Global Opportunities for Sustainable Bioethanol

CTBESustainability workshop May 14 - 15th 2009 Global Opportunities for Sustainable Bioethanol Marcelo Poppe CGEE Center for Strategic Studies and Management

World Global biofuel market: expansion, land use,productivity, energy balance, and competitiveness

World Biofuels todayReproduced from Unep, February 2009. The environmental food crisis

World Public policies regarding biofuels

World New bioethanol markets Sweden Russia Canada United Kingdom Nederland Germany France Swiss Spain Italy United States China Japan India Mexico Thailand Philippines Colombia Venezuela Peru BRAZIL South Africa Australia Argentina New Zealand World consumption: 50 billion liters in 2006  80 billion liters in 2010

World Brazilian bioethanol exports 6 5 USA 56% - UE 30% 4Billion liters 3 2 1 0 2000 2001 2002 2003 2005 2005 2006 2007 2008 Source: Secex/Unica

World Brazilian bioethanol exports 2006/2007 2,3% Estados Unidos 2,7% Países Baixos (Holanda) 3,0% 7,6% Japão 3,0% Suécia 5,2% Jamaica 46,8% El Salvador Trinidad e Tobago Costa Rica 5,6% Venezuela 6,3% Nigéria 7,0% Outros 10,5% Fuel: 83,1% Other: 16,9%Volum: 3,83 bilhões liters US$/m3: 485,23 Source: SECEX

World Agricultural land availability Source: World Watch Institute

World Land use needs for sugarcane bioethanol to provide a 10% blend in the global gasoline consumption (E10) 2005 basis Brazilian bioethanol production: 265 thousands b/d Brazilian land use: 2.6 million ha of sugarcane crops Gasoline world consumption: 20 million b/d Global ethanol production needs for E10 => 2.4 million b/d World land use needs => 24 million ha of sugarcane crops to be disseminated among tropical humid Countries: Latin America, Caribbean, Africa, Asia and Oceania

World Sugarcane producers (130 countries instead of 20 oil providers)Source: Adapted from Laura Tetti, 2005

World Sugarcane bioethanol productivity and energy balance Ethanol yields (liters per hectare)Sources: IEA – International Energy Agency (2005)

World Bioethanol competitiveness (1) Oil prices => US$ 60/b Gasoline prices => US$ 0,50 to 0,60/l Brazilian average bioethanol prices => US$ 0,35/l  Logistics US$ 0,05/l  FOB prices US$ 0,40/l Related benefits  UNFCCC - Kyoto Protocol: GHG emission reduction  Sugar: average cost US$ 300/t (13 c/lb, or 15 c/lb FOB)  Competitive excess power generation: ~ US$ 150/MWh  Increasing other by-products and residues valuation (1) 2008: 2,25 R$/US$

World Bioethanol production costs (1) Sugar Ethanol Country Raw material [US$/t] [US$/l] Brazil 120 0,20 Sugar cane Thailand 178 0,29 Sugar cane Australia 195 0,32 Sugar cane United States 290 0,47 Corn European Union 760 Beet European Union 0,97 Cereal Source: Datagro 2003 (1) 2003: 3 R$/US$

World Bioethanol production costs (1) Item USA Corn (Euro/hl) Germany Brazil Sugar cane (Euro/hl) Wheat (Euro/hl) Beetroot (Euro/hl)Building 0,39 0,82 0,82 0,21Equipments 3,40 5,30 5,30 1,15Labor 2,83 1,40 1,40 0,52Insurance, tax and others 0,61 1,02 1,02 0,48Raw material 20,93 27,75 35,10 9,80Other operational costs 11,31 18,68 15,93 2,32Total production costs 39,48 54,96 59,57 14,48Sub-products sale - 6,71 - 6,80 - 7,20 -Federal and state subsidy - 7,93 - - -Liquid production costs 24,84 48,16 52,37 14,48 (1) 3 R$/US$ e 1,20 US$/EURO Source: Henniges, 2004

