, distributed as shown in

Table 1:

Annual cultures (corn, soybean etc) 12.3%

Perennial cultures (orange, coffee etc) 5.2%

Semi-perennial cultures (sugarcane) 17.5%

SUB-TOTAL CULTURES 34.9%

Natural forests 14.2%

Reforesting 5.0%

SUB-TOTAL FORESTS 19.2%

Pastures 45.9%

TOTAL 100.0%

Table 1: Land use in So Paulo State, 2005

Source: Instituto de Economia Agrcola, 2006

1land costs vary, but in So Paulo, where 60% of Brazilian sugarcane is produced, a conservative estimate is aroundUS$ 2,700-3,500 per hectare (PROCANA, 2005)


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In So Paulo State, for example, sugarcane expansion during the

period 2002-2004 ocurred mainly on land previously used for cattle feed (SMA,

2005). It must also be considered that, during every harvesting season, 20%

of the sugarcane crop is removed and replaced with other crops like beans,

corn, peanuts, etc. This procedure is widely practiced and allows the soil to

recuperate, being used throughout the country.

Pasture areas have very low densities compared to developed

countries averages. There are large potentials for productivity improvements.

In So Paulo, cattle population has been raising, even with reduction of

pasture land use over time, as shown in the following table:

2001 2005

Cattle (heads) 13,154,649 14,072,447

Pasture (hectares) 10,288,887 10,010,491

Density (heads/hectare) 1.28 1.41

Table 2: Cattle population in Sao Paulo State

Source: Instituto de Economia Agrcola, 2006

In Brazil there are soils that have been producing sugarcane for more than

200 years with ever-increasing yield. Good agricultural practices (protection

against erosion, compactation and moisture losses, correct fertilization etc.)

increase the sustainability of the culture. Land area available for biofuels must

not depend on deforestation nor competition with food. Sugarcane crops mustnot create any pressure on Amazon deforestation2, but atention must be paid

to indirect effects from sugarcane expansion over cattle areas, what can push

these activities over Amazon. Figure 1 below shows the map of Brazil,

including the Amazon region; it shows also that most areas occupied with

sugarcane are in Southeastern region and, moreover, the So Paulo State.

2Amazon deforestation is indeed a problem to be addressed but the main pressure on it is from soy crops and notfrom sugarcane.


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Figure 1: Map of Brazil locating sugarcane cultures (So Paulo State

borders delimited around red area) and major ecosystems.

Besides these issues, sugarcane plantations (or other crops) in So

Paulo must guarantee at least 20% forestry cover on native trees (or

reforested with native trees), according to the National Forestry Code (Federal

Law 4,771/65) and State Decree 50,889 from June 16th, 2006. Sao Paulo

State has also special requirements on riparian forests for licensing and since

2005 it was started a special program on recuperation of riparian forests with

funds from World Bank/GEF.

Besides these issues related to land use, So Paulo State presents

significant expertise to reduce the environmental impacts of ethanols life

cycle, through adequate environmental legislation and strong enforcement:

Control of atmospheric and liquid effluents:


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3. THE ECONOMIC COMPETITIVENESS OF ALCOHOL FUELCOMPARED TO GASOLINE

Brazilian ethanol has become fully competitive with gasoline in the

international market, as shown in the learning curve (Figure 2)5. Sugarcane

ethanol can be produced in several countries with potential resources; which

can now develop their own biofuel programs with the advanced technologies

available, benefiting from cost reductions derived from the Brazilian

experience.

1

10

100

0 50000 100000 150000 200000 250000 300000Ethanol Cumulative Production (thousand m

3)

(2004)US$

/G

J

Ethanol prices in Brazil Rotterdam regular gasoline price

tr en d ( Rott erda m g asolin e p rices) tr end (Et ha nol pr ices)

19862004

2002

1999

1980

1990

1995

Figure 2. Learning curve: Brazilian sugarcane ethanol (LHV 22.35 GJ/m3)competitiveness with Rotterdam gasoline (considered LHV 32.77 GJ/m3).

Source: Nastari, 2005.

In Brazil, the present wave of exclusivelly private investments without

further need of governmental assistance - in new sugar mills (around 50 new

5There are differences on Brazilian taxes for fuels, including alcohol and gasoline. Ethanol and flexible vehicles havelower IPI (Federal tax for industrialized products) when compared to gasoline; also, some state taxs (ICMS) havelower taxes for ethanol. These taxes take into account the environmental benefits of alcohol. Besides these taxesthere is a special tax called, CIDE (Contribution fot Intervention in Economic Domain), a Federal tax on oil fuels.CIDE gives differentiated values according to each fuel; natural gas and ethanol are exempted. The current level forCIDE on gasoline is R$ 280 per cubic meter (US$ 0.0957/liter in 2004 US dollars); for diesel oil is R$ 70 per cubicmeter (Brazil, Decree # 4565/2003). In 2004, the average prince of gasoline net of taxes was R$ 0.74837 per liter(www.anp.gov.br.), weighted averaged for Brazil. Adding the R$ 0.28 per liter value of CIDE, the total value attributedto pure gasoline to be compared to the price of ethanol net of taxes comes to R$ 1.02837 per liter, average value for

2004. This value translates into US$ 55.88 per barrel, which is practically identical to the average price of midgradegasoline in the US during the same period, of US$ 56.28 per barrel, equivalent to US$ 1.32 per gallon (Energy


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mills since 2003, processing 2 million tones of sugarcane per year each one)

demonstrates the economic competitiveness of Brazilian sugarcane ethanol.

