Rio de Janeiro – The growing demand for fuel – higher than 40% for gasoline in the past three years – is causing concern to the federal government, which is working with not quite optimistic scenarios, such as importing 58 billion reals (US$ 28.4 billion) worth of the fuel from 2015 to 2020. The forecast was made by the secretary of Oil, Natural Gas and Renewable Fuels of the Brazilian Ministry of Mines and Energy, Marco Antônio Almeida, in a pessimistic simulation during an event for the ethanol industry held this Wednesday (29th) in Rio de Janeiro.
In the scenario described by Almeida, considering that that the gasoline production capacity does not increase and that the overall demand for fuels rises at an average of 4.5% a year, the monthly demand by 2020 will be 1 billion litres of gasoline equivalent.
Another possibility, of adapting industrial plants which process naphtha for gasoline production, would demand approximately 56 billion reals (US$ 27.4 billion), investment in naphtha adaptation and imports included. Another alternative is building 67 new medium-sized ethanol plants, at a cost of 67 billion reals (US$ 32.8 billion).
“What do we need to do in this scenario? Work to prevent it from taking place. We need to increase ethanol and gasoline output in the country. It’s about making decisions on what to do and how to do it,” said Almeida, who also stressed the need for the ministry, Petrobras, and producers to engage in dialogue in order to decide on the investment as soon as possible.
The secretary also said it is crucial to invest in the auto industry to develop more efficient engines, especially when running on ethanol.
During the event, tax breaks for the ethanol industry in the state of Rio were made official, and issues were pointed out that exist in the industry, which has been plagued with declining consumption ever since 2009, when prices became less competitive than those of gasoline.
According to businessman Luis Roberto Pogetti, of the Copersucar, which comprises 48 plants which account for one third of the national output, ethanol is a “good cause.”
The investment required until 2020 to meet the national ethanol demand is 130 billion reals (US$ 63.7 billion) in the least, despite the low productivity. The increase in sugarcane productivity was lower in the last few years than for competing products such as Maize and beetroot. Brazilian crops have an idle capacity for 150 million tonnes of cane.
According to Pogetti, the current productivity rate for cane is 7,000 litres per hectare, and may potentially reach 23,000 litres per hectare by 2025. To that end, growers must conquer a series of obstacles. One is the high average age of crops, a factor which detracts from productivity, which falls short of its full potential right now. “[Competitiveness today] is in fact poor. We have lost productivity with the financial crisis, which has inhibited growth from 2008 onwards,” he said. He also said productivity has been low due to the climate. In the last crop, the average output was 5,600 litres per hectare.
Another cause for concern is the population’s preference for gasoline. Almeida points out this change as an indication that society is not willing to pay the price for a more expensive renewable fuel. “As soon as ethanol ceases to be competitive and hits 70% [of the price of gasoline], the society will start buying gasoline. Is it so that society has come to the conclusion that ethanol has some good properties which are not being fulfilled? I am not sure about that, and it requires debate,” said Almeida.
*Translated by Gabriel Pomerancblum