Brazil Bioethanol Brazilian experience

Brazil Renewable and non-renewable sources share 100 93,8 87,3 90 80 70 60 54,2 50 45,8 % 40 30 20 12,7 6,2 10 0 Brasil (2007) World (2005) OECD (2005)CO2 emissions:Brazil: 1.7 t/toe Renewable sources Non-renewable sourcesWorld: 2.4 t/toe

Brazil Domestic energy supply Non renewables – 54,2% Renewables – 45,8% 5.8% 1.6% 15.1% 9.3% 12.6% 14.9% 37.5% 3.2% Hydropower Firewood Sugar Cane Other Renewable Oil&Oil Products Natural Gas Coal Uranium Source: Brazilian Energy Balance 2008 Source: BEN 2006

Brazil Energy pattern - transport sector Energy Consumption Transport Sector (1975) Energy Consumption Transport Sector (2005) Electricity Alcohol Electricity 0,2% 0,4% 0,2% Alcohol Natural gas Kerosen 13,3% 3,3% 5,6% Diesel oil Kerosen 37,3% 4,9% Diesel oil Gasoline Gasoline 50,9% 50,8% 25,9% Fuel oil 5,6% Fuel oil 1,5% 1800 1600 r d c n n m ot f iPo u tio a dI p r o o 1400 Import (h u a db ) t o s n /d 1200 Production 1000 800 600 400 200 0 1975 2005 Year

Brazil Sugarcane cultureFarming (2007) Area (Mha)Soya 23Corn 12Sugar cane 7Agriculture 70Cattle 200 Country total area 851 Mha (100%) Rural properties area 355 Mha (42%) Cultivated land area Amazon forest 400 Mha 70 Mha (8%) Pantanal 13 Mha Sugarcane cropland for fuel Atlantic rain forest 3 Mha 3,5 Mha (0.5%)

Brazil Progress over 30 years l/tc tc/ha m3/ha Learning curbSource: Unica 85,00 7,50 35 80,00 7,00 1980 30 75,00 6,50 25 (2 0 0 4 ) U S $ / G J 70,00 6,00 20 1986 5,50 65,00 15 jul 2005 5,00 m3/ha 1990 2002 2004 tc/ha 60,00 10 1995 4,50 5 1999 55,00 4,00 0 50,00 3,50 0 50000 100000 150000 200000 250000 300000 Ethanol Cumulative Production (thousand m3 ) 45,00 3,00 Ethanol prices in Brazil Rotterdam regular gasoline price 40,00 2,50 04/05 long-term trend (Rotterdam gasoline prices) long-term trend (Ethanol prices) 05/06 06/07 03/04 02/03 95/96 96/97 97/98 01/02 93/94 94/95 98/99 99/00 00/01 92/93 91/92 89/90 90/91 86/87 87/88 88/89 77/78 79/80 80/81 81/82 82/83 84/85 85/86 76/77 78/79 83/84 7576 Source: J Goldemberg Source:CTC

Brazil Bioethanol from sugarcane 25 billion litters produced & 5 billion litters exported Energetic biomass cost = US$ 1.4/GJ (industrial countries goal for 2020) 420 industrial units (100 new ones) >70,000 producers; ~1,000,000 jobs Knowledge frontier expansion : genetics, biotechnologies, hydrolysis...