During the 2003-2004 season, the country exported 2.5 billion liters 6 of

ethanol.

In fact, sugarcane feedstocks represent a dominant share in the cost

buildup of ethanol. The economic cost of production is in the range of

US$0.180.25 per liter of gasoline-equivalent (average export price of ethanol

in the period 2001-2003 was US$ 0.23 per liter). Nowadays, the initial

investment for a compatible industrial plant (processing capacity of 2 million

tonnes of sugarcane per year) is around US$ 60 million (in 2005 prices).

Located in the Center-South of Brazil, such plant yields on average 79.39liters of anhydrous ethanol equivalent (82.86 liters of hydrous) per tonne of

sugarcane. Price paid per tonne of sugarcane is US$11.4 (UNICA, 2005). A

simple calculation, without interest rates, considering the price and a plant

lifetime of 25 years would lead to a feedstock cost of US$ 0.143 per liter of

ethanol and an investment cost around US$ 0.017 per liter of ethanol

produced. But investments are affected by the extremely high interest rates in

Brazil: banks add their spreads to 19.75% per year, which is the basic officialrate in August 2005.

Production costs of ethanol from sugarcane are low not only due to

geographic conditions but also because of the extremelly favourable energy

balance.

Table 3 shows the energy balance of sugarcane ethanol,

demonstrating that more than eight units of energy are produced from each

unit of fossil fuel consumed. The finding opens important opportunities for

participation of developing countries in the Kyoto Protocols Clean

Development Mechanism.

Information Agency, US Department of Energy, U.S. Refiner Motor Gasoline Prices by Grade and Sales Type,Washington, DC, 2005)

6 According to the Ministry of Agriculture, Livestock and Food Supply (2005), the main importers of Brazilian ethanolin 2004 were India (480 million liters), the U.S. (425 million liters), South Korea (280 million liters), Japan (220 millionliters) and Sweden (190 million liters)


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Table 3. Energy balance of sugarcane ethanol.

Source: Macedo et. alii, 2004.

Notes: Scenario 1 corresponds to an average mill; scenario 2 corresponds to the most

efficient mills.

This favorable energy balance is mainly due to the fact that all energy

needs in sugarcane mills are provided without any external energy source.

Sugarcane bagasse 7 is burned in boilers to produce steam and

electric/mechanical energy to fuel the process (cogeneration process).

In fact, bagasse is the most important industrial by-product from

sugarcane, available at the mills at no effectively cost and sugarcane trash8

may become also important, when the sugarcane is harvested without burning.

For example, midsize plants in Sao Paulo State, processing 2 million tones of

7Bagasse is the by-product from sugarcane crushing; it corresponds to 30% (in weight) of sugarcane, 50% wet.8 When sugarcane is harvested manually it must be burnt before harvesting and so tops and leaves (trash), are lost (30% of thesugarcane). Recent studies from Copersucar/GEF (PROJECT BRA/96/G31) evaluated possibilities for the harvesting of

greencane and the amount of trashto be left in thefields and the amount to be burnt in boilers for cogeneration.


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cane per harvesting season were able to change from existing old equipments

(21 bar boilers) to more efficient ones (40 or 60 bar boilers and more efficient

steam turbines), increasing their capacity for surplus generation from 2.3 MW

to 9.3 MW and providing renewable electricity to local consumers.

Considering the energy balance for different crops, not whitstanding

the variations in figures provided by different studies, there is no doubt that

sugarcane is definetely the most efficient feedstock in terms of replacement of

fossil fuels (CO2), as shown in Figure 2.

0

2

4

6

8

10

12

Sugarcane Sugar beet Wheat straw Corn Wood

ethanol feedstock

energyoutput/inputratio

Figure 3: Energy balance of alcohol production from differentfeedstocks.

Sources: Macedo et alii, 2004; UK DTI, 2003 and USDA, 1995

4. PERSPECTIVES FOR THE REPLICATION OF BRAZILIANETHANOL PROGRAM IN OTHER DEVELOPING COUNTRIES

When discussing Brazilain experience and possible replication in other

developing countries, there are some main issues:


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4.1. COMPATIBILITY OF EXISTING FLEETS WITH ETHANOL-

GASOLINE BLEND

The ethanol application as a fuel brings sometimes some concerns

about its compatibility with existing fleets. Doubts are about compatibility of

ethanol/gasoline blends regarding metallic materials of vehicle (corrosion),

plastic and rubber materials of vehicle (chemical attack), as well as higher fuel

consumption (due to low energy content), losses in drivability (due to different

air / fuel ratio for combustion) and cold start difficulties (due to lower vapor

pressure). However, this depends on the amount of ethanol blended with the

gasoline, on the ethanol fuel specification and quality and on the technological

level of vehicle (vehicle age). Even so, small blends of ethanol (5%) arerecognized to not affect existing engines.

