Biodiesel

1. BIODIESEL IN BRAZIL: TODAY’S
PANORAMA
OF THE INDUSTRY AND FUTURE
SCENARIOS
VIA A FUZZY MODELING.
Bruno F. V. M. Coelho, Petrobras
Thiago P. Amaral, Petrobras / Universidade Federal
Fluminense

2. 1. Introduction
• This work uses primary and secondary sources of information to propose an
exercise of economical modeling for the construction of future scenarios by
means of a fuzzy logic tool.
• The first part of the article uses primary data found at ANP (2010 a, b and c)
in order to trace today’s configuration of the industry in Brazil. Based on
these data, production, investments, production inputs and the country’s
geographic distribution of industry may be discussed. Other auxiliary
materials such as the Enterprises’ investment plans (Petrobras, 2010) and
white-papers from Federal Government (EPE 2010) display indications of
the desired aims for the biodiesel industry in Brazil.
• The second part will show the main variables used in the model: the oil
price, the environmental pressures, the political incentives and technology.
• Finally will be shown the scenarios traced using the fuzzy logic tool in
Matlab.

3. 2. The biodiesel fuel in Brazil
Capacity authorized by the ANP, production and
compulsory demand for biodiesel in Brazil (2005 - 2010)
Source: ANP (2011)

4. 2. The biodiesel fuel in Brazil
Production X Capacity authorized by ANP (2008 - 2009)
Source: ANP (2010a)

5. 2. The biodiesel fuel in Brazil
• Important facts:
• December 2004 – Creation of the National Program of
Biodiesel Production and Use (PNPB) – Economical and
Social focuses.
• Law 11097/05 – Stablish a schedule to the mix of
biodiesel in diesel.
• Social Fuel Stamp – Incentives to north and northeast
production and the use of some feedstocks like .

6. 2. The biodiesel fuel in Brazil
Raw materials used for biodiesel production in Brazil - Jan 2011
Source: ANP (2011).

7. 2. The biodiesel fuel in Brazil
41%
30%
10%
18%
1%
Centro Oeste
Sul
Nordeste
Sudeste
Norte
Production of biodiesel in Brazil
Source: Elaborated from data of ANP (2010b)

8. 3. Relevant factors for
determining the development of
biodiesel production in Brazil.
• 3.1. Oil Price
• 3.2. Environmental factors
• 3.3. Political incentive factors
• 3.4. Technological factors

9. 3.1 Oil prices
• The price of oil has a significant role in make
viable alternative energies.
• During the price oil shocks in the 70`s Brazil has
developed his Ethanol Program.
• In a nutshell, high oil price helps to develop
biodiesel production and a lower oil price make
harder the entrance of this product in the
market.

10. 3.1 Oil prices
• In this work we chose the interval between 50 and
120 US$/bbl, because it is a scene contained in
most scenarios of future prices for a barrel of oil.
Historic and forecast for oil prices in EIA Scenario.
Source: EIA (2010)

11. 3.2. Environmental factors
• Biodiesel is regarded as one of the alternative
sources to tackle the climate change.
• The US Department of Energy predicts a
increase from 2% to 6% in the biofuels
consumption in the total liquid fuels demand by
2030.
• According to this scenario biofuels will have the
fastest growing rate compared with other
alternatives like XTL.

12. 3.2 Environmental factors
• In the model presented in this paper we used the
CO2 equivalent concentration levels into the
atmosphere as a "proxy" variable to this
pressure.
• As higher (near to 450ppm) this concentration
the lower was the biodiesel penetration in the
market. Otherwise lower CO2 (near the current
280ppm) concentration leads to a higher use of
biodiesel in the energetic matrix.

13. 3.3 Political incentives
• The establishment of a minimum percentage blend of biodiesel with mineral
diesel ensures a steady demand for producers.
• Ten Year Plan for Energy (EPE, 2010) shows that the amount destined to
biodiesel represents only 0.1% of the total planned for the investment in the
energy area. Even in comparison to the investment in liquid biofuel, the
value of only 500 million Reais in a total of 66 billion Reais destined to the
ethanol production.
• Thus, for the construction of the scenarios proposed in this paper, we have
considered that in a medium scenario which maintains the incentives of the
regulatory framework, there would be an expansion of installed capacity for
up to 3 million cubic meters per year, a figure a little above what Petrobras
(2009) estimates as the potential market, if it is maintained the requirement
of B5 diesel. A scenario in which there are greater incentives (such as
higher exports), would lead to increased capacity up to 6 million cubic
meters, slightly above capacity already authorized by the ANP.

14. 3.4. Technological factors
• Taking into consideration the limitation of investments in biodiesel
provided in EPE (2010), a major productive innovation in this area
would be due to circumstantial environmental factors more than to
the organized and structured investments for this purpose in this
industry.
• This paper considers the possibility of small breakthrough
innovations in the industry and sets a very low probability of
occurrence of structural innovations that could change the work of
the industry, with productivity gains that allowed ANP auction prices
around 1,00 R$ / liter of biodiesel B100 (mid-2010 the prices of
auction were around R$ 1.80 per liter, according to data of ANP
(2010c). On the other hand, the work provides the opportunity for
productivity marginal gains resulting from incremental innovations in
agricultural production, in the transesterification process, and in
waste treatment to allow the prices of biodiesel to hike the price of
mineral diesel around R$ 1.65/liter in May 2010

15. 3. Relevant factors for
determining the development of
biodiesel production in Brazil.

16. 4. Scenarios for the production
of biodiesel obtained with the
tools of fuzzy logic

17. 5. Conclusions
• Brazil is among today’s major biodiesel producers and has observed an
impressive increase of production in the last 6 years.
• Nevertheless, biodiesel still sums up to a minimal fraction of Brazil’s energy
matrix and many of the government’s social aims have still remained
unattained.
• Our model estimated that, even for expected levels of the variables
arbitrated in a conservative manner, the production of biodiesel in the
country tends to grow.
• This behavior, maybe, can be explained by the great inertia contained in
some variables discussed here like the governmental incentives.
• These results are encouraging, when you think of the enormous social
challenge that the biodiesel industry still has to face and the tremendous
opportunities that still exist in this market

18. THANK YOU!
• THIAGO PERIARD
thiagoperiard@petrobras.com.br