Brazil Bioethanol for car• Large experience using bioethanol as mixed fuel for vehicle (1925) ~ 5%• Proálcool (1975): • up to 25% of bioethanol blended in the gasoline (E 25) • 5 million pure bioethanol powered cars manufactured• Flex-fuel motors using the E 25 blend, bioethanol, or a mix of both (2003) • 7 million flex-fuel cars manufactured; 90% of the 2008 new car market• Only E 25 & bioethanol delivered by all the 35,000 Country’s fuel station 1925 1975 2003

Brazil Switch to an energy business 100,96 t/h CALDEIRA 66 bar - 520 º C Quantidade de Biopower in Country’s η =86% Bagaço 46,1 Ton/h 35 t/h 65,96 t/h 5,7 kgv/kWh 3,6 Kgv/kWh G ~ 6.140kW G ~ 18.322KW electricity generation η = 84% η = 84% 49,47 t/h 16,49 t/h 2007 3% kW 4 PROCESSO INDUSTRIAL 35,00 t/h 110 º C 2012 6% 150 º C 2020* 15% Business income 2005 2015 bioethanol 39% 54% bioelectricity 1% 16% energy 40% 70% * COGEN 2008

Brazil Bioethanol prospects technological improvement and sustainability enhancement

Soil & climate potential Brazil for sugarcane culture with irrigationwithout irrigation “salvation” (< 2.000 m3/ha.year) Amazon Rainforest Pantanal Other important Above 12% slope preservation areas area (75 Mha) Atlantic Forest High Good Medium Inadequate (> 80 t/ha) (> 70 t/ha) (> 60 t/ha) Source: CGEE – NIPE/Unicamp - CTC

Brazil Scenarios of land use needs for sugarcane production (2025) *Taking in account agro-ecological criteria and existing temporary and permanent cultures Global Technology Sugar Ethanol Ethanol Total Available ethanol (Mha) (Mha) internal exports land land* consump market (Mha) (Mha) (Mha) tion (Mha)Scenario 1 102,5 Present 3.6 6.8 15.2 25.6 80 E5 bl/y Progressive 3.2 4.8 12.0 20.0 80Scenario 2 205 Present 3.6 6.8 30.4 40.8 80 E10 bl/y Progressive 3.2 4.8 24.0 32.0 80 60% of Pantanal area 20% - environment reserve 82.6 times Atlantic rain forest area Source: CGEE – NIPE/Unicamp

Brazil Scenario E 5 for 2025 Socio-economic impactsInvestments during 20 years US$ 5 billion/yearResults per year in 2025Ethanol production 102.5 billion litersExcess power production 55 TWh (15% of the 2004 power market)Ethanol exports US$ 30 billionGDP increasing US$ 75 billionConsidering direct, indirect and induced revenue (input-output matrix)Jobs 5.3 millionLevel of salary 50% over the national average salary Source: CGEE – NIPE/Unicamp

Brazil Scientific and technological base Scientific publications related with the sugar cane Pesquisa em cana-de-açúcar 140 EUA Brasil 120 São Paulo Índia 100 Austrália China 80 60 40 20 0 1989 1991 1993 1995 1997 1999 2001 2003 2005 Literature research: (TS=(sugarcane or "sugar cane" or Sacchacarum) or TI=(sugarcane or "sugar cane" or Sacchacarum) Source: ISI – Web of Science (29/09/2006) NOT TS=(alcoholism or psychiatr* or clinic or medicin*)

Brazil Bioenergy technology road mapSource: http://www.ifpri.org/2020/focus/focus14/focus14.pdf

Brazil Bioethanol Science and Technology Centre National laboratory, working with the scientific and industrial Brazilian communities. It collaborates with basic research and technological development along the sugarcane & bioethanol chain. Its mission involve the construction of public and private partnerships.

Brazil National Science and Technology Institute for Bioethanol Biotechnology Research network

Brazil Bioethanol R&D&I agenda Better photosynthesis comprehension Conventional genetic improvement and genetic engineering Production models and infrastructure development Biotechnologies, agriculture of precision and optimization of inputs Mechanical harvest, without burning and with straw collecting Pre-processing and stock of bagasse and straw Fermentation, grinding and distillation improvements Management and automation (advanced system) Reduction of water and energy consumption and recycle of effluents Increase of the excess power generation Alcohol-chemistry, sugar-chemistry and biorefinery Hydrolysis, gasification (F-T) and pyrolysis of bagasse and straw Sugar-cane of high biomass - "energy cane"