In general the compatibility of ethanol with plastic and rubber parts is

very good for almost all the materials usually employed by the automotive

industry9. Phasing-in blends of up to 5% ethanol do not bring technological

difficulties to any country. Major car manufacturers today are adjusting their

assembling line to produce cars that are compatible with E10 fuels10. Existing

performance results for a Volkswagen FFV vehicle, show similar behaviour in

gasoline and alcohol (Magneti Marelli Controle Motor Ltda, 2005)

The World Wide Fuel Charter11 establishes maximum oxygen content

in gasoline of 2.7% (mass basis), which allows blends higher than 5%. With

the introduction of low blends ethanol-gasoline (up to 10%) 12 in many

countries, as regular fuel for vehicles developed for neat gasoline, no

remarkable performance loss is observed. Due to the ability of electronic fuel

9 The unique exception is the plastic polyamide 6.6 (Nylon), which in presence of hydrous ethanol adsorbs waterand swells, increasing the component dimensions; the polyamide 6.6 absorbs the water and, for this case, it isnecessary to substitute it for another plastic (usually, polyamide 12). For the application with gasoline or ethanol-gasoline blends, there are not problems with the polyamide 6.6, since these fuels do not have significant watercontent.10 Considering that ethanol is a polar substance and gasoline is an unpolar substance, there is not solubilitybetween both, but only miscibility, which, in general, is good and stable. Two factors have influence on this miscibility:the presence of water and the characteristics of hydrocarbons of gasoline (resulting from the production process).However, with the use in low concentration of anhydrous ethanol (up to 10%) and with the increase of crackedgasoline application (instead direct distilled gasoline), there are not reports on separation problems in the countrieswere this blend is used, even in the countries with cold weather.11 Alliance of Automobile Manufacturers (2005)12 In 1975, performance and emission tests were developed in Brazil, adding increasing volumes of anhydrousethanol to gasoline. The study concluded that the 20% +- 2 % ethanol blend yielded good results in terms of fuelconsumption and emissions.


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injection systems to automatically correct the engine air-fuel ratio, the

presence of ethanol up to 10% blended in gasoline do not affect vehicle

performance and the increased fuel consumption is relatively low (below 3%).

The Brazilian Automobile Manufacturers Association (ANFAVEA, 2005)

has summarized the necessary modifications in vehicles for the use of

national sugarcane ethanol blends (Table 4). The same associated also

provided comparative performance figures for the Brazilian new vehicles

(Figure 4).

EthanolContentin

theFuel

Carburetor

FuelInjectio

n

FuelPump

Fuel

P

ressure

FuelFilter

IgnitionSystem

Evaporative

System

FuelTank

CatalyticCo

nverter

BasicEngin

e

MotorOil

IntakeManifold

ExhaustSystem

ColdStartS

ystem

5% NN for any vehicle

5- 10% PN

NN for relatively new fleets (10 15 years old)

10-25% PN, Brazilian application NN

25-85% PN, U.S. application NN

85% PN, Brazilian application

Table 4. Modifications (not necessary NN and possibly necessary PN) in vehicles for different ethanol blends.

Source: ANFAVEA, 2005.

The energy content of ethanol fuel is 37% lower 13 than gasoline;

however, since ethanol density is 5% higher than gasoline, fuel consumption

increment is proportional to the ethanol heating value and to its specific

weight14. Equivalence must consider the final energy service provided (work)

by each fuel, based on measured performance. In Brazil, the consumption

13 Consequently, to obtain the same output, it is necessary to burn more ethanol than gasoline, raising the fuelconsumption14According to the Brazilian National Energy Balance 2004 (MME, 2005) the lower heating values (LHV) of dieselfuel, automotive gasoline, anhydrous ethanol and hydrous ethanol are respectively 35.50, 32.20, 22.34 and 21.33MJ/liter of fuel


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ratio comparing neat hydrous ethanol with gasoline was assessed by tests15

equal to 0.8067. Flexible fuel vehicles, adjusted to have a similar power

performance with both fuels, have lower ratios, of approximately 70% (UNICA,

2005a)

In Brazil, the recently introduced flex-fuel vehicles16can operate with

up to 100% hydrated ethanol17. This concept is different from US flex-fuel

models, which can use a maximum of 85% ethanol, due to problems of

corrosion, cold start and phase separation inside the tank at very low

temperatures. When using 100% ethanol, eventual problems of cold start are

solved through the use of a little gasoline reservoir for instant automatically-

activated gasoline injection, as it is done in Brazil in any alcohol or flexvehicles.

103,3

%

110,0

%

102,1

%

106,4

%

103,2

%

105,3

%

9

5,5

%

89,

3%

10

5,5

%129,4

%

0

2040

60

80

100

120

140

Power Max Speed Consumption

(L/100km)

Gasoline 0% Gasohol 22% Ethanol 100%

Figure 4. Comparative performance of Brazilian similar direct injectionnew 1999 models, with pure gasoline (E0), gasohol blend (E22, puregasoline with 22% anhydrous ethanol) and pure hydrated ethanol (E100).

