Opportunities for Ethanol Export in Key Target Markets

1. Opportunities for Ethanol Export
in Key Target Markets
Brazil and the US
Strategic Energy Dialogue
Ricardo Dornelles
Head of Renewable Fuels Department
dcr@mme.gov.br
New Orleans, February 2016
Ministry of Mines and Energy
Secretary of Oil, Natural Gas and Renewable Fuels

2. Brazil and the US Biofuels Cooperation
Brazil and the US governments work together in bioenergy cooperation
since 2003.
In biofuels, both countries are the main producers and market that
developed a huge ethanol economy which contributes for
decarbonization of transport sector.
 MME – DoE (MoU 2003 – Cooperation in Energy Area)
 Brazil and US Government (MoU 2007 – Biofuels)
 Binational Energy Working Group – 2011
 Brazil and US Government (MoU 2011 – Aviation Biofuels)
 MME – DoE : Strategic Energy Dialogue (SED) – 2011
• Bioenergy Action Plan
• Mission Innovation (New technologies with private sector)

3. SED Main Objectives (Biofuels – Area 3)
The Parties agreed on the role of the Dialogue in enhancing the
U.S.‐Brazil partnership to leverage their countries collective public and
private sector resources toward the advancement of biofuels.
The Parties opened discussions with a view to:
1. Biofuels Sustainability Analyses;
2. Advanced Biofuels R&D Cooperation;
3. Cooperation in Third‐Party Countries;
4. Regular exchange of information on biofuels production and market.

4. Brazil: Ethanol Market Perspectives
• Between a third and a half of
fuels demand for light vehicles
in Brazil is ethanol (anhydrous
or hydrous);
• Hydrous ethanol plays a key
role in our market providing
demand / supply equilibrium.
• Hydrous ethanol volumes will
remain superior in comparison
with anhydrous in mid‐term
perspectives;
• Even with ethanol expansion
considered, we forecast a fuel
gap opportunity of 1.85 billion
gallons of gasoline eq. (2024).
Estimated Fuel Gap
million m³

5. Brazil: Blending and Tax Differentiation
 Brazil is using ethanol mixture
above 20% (E20) for 39 years.
 Government controlled fuel prices
until Jan/02.
 Since 2002, fuels have free prices
in the whole chain of production
and commercialization in Brazil.
 In Brazil, federal taxation always
kept differentiation between
gasoline and ethanol as a State
Policy.

6. US: Ethanol Market Perspectives
The US Ethanol industry will face constrained growth due to:
 Domestic ethanol market is limited by the “blend wall”
 Domestic ethanol consumption is mainly in the form of lower blends
with gasoline (E10)
 No substantial growth can be expected in the short run in the
consumption of E15 and E85
 Potential for ethanol exports expansion seems limited for next years
Considering this, what about…
 New international markets for ethanol fuel?
 US blend wall review or incentives to E15 and E85?

7. Brazil/US Ethanol Trade Balance
Billion liters R$/US$

8. Ethanol Exports Destination
US Exports (2015*):
630 mi Gallons
 Both countries are trying to
diversify ethanol exports
 Other destinations to Brazilian
ethanol exports included 27
countries (2015)
* Jan‐Sep/2015
Brazil Exports (2014):
370 mi Gallons
Brazil Exports (2015):
500 mi Gallons

9. Despite diversification, ethanol trade is not growing...
Billion liters
Bilateral trade (US‐Brazil)
corresponds to a third of
total volumes

10. Bioenergy Global Scenario
The Renewable Energies were
responsible for 19.1% of global
energy consumption in 2013.
Modern renewable energy
participation has increased to
10.1%.
Traditional biomass accounted
for 9%, the same as 2012.
Although its recent growth,
biofuels count only for 0.8% of
global energy supply
IEA estimates that fossil fuels share in 2035 will be reduced to 75%.

11. What’s Happening Today?
• 62 countries have different biofuels mandates
(biodiesel and ethanol)
• Of the global fuel market (in volume):
2013
Global Ethanol Share 6,9%
Ethanol Share
(Mandates' Average)
8,7%
Global Biodiesel Share 1,4%
It seems a lot, but…
Volumes of gasoline and diesel: EIA DOE Stats ‐ BP Statistical Review of World Energy (2013) – Elaboration MME (2014)

12. Trends for bioenergy and a green economy…
G7 Climate Commitment  Last year, G7 agreed to support
reduction between 40% and 70% of
emissions until 2050 (base 2010)...
 How2Guide for Bioenergy
International Energy Agency
initiative launched in 2015
 CoP‐21: Long‐term global goal for net zero emissions.
Countries have promised to try to bring global
emissions down from peak levels as soon as possible.
More significantly, they pledged “to achieve a balance
between anthropogenic emissions by sources”.

13. Final Remarks
 Government mission is to take care of fuel markets
pursuing adequate conditions of regular supply and
quality standards;
 Brazil and US are engaged at defending, in all forums
abroad, biofuels and bioenergy as sustainable
alternatives for transport and energy sectors;
 Brazil and US are also working hard to open new
markets for biofuels as one of the key instruments to
tackle the climate change challenge. Under COP 21
conclusions, there is a clear opportunity to foster
bioenergy projects.

14. Thanks for your attention
Ricardo Dornelles
Head of Renewable Fuels Department
dcr@mme.gov.br
New Orleans, February 2016
Ministry of Mines and Energy
Secretary of Oil, Natural Gas and Renewable Fuels