São Paulo – Those accompanying the euphoria of the ethanol market some five years ago, after the visit to Brazil of then North American president George W. Bush, probably imagined that in few years the fuel would have been adopted globally and would be generating greener emissions in flexibly fuelled engines world over. It is 2012, the world is far from using the Brazilian ethanol consumption model, with exclusive pumps at fuelling stations, but several countries started implementing projects for production of the biofuel and of mixing small volumes into petrol.
In South America, nations like Peru, Colombia, Argentina and Bolivia add ethanol to petrol, mainly produced locally. On the African continent, the movement is more recent, but there are, for example, plans for production of fuel alcohol and its mixing into petrol in Mozambique, where the French Tereos, through a company it controls, the Brazilian Guarani, and Petrobras Biocombustível are running a cane mill. In Sudan, there is production, consumption and even export of the product. In the same line, China and India produce and consume sugarcane ethanol.
These initiatives are not concretisation of the Brazilian dream of seeing its “green giant” taking great strides on all continents and being exported in great volume by the country mills, but they show that the engine for transformation of alcohol into a commodity is not totally stopped. "Consolidation of programmes in Europe and the United States should cause countries that are competitive in sugarcane to produce ethanol,” said the executive director at the São Paulo Sugarcane Agroindustry Union (Unica), Eduardo Leão de Sousa, regarding the initiatives.
The United States mix 15% ethanol into petrol and have ambitious plans for biofuels: they plan to consume 136 billion litres a year in 2022, against the current 50 billion. In some regions of the country, like the Midwest, where maize is produced for ethanol, the fuel is used in flexibly fuelled engines. The European Union has stipulated that its members should have 10% of its energy grid based on renewable fuels by 2020. This, according to Sousa, means 14 billion litres a year.
A large part of sector specialists and representatives have not paid much attention to consumer initiatives of countries in Africa and South America, which are generally small markets, with possibilities for own production and, therefore, without potential for consumption of Brazilian ethanol. They admit, however, that production of biofuels in other nations is good for Brazil, as it creates new supply sources.
"It would be very good for Brazil if new players arose. We are speaking about energy, and the whole world has experience in dependence on a source of energy with few producer countries (oil). When more producers are operating, better for us,” said Edgar Gomes Ferreira de Beauclair, a professor and doctor from the Luiz de Queiroz Higher School of Agriculture (Esalq) of the University of São Paulo (USP).
They do not believe in adoption of a similar model to the Brazilian one, with consumption of pure ethanol, and believe, in fact, that there is no significant perspective for greater use of the fuel added to petrol. “The euphoria is over, and now comes a moment of pessimism for the sector. Ethanol has lost glamour since 2006, 2007", says the Agribusiness and Bioenergy specialist and partner at PFSCosta e Associados, Paulo Costa.
But Sousa, from Unica, has a different point of view. "Brazil is the only country that has developed a programme of such scale, we are being observed by several countries,” he said.
To Sousa, the first step in other countries should be adoption of the mixture, as that does not require establishment of a more complex logistics network. For use of pure ethanol, they would have to develop an entire distribution logistics network, as well as seeking carmaker approval for production of flexibly fuelled engines. “But it may happen, depending on how competitive production (of ethanol) may become, on new technologies. We have great frontier to be opened in biofuel technology,” he says. Currently, according to him, over 100 countries produce sugar and, therefore, may produce sugarcane ethanol.
Use of the biofuel, according to the executive director, is motivated by three factors. One is global warming, as the biofuel helps countries reduce their emissions of pollutants and comply with international targets. Another reason is energy safety, with reduction of dependence of oil. The third reason is rural development, with generation of income in the country. "But the demand [for ethanol] does not take place spontaneously, and public policies are necessary to induce consumption,” said the executive director at Unica.
With or without Brazil
Even if progress is slow, the world is heading in the direction of ethanol. In Brazil, the country that started the sector, however, there are doubts regarding the part to be played by the world’s main player of green fuel. The United States have reduced the import tax on ethanol this year, but Brazil is having a hard time supplying its own demand. Among scholars and consultants, criticism about the country’s operation in the area is not lacking.
"We do not have public policies for biofuel energy,” said professor Beauclair. He recalls that the opening of the market in the US had been scheduled a while ago. "And we don’t even have enough ethanol for our own consumption,” said the professor, adding that the sector has been junked, with the best units being sold to foreigners and investment in research turned to the pre-salt layer of oil. With the need to self-finance, mills then turned to sugar production, due to prices of the commodity.
"Financing to the sector has only just turned up, for plantation of new crops, as the government has run out of excuses, ethanol was lacking in the last crop, and mill capacity use was at 30%. There was too little sugarcane,” said the USP doctor, regarding the R$ 4 billion (US$ 2.3 billion) launched by the Brazilian Development Bank (BNDES) for expansion of cane crops, which should contribute to doubling ethanol production by 2014.
Consultant Paulo Costa believes that in 2012 production should be a little greater than last year. "But the incapacity to supply this demand should go on for a while,” says Costa. The specialist also does not believe that Brazil will have a very great ethanol market abroad. “The United States has record ethanol stocks, and the country even exports to Brazil. In Europe, France, Germany and The Netherlands make the mixture, but in small volume,” said Costa. "Global consumption is insignificant,” he said.
The United States, however, stipulated that maize ethanol – produced in the country – may represent just 57 billion of the 136 billion that should be consumed by 2020. "From then on (57 billion) they want a fuel that may reduce petrol emissions by 50%, which may be sugarcane or cellulose ethanol, which is not yet commercially viable. With this, they will have compulsory demand for sugarcane export, from Brazil or other countries,” said Sousa, from Unica. Global production of ethanol reached 110 billion litres in 2011, against 40 billion litres in 2003.
Our technology
But if Brazil is not exporting ethanol worldwide, it has been operating in transmission of technology. There are several initiatives, from companies and governments, to help implement sugarcane crops and construction of ethanol mills. Dedini itself, which produces equipment for the sector, sells its mills abroad and transfers technology for production of ethanol. The Alcohol Production Hub (Apla) and the Brazilian Export and Investment Promotion Agency (Apex) maintain a program for incentive to mill exports.
Even in this area, however, Brazil must pay attention to stop losing space. China has been gaining experience in the production of equipment for production of ethanol and, despite presenting lower quality products than the Brazilian ones, has shown capacity to win markets world over with its technology.
*Translated by Mark Ament