Source: ANFAVEA (2005).

Note: Consumption is expressed in liters of fuel per 100 km to allow the comparison ofethanol consumption to gasoline consumption.

15Commission for Re-exam of the Energy Matrix, Brasilia, Brazil, 199116This recent alternative of flex fuel vehicles designed to use alcohols as automotive fuel allows the use of a variety of fuelssuch methanol, ethanol, gasoline and blends of these fuels at any proportion, through the use of eletronic systems for engine

management.


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4.2. POTENTIAL FOR LAND USE IN DEVELOPING COUNTRIES

Regarding land use and the perspectives for ethanol production in

developing countries, some considerations are important. Sugarcane area in

developing countries is less than 3% of primary crops areas and 0.6% of

agricutural areas, where cultures are already planted (FAO, 2005). Also, form

FAO, 2005, it is significant the fact that low income and African countries

present agricultural efficiency lower than the world average (68.2 tonnes/ha)

and much lower than Brazil (73.5 tonnes/ha), showing some potential for

improvements in agricultural sector.

Also, it is important to know, from the world arable land, which area

would be necessary to produce biofuels to be blended to gasoline. Table 4

provides an idea on this issue. It shows potential land to produce sugarcane

crops aiming to produce ethanol to be blend in a proportion of 10% (in volume

basis) to gasoline.

Unit World OECD

countries

Non-OECD

countries

Gasoline consumption Billion litres/yr 1165 838 327

Ethanol 10% blend (a) Billion litres/yr 175 126 49

Sugarcane area necessary for E10 Million ha* 29 21 8

"Suitable and very suitable"sugar crops (FAO) Million ha 383 116 217

All sugar crops (all cultures, FAO) Million ha 1455 496 959

Table 4. Land use with to produce ethanol to be blend to gasoline in 10%

(volume) basis) (E10 ). Source: FAO, 200518

Note: conservatively considered (a) 6,000 liters of ethanol/ha.yr; LHV (gasoline) = 33MJ/liter,LHV (ethanol) = 22 MJ/liter

17The huge success of these flex fuel vehicles is due to the freedom of choice for the consumers, depending of the price of each

fuel at the pump station. Alcohol prices can be up to 70% of gasoline pricesand a global ethanol market, allows the utilization ofFFVs, which can address eventual fossil or renewable fuel shortages. Volkswagen, General Motors, Fiat, Ford, Peugeot, Renault

are some of manufacturers producing flex-fuel vehicles in Brazil - a fleet of 700,000 units in 200518Source: FAOSTAT (2005)http://faostat.fao.org/faostat/form?collection=Production.Crops.Primary&Domain=Production&servlet=1&hasbulk=0&version=e

xt&language=EN


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From Table 4 it can be seen that considering the blend of 10% (in vol)

of ethanol to gasoline the sugarcane area necessary would be 29 million

hectares, much less than the 383 million hectares of suitable and very

suitable sugar crops mentioned by FAO, 2005.

In fact, Brazil is endowed with vast agricultural areas. Plentiful land,

favorable climatic conditions and low cost labor were indeed necessary for the

success of alcohol program based on sugarcane. But several other tropical

countries can handle a large alcohol program like Brazil. Although sugarcane is

a highly intensive culture possible to be produced in regions that have an

average temperature above 20oC and plenty of available sunlight and water, it

does not imply that areas covered with forestry are the most suitable for theculture. Figure 8 gives an idea of the regions that meet these conditions; from

this figure it can be seen that most are developing countries.

Biofuels produced by developing countries correspond to a significant

opportunity for job creation and rural development. Conclusions from a recent

workshop organized by STAP/GEF/WorldBank shows that biofuels can offer

a sustainable and carbon neutral alternative to petroleum fuels, provided that

environmental safeguards are put in place, and that sustainable land

management is applied. This would exclude the production of biofuels from

cleared forest land for example, and biofuels with negative or uncertain GHG

emission reductions. The potential negative impacts on soil, water and

biodiversity in the case of large-scale monoculture plantations must also be

recognized. Hence, the question of the role of biofuels in mitigating climate

change is also a question of natural resource management, pertaining to the

land degradation, biodiversity, POPs and international waters focal areas of

the GEF.

Among commercial biofuels today, sugarcane ethanol gives the highest

land use efficiency for GHG mitigation, and is therefore an attractive biofuel

from a GHG perspective. Provided environmental externalities are addressed

in the production, and no natural ecosystems are converted, sugarcane

ethanol has a significant potential for reducing GHG and improving energy

security. Sugarcane ethanol also offers the distinct advantage of generating


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bagasse as a co-product, which can be used for electricity generation. The

combination of the unique climatic and soil conditions in the South East of

Brazil, the sustained commitment from the government, learning by doing

and good infrastructure, brought the production costs of bioethanol down to

the point where (unsubsidized) ethanol became competitive with a 25$/bbl oil

price. The question whether the Brazilian example can be replicated, the

steps that would need to be taken and the conditions that would make it

possible, was a central topic of the workshop.