Brazil Geneticsnew varieties adapted to local soils and climate and resistent against diseases Biofactory: quick multiplication Sugarcane of high biomass: energy cane

Brazil Next generation Low impact mechanization Recycle Hydrolysis Gasification Pyrolysis Biorefineries

Brazil Productivity prospects (agro-industrial technologies) 2005 2015 2025Sugar cane 70 t/ha 82 t/ha 94 t/ha Industrial l/tc l/ha l/tc l/ha l/tc l/ha technologyConventional 85 6,000 100 8,200 110 10,400 Hydrolysis --- ---- 15 1,200 40 3,600 Total 85 6,000 115 9,400 150 14,000 Source: CGEE – NIPE/Unicamp

Brazil Primary energy potential improvement Sugar cane Energy caneProductivity (t/ha) 70 100 Fiber (%) 13.5 26.0 Trash (%) 14.0 25.0 Pol (%) 14.5 12.0Total fiber (t/ha) 19.3 51.0 Energy (GJ/ha) 520 1,100 (12.5 toe) (26 toe) Source: CGEE – NIPE/Unicamp

World Biofuel production awareness Careful planning Exclusion of protect areas Regards to food security Crop choices matching geo-climate conditions Productivity, and energy & GHG emission balances Agricultural best-practices Products and processes certification Environmental, social and economic sustainability

World Biofuel favorable externalities  Regional, country & local development  Energy security enhancement  GHG emission reduction  Local pollution reduction  Oil imports reduction  Oil exports expansion  Currency saving  Job creation  Rural migration contention

World Remarkable perception“I foresee the time when industry shall no longerdenude the forests which require generations tomature, nor use up the mines which were ages in themaking, but shall draw its raw material largely from theannual products of the fields. I am convinced that weshall be able to get out of the yearly crops most of thebasic materials which we now get from forest andmine” [Henry Ford, Modern Mechanics (1934)]

Brazil Studies related to BioethanolNAE Journals: Biofuels Study on the role of State AgriculturalStudy commissioned by the Nucleus of Strategic Issues Research Organizations (OEPAs)of the Presidency of the Republic Study under the Management Contract signedCoordination: Isaías Macedo & Luiz A. Horta Nogueira between MCT and CGEE

Brazil Studies related to BioethanolStudies commissioned to Nipe/Unicamp, and involving CTC and TranspetroCoordination: Rogério Cezar de Cerqueira Leite / Luís Augusto Barbosa CortezSupervision: CGEE

Brazil Studies related to BioethanolStudies commissioned to Nipe/Unicamp, and involving CTC and CeneaCoordination: Rogério Cezar de Cerqueira Leite / Luís Augusto Barbosa CortezSupervision: CGEE

Book in four languageslaunched during theInternational Conference onBiofuels, held in São Paulo(November 2008)www.bioetanoldecana.orgwww.bioetanoldecanadeazucar.orgwww.sugarcanebioethanol.orgwww.bioetanoldecanne.org Partnership: BNDES, CGEE, ECLAC and FAO Coordination: Luiz A. Horta Nogueira

Thank You ! Marcelo Poppe mpoppe@cgee.org.br www.cgee.org.br

World Global challengeThree quarters of the worlds energy supply comefrom fossil fuels, responsible for large local pollutionloads and for most of the greenhouse gasesemissions. The scale on which they are being usedwill quickly lead to their depletion. The world energyconsumption should grow as a result of the progressof many of the world’s developing regions. Industrialcountries have not succeeded in reducing energyuse without compromising the quality of life, eventhough it is known that this can and must be done.The challenge, therefore, is to seek renewableenergy sources and to increase efficiencies in energyproduction and use on an unprecedented scale.

Global Opportunities for Sustainable Bioethanol

by CTBE - Brazilian Bioethanol Sci&Tech Laboratory

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