Both small and large-scale production of biofuels can be sustainable

and beneficial in terms of global and local benefits. Large-scale exploitation of

biomass for energy and fuel uses requires a national strategy for the energyand other uses of biomass (food, substitution of other petroleum products)

(STAP/GEF, 2006)

An improved, liberalized global market for biofuels produced especially

in developing countries (where natural resources and labor force are more

available) would thus create more jobs, reduce emissions of local pollutants

and greenhouse gases, reduce oil imports, benefit external trade balances

and develop a whole new industry of goods and services.

In very simple terms, poorer countries ask for funds; rich countries want

to sell technology and to promote their own efficiency achievements. In the

middle of these there can be opportunity windows based on well-established

programs. This is the case of transport biofuels today, which are starting to be

supported by the automotive industry worldwide and can benefit both

developing and developed nations. Biofuels for transport match perfectly with

the UNFCCCs Subsidiary Body for Scientific and Technological Advice

(SBSTA) objectives for climate change mitigation, together with exchanging

information and sharing experiences,. The low interest in biofuels much

probably is still a consequence of the conventional approach for renewables,

which considers that they should only be produced domestically and not

traded as global commodities. Behind this scene are interests such as the

agricultural subsidies in developed nations and fossil fuel industries, which

prefer more expensive options like carbon capture and storage, cleaner coal,


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energy efficiency for conventional energy sources.Tackling barriers against a

global biofuel market is perfectly achievable.

Figure 5. Sugarcane potentials (SI, suitability index). Source: FAO(2005)19

Geographic and distributional considerations (such as need for

proximity to a sufficiently large market for the biofuel produced) are a

common failure in biofuel assessments. These arguments miss the point

because they consider domestic production and consumption as as the only

possible use for the fuel. Biofuels are liquids and can be transported over

significant distances, as occurs today with all liquid fossil fuels (and with

alcohol in Brazil, despite being a very large country). In fact, distances depend

more on logistics and production scale.

The Brazilian experience shows that existing technology for alcohol

production has had an increase of 3% per year on industrial productivity

during the alcohol program and became commercially available. Brazil has a

mature fermentation process, self-adaptative to different feedstocks and

production conditions (startup, temperature changes etc), resulting in an

efficient process with little undesirable byproducts, flexible, robust and


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inexpensive. The distillation process is also efficient (despite the fact that

there is still room for further improvements in efficiency) and available at low

costs. The cogeneration process from bagasse has also undergone significant

improvement in recent years and high efficient steam systems using

sugarcane bagasse are commercially available.

Althought, in the case of Brazil, alcohol production for the blend of up

to 25% cannot be a candidate for CDM projects (because this situation

corresponds to a baseline before the base year for Kyoto Protocol) other

developing countries can start such a program and would be excellent

candidates for CDM.

4.3. POLICIES PROPOSED FOR OTHER DEVELOPING COUNTRIES

Based on the Brazilian experience with sugarcane-ethanol, those

countries could successfully introduce ethanol-biofuel in their economies. This

introduction does not need to start from the very beginning, as happened with

Brazil; they could start from an advanced step, avoiding past mistakes and

benefiting from lessons learned by Brazil.

In any case, it appears as the best option the production of anhydrous

ethanol to be blended to gasoline (in several countries the sugarcane option

appears to be a good opportunity). Despite the fact that anhydrous ethanol

production costs are around 10-20% higher than hydrous ethanol, there is no

need for changes in existing vehicles, as it would happen for the use of

straight ethanol (in this case it would be necessary to change vehicles engine

to run with pure ethanol).

There are two main issuesto be addressed:

1. Countries already producing some sugarcane for sugar and

interested in producing ethanol for local consumption, reducing oil/derivatives

imports: these countries could start an alcohol program using part of the

existing sugarcane production for alcohol production

19http://www.fao.org/ag/AGL/agll/gaez/ds/da.htm?map=24


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22

2. Countries with no sugarcane production but with existing

deforested land: these countries must start since the very beginning, including

the choose for the best crop to be used for biofuels

For countries in the first group, when interested in the alcohol

production, it would be necessary a preliminary global (technical / economic /

environmental / social) evaluation of the alcohol production. If perspectives

are positive, existing policies could be discussed, together with perspectives

for changes, including:

Assessment of existing technical expertise, financing resources,

policies, key economic players, other stakeholders;

Development of an information exchange, technology transfer

and capacity building program;

To foster pilot projects for alcohol production for local

consumption;

Establishment of policies for a phase-in of (anhydrous) ethanol

blends in gasoline without need of adaptation in the existing fleet, up to 5% involume;

Discussion of fiscal policies (if necessary) regarding economic

competitiveness of alcohol fuel.

For countries in the second group, aiming to use existing degraded

land, other issues must be addressed, besides a preliminary global (technical

/ economic / environmental / social) evaluation of the alcohol production, such

as:

Assessment of current and potential areas of arable land, sugar

crops production, other cultures, rainfall and water demand and other physical

conditions;

Assessment of existing technical expertise, financing resources,

policies, key economic players, other stakeholders;


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23

Development of an information exchange, technology transfer

and capacity building program;

Foster pilot projects, then pre-commercial scale plants;

Establishment of policies for a phase-in of ethanol blends in

gasoline without need of adaptation in the existing fleet, up to 5% in volume;

Discussion of fiscal policies (if necessary) regarding economic

competitiveness of alcohol fuel.

In both cases, issues regarding ethanol export could be addressed in a

second phase program, including the discussion on existing trade barriers in

developed countries, especially import taxes, quota allocation and harmful

domestic subsidies against the WTO rules, as discussed in previously by the

authors (Coelho et al, 2005).

In this context it is important to mention the opportunities for developing

countries as discussed in by World Bank, 2004, that presents the

opportunities and barriers to the implementation of ethanol production as a

poverty alleviation vector.

5. CONCLUSIONS

Many biofuel programs in the developed world have benefited from

policies designed primarily to support domestic agriculture. This is the case of

the US corn producers and the EU rapeseed farmers. In any cases, agricultural

support policies are an existing reality, a political challenge that has the World

Trade Organization (WTO) as one of the possible discussion forums.

In spite of the benefits from biofuel production to sustainable

development, exports to developed countries faces several barriers and local

producers are against the removal of domestic subsidies. On the other hand,

society, as a whole, will benefit from trade liberalization, through the

introduction of an available renewable fuel. Local trading policies can balance

quite well the supply of domestic and imported ethanol, in order to introduce an

alternative to gasoline or diesel (Coelho et alii, 2005).


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6. REFERENCES

Abrantes, R., A Emisso de Aldedos e Hidrocarbonetos PolicclicosAromticos de Veculos Comerciais a Diesel, CETESB, SIMEA 2003, SoPaulo, Brazil.

Air Quality Impacts of the Use of Ethanol in California Reformulated Gasoline,California Air Resources Board, Sacramento, USA, 1999.

Alliance of Automobile Manufacturers (2005) World Wide Fuel Charter 1998http://www.autoalliance.org/archives/000090.html

Anderson, L.G. et alii, Effects of Using Oxygenated Fuels on CarbonMonoxide, Formaldehyde and Acetaldehyde Concentrations in Denver, Air &Waste Management Association's 90th Annual Meeting & Exhibition, Toronto,Ontario, Canada, June 8 - 13 1997.

ANFAVEA (2005) Ethanol Fuel Vehicular Application Technology.Presentation of Henry Joseph Jr. (Brazilian Automotive Industry AssociationsEnergy & Environment Commission [email protected]) atCEPAL/CENBIO/USP Seminar So Paulo, August 17th, 2005

Apace Research Ltd., Intensive Field Trial of Ethanol/Petrol Blend in Vehicles,EDRC Project N 2511, Australia, December 1998. Available athttp://journeytoforever.org/biofuel_library/EthanolApace.PDF

CARB (2004) California Air Resources Board data base

CAPCOA (1993) California Air Pollution Control Officers Association AirToxics "Hot Spots" Program, Revised 1992 Risk Assessment Guidelines.

CETESB (2003) Relatrio de Qualidade do Ar no Estado de So Paulo.Companhia de Tecnologia de Saneamento Ambiental

CETESB (2004) Air Quality Report 2003

Cdigo Florestal (1965) Federal Law 4771/65

COELHO, S.T., GOLDEMBERG, J., LUCON, O., GUARDABASSI, P.Brazilian sugarcane ethanol: lessons learned. Volume X, Number 2, June,

2006. Available at: ESD www.ieiglobal.org/ESDv10n2/brazilethanol.pdf

Coelho, ST; Lucon, O; Guardabassi, P (2005) Biofuels advantages andtrade barriers. UNCTAD/DITC/TED/2005/1www.unctad.org/Templates/Download.asp?docid=5741&lang=1&intItemID=1397

F.O. Licht (2005) World Ethanol Production 2001. Apudhttp://www.distill.com/berg/

FAO (2005) Sugarcane potentialshttp://www.fao.org/ag/AGL/agll/gaez/ds/da.htm?map=24 andhttp://www.fao.org/ag/AGL/agll/gaez/ds/ds.htm


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FAOSTAT (2005)http://faostat.fao.org/faostat/form?collection=Production.Crops.Primary&Domain=Production&servlet=1&hasbulk=0&version=ext&language=EN

FAOSTAT (2005) Primary crops

http://faostat.fao.org/faostat/form?collection=Production.Crops.Primary&Domain=Production&servlet=1&hasbulk=0&version=ext&language=EN

Goldemberg, J (2002) Brazilian Energy Initiative. www.worldenergy.org/wec-geis/focus/wssd/goldemberg.pdf

Goldemberg, J., Coelho, S. T., Nastari, P. M., Lucon, O. (2003) "Ethanollearning curve- the Brazilian experience", Biomass and Bioenergy, Vol 26/3pp 301-304.http://www.iee.usp.br/biblioteca/producao/2004/Artigos%20de%20Periodicos/BiomassandBioenergyVolume26.pdf

Goldemberg, J (2004) The case for renewable energies. Renewables 2004Conference, Bonn, http://www.renewables2004.de/pdf/tbp/TBP01-rationale.pdf

EPA (2005) IRIS - Integrated Risk Information System: Acetaldehyde (CASRN75-07-0) http://cfpub.epa.gov/iris/quickview.cfm?substance_nmbr=0290

EPA (2005) IRIS - Integrated Risk Information System: Formaldehyde(CASRN 50-00-0)http://cfpub.epa.gov/iris/quickview.cfm?substance_nmbr=0419 .

IEA (2004) Biofuels for Transport - An International Perspective. InternationalEnergy Agency, ISBN 92-64-01512-4

International Energy Agency (2003) Energy Statistics Of Non-OECDCountries, 2000-2001 - II.9

IPCC (2001) Third Assessment Report (TAR) "Climate Change 2001"http://www.ipcc.ch/activity/tar.htm and http://www.ipcc.ch/pub/online.htm

Macedo, I.C.; Leal, M.R.L.V. and Siflva, J.E. A.R (2004) Assessment ofgreenhouse gas emissions in the production and use of fuel ethanol in Brazil.So Paulo State Environment Secretariat. Also at

www.unica.com.br/i_pages/files/pdf_ingles.pdf

Macedo, IC (2005) Evoluo e Perspectivas do Etanol. Seminar BrazilianExperience with Ethanol Fuel, CEPAL - S. Paulo, 15-19 Aug

Magnetti Marelli (2005) Personal communication to Olimpio Alvares Jr,CETESB

Mnsson, T., Clean Vehicles with Biofuel - A State of the Art Report, KFB-Report 1998:18, Sweden, 1998.

Ministry of Agriculture, Livestock and Food Supply - Secretariat of Production

and Agrienergy (2005) Sugar and ethanol in Brazil, Brasilia - July 2005


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MME (2005) Brazilian Energy Balance 2004, www.mme.gov.br

Nastari, PM (2005). Information Services on the Sugar and Ethanol Industriesin Brazil. Personal Communication from Plinio Mario Nastari. Email [email protected] website http://www.datagro.com.br/ingl/index2.asp

National Renewable Energy Laboratory, US Department of Energy, USA,2002.

O Estado de So Paulo newspaper (2005) Cana: formao de preo emdebate, 17Aug 2005, p. G4

PROCANA (2005) Alcool e acar derrubam o preo da terra. Available athttp://www.jornalcana.com.br/conteudo/noticia.asp?area=Mercado%26Cotacoes&secao=Cana-Clipping&ID_Materia=11027

Sao Paulo State (2002) Decree 47.397 (4thDecember 2002)

Sao Paulo State (2002) Decree 48.523 (2ndMarch 2004)

So Paulo State (2002) Law 11241

So Paulo State Secretariat of Environment (2005). Personal communication,statistics provided by Ms Elisabeth Kono, www.ambiente.sp.gov.br

Sher, E., Handbook of Air Pollution from Internal Combustion Engines,Academic Press, USA, 1998.

STAP / GEF STAP Guidance Paper on Liquid Biofuels for Transport - Main

findings of the STAP Workshop on Liquid Biofuels, June 2006 (draft version)

U.S. Department of Energy, Ethanol for Sustainable Transportation, USA,April 1999.

UK DTI (2003), Technology status review and carbon abatement potential ofrenewable transport fuels in the UK.Report B/U2/00785/REPwww.dti.gov.uk/renewables/publications/pdfs/b200785.pdf

UNDP (2002) World Energy Assessment 2000. United Nations DevelopmentProgramme, Washington

UNDP (2002b) Atlas do Desenvolvimento Humano no Brasil. Available at:www.pnud.org.br/atlas

UNICA (2005 a) Observations on the Draft Document entitled Potential forBiofuels for Transport in Developing Countries, prepared by Plinio MrioNastari, Isaas de Carvalho Macedo and Alfred Szwarc for The World BankAir Quality Thematic Group, July 2005www.unica.com.br/i_pages/files/ibm.pdf

UNICA (2005 b) Personal communication, Alfred Szwarc.

USDA (1995) Estimating the Net Energy Balance of Corn Ethanol. Report byHosein Shapouri, James A. Duffield, and Michael S. Graboski. U.S.


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Department of Agriculture, Economic Research Service, Office of Energy.Agricultural Economic Report No. 721.http://www.ers.usda.gov/publications/aer721/AER721.PDF

Whitten, G., Ethanol's Clean Air Impact, 9th Annual Renewable Fuels

Association Conference, Miami Beach, FL, USA, February 18

th

2004.WTO (2001) Ministerial Declaration. Ministerial Conference, Fourth Session,Doha, 9 - 14 November 2001. WT/MIN(01)/DEC/1, 20 November 2001 (01-5859). http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm

World Bank Energy and Poverty Thematic Group (2004, forthcoming)."Ethanol: Re-examining a Development Opportunity for Sub-Saharan Africa"


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ANNEX

EMISSIONS FROM ALCOHOL VEHICLES COMPARED TO GASOLINE ANDGASOHOL VEHICLES

Several countries aiming to start an alcohol program are interested in

real figures related to atmospheric emissions from such vehicles.

Table 1 below shows recent results from Cetesb for recent vehicle

models in Brazil.

FuelCO

(g/km)

HC

(g/km)

NOx

(g/km)

Aldehydes

(g/km)

CO2

(g/km)

Autonomy

(km / l )

Gasohol (E22)dedicated

0.40 0.11 0.12 0.004 194.0 11.2

Ethanol (E100)dedicated

0.77 0.16 0.09 0.019 183.0 7.5

FFV with E22 0.50 0.05 0.04 0.004 210.0 10.3

FFV with E100 0.51 0.15 0.14 0.020 200.0 6.9

Range for FFVwith E61 (50% E22/ 50% E100)

0.15 0.74

0.038 0.14

0.06 0.19

NA NA NA

Table 1. Average emission factors for 2003 light vehicle models (1.6 and1.8 liters) in Brazil. Source: CETESB, 200420

Also, a comprehensive Australian study (Apace Research Ltd., 1998)has shown positive results with low ethanol-content blends, including pollutant

reduction effects associated to blends containing up to 10% ethanol by

volume (E10 blends).

20 Weighed average by production volume, according to Brazilian standard NBR 6601. In 2003, for gasohol models1.0 l engines are dominant; for ethanol, from 1.0 to 1.8 l. In 2004, for gasohol models there are engines between 1.0 land 2.0 l; for ethanol, 1.0 l. In flex-fuel vehicles, engines from 1.6 e 1.8 l are dominant. Part of the production was

tested with gasohol and the other part with neat ethanol. The largest differences due to engine size were observed inCO2 emissions. Gasohol for tests: blend of 78 % gasoline and 22 % anhydrous ethanol (v/v). Emission tests wereperformed according to the FTP 75 procedure.


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In older carburated vehicles (as those existing in many developing

countries), the use of gasoline-ethanol blends transfer to gasoline most of

ethanols benefits, especially those regarding carbon monoxide emissions,

which could be reduced up to 60 percent.

There is an increase in exhaust emission of aldehydes when ethanol is

blended to gasoline and, depending on engine characteristics and on ethanol

content in the blend, exhaust emission of nitrogen oxides (NOx) may increase.

In fact, total aldehydes emissions from alcohol engines are higher than those

from gasoline, but these aldehydes are less toxic than the formaldehydes

from the fossil fuels (EPA, 2005a and 2005b)21. A 2003 model-year Brazilian

vehicle fueled with the reference blend for governmental certification (a blendwith 22%v/v ethanol E22) emits 0,004 g/km of aldehydes (formaldehyde +

acetaldehyde), a concentration that is about 45% of the strict California limit

that is required only for formaldehyde.

An increase in evaporative emissions may occur, depending on

gasoline volatility and ethanol percentage. Emissions factors showed above

indicate that substantial reductions in exhaust emissions have been achieved

from both alcohol and gasohol-fueled vehicles, especially when comparing

modern electronic injection and catalytic technology to the older carburated

generation. Also, blend volatility varies as a function of base-gasoline

composition. Gasoline types with lower concentration of light hydrocarbons

will show a smaller volatility increase when blended with ethanol. Second,

blend volatility varies as a function of ethanol concentration in the blend. And,

compared to CNG22, ethanol has less HCs fugitive emissions.

Another relevant aspect is that ethanol has a latent heat of

vaporization higher than gasoline, what means that ethanol may contribute to

lower combustion temperature and therefore to reduce NOx. Besides that,

21 CETESB (2003) obtained in 1993 the concentration ratio acetaldehyde/formaldehyde based on ambient airmonitoring data. The results were in the range of 1.7-1.8 and in 1996/1997, 1.6-2.1. Comparing these figures to thetypical values encountered in Los Angeles, Atlanta and Chicago (0.18 - 0.96), the higher concentrations ofacetaldehydes were observed in So Paulo due to the intensive ethanol use as an automotive fuel. It must be

emphasized that during this monitoring campaign period, only a very small portion of the Brazilian light-duty fleet wasequipped with catalytic converters - which help significantly in the reduction of aldehydes emissions.22 Compressed Natural Gas


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modern vehicle technology allows efficient NOx control, reducing tropospheric

ozone.

Also, the solvent effect of ethanol that contributes to clean the

combustion chamber from deposits might be another factor to avoid the

increase of NOx with mileage accumulation or even reduce NOx after cleanup

is completed. In this regard it is necessary to recognise that cleanup of

deposits may have a pronounced effect in the reduction of other important

pollutants such as volatile organic compounds (VOC/HC) over vehicles

lifetime usage.

Ethanol is a substance of very moderate toxicity, posing less health

risks than gasoline or diesel. Generally speaking, similarly to neat ethanol

effects, the Brazilian experience with gasoline-ethanol blends (up to 25

percent of anydrous ethanol addition, by volume) has not shown any

deleterious health effects.

Documents

Brazilian Biofuels Experience