Outlook for Sugarcane Ethanol

Transcription

1 BRAZILIAN SUGARCANE INDUSTRY ASSOCIATION UNIÃO DA INDÚSTRIA DE CANA-DE-AÇÚCAR Outlook for Sugarcane Ethanol An Update on the Brazilian Sugarcane Industry Leticia Phillips 1

2 ABOUT UNICA UNICA is the leading sugarcane industry association, representing +120 producers and mills in Brazil Responsible for 60% of all ethanol and sugar production in Brazil Emerging as a leader in the generation of bioelectricity already meeting 5% of Brazil s electricity demand International presence, now in Washington & Brussels, to engage in constructive dialogue 2

3 WHAT WE MAKE WITH SUGARCANE SUGAR 30 Million Tons ETHANOL 7 Billion Gallons ELECTRICITY 16,000 GWh 550 M MT Sugarcane is Brazil s #1 source of renewable energy and the second overall energy source behind petroleum. 600 million tons of CO 2 emissions avoided thanks to the use of ethanol since Source: UNICA; Ministry of Mines and Energy BEN (2008); Historical carbon budget of the Brazilian ethanol program in Energy Policy, Volume 37, Issue 11, November 2009, Pages

4 WHERE SUGARCANE IS GROWN South-Central region represents about 90% of sugarcane harvest Sources: UNICA, NIPE-Unicamp, IBGE, CTC, CanaSat, see 4

5 CURRENT & FUTURE PRODUCTS 5

6 Looking Back at 2009 Harvest Rains Negatively Affected Yields 6 6

7 FFV CONTINUE TO GAIN MARKET SHARE 39% Source: UNICA, 2009 data is through November. 7

8 ETHANOL DEMAND STRONG IN BRAZIL Gasoline Ethanol Source: ANP & UNICA 8

9 SUGAR PRICES EXPLODED DUE TO INDIA & RAINS With low sugar prices until 2009, sugar (as opposed to ethanol) production was not increasing in Brazil for last two crop years but world sugar market is now in structural deficit, exacerbated by India s switch to net importer among other reasons. So, Brazil tried to boost sugar production (despite rains) yet key sugar markets are not accessible And don t forget ethanol as 40% of cars are now Flex-Fuel in Brazil Source: ICE NY #11 Sugar Contract, UNICA 9

10 RAINS REDUCED DAYS AVAIL TO HARVEST AND SUCROSE YIELD Kg ATR/t of cane March Dec April Dec Source: UNICA, CTC 10

11 SOUTH CENTRAL BRAZIL SUGARCANE DATA Source: UNICA, Data as of January 16,

12 OUTLOOK FOR 2010/11 HARVEST I. If UNICA s forecast regarding the sugarcane production of 530 million tons is confirmed, nearly 50 million tons of sugarcane will remain in the fields, this is nearly the Mexican sugarcane production (6 th in the FAO sugarcane production ranking) II. About 15 new mills coming into operation in the next harvest season should be lower than the total of 23 new units estimated to start their activities during 2009/10 crop year Despite the growth of the sugarcane crushing capacity, we do not observe significant investments in the expansion of the sugar production capacity Therefore, the main variable affecting sugarcane crushing will be the weather conditions. Will the weather conditions stabilize under historical levels? How much will the rain affect the milling capacity and the quality of the sugarcane? III. If all goes well with Mother Nature, Brazil may produce an additional 5 million tons of sugar and an additional 4 billion liters of ethanol (+1 billion gallon) this year, which would alleviate supply stocks and price pressures. 12

13 Sugarcane s s Advanced Biofuels Cane Ethanol in the RFS and the LCFS 13 13

14 U.S. RENEWABLE FUELS STANDARD (RFS-2) Sugarcane Ethanol is Advanced Renewable Fuel with 61% GHG Reduction Source: EISA of 2008, U.S. Environmental Protection Agency (RFS-2) Final Rule. 14

15 WHAT UNICA TOLD EPA While we were pleased with results of EPA s rulemaking, we believe that GHG reduction even including ILUC is still better than 61% Sources: UNICA s comments to EPA on September 25,

16 CALIFORNIA S LOW CARBON FUEL STANDARD (LCFS) Other states may follow California s lead, going beyond RFS requirements The LCFS calls for a reduction of at least 10 percent in the carbon intensity of the state's transportation fuels by California consumes about 15 billion gallons of gasoline a year Source: California s Low Carbon Fuels Standard Programhttp:// 16

17 LCFS WITH INDIRECT LAND USE PENALTY Despite Modeling Errors, Sugarcane Ethanol is Lowest Carbon Liquid Fuel Grams of CO 2 per megajoule Fonte: California Air Resources Board s Low Carbon Fuel Standard. 17

18 LCFS SIMULATION WITH SUGARCANE ETHANOL Even with ILUC, 10% sugarcane ethanol blends meet LCFS to 2017 Grams of CO 2 per megajoule REPORTING ONLY E-10 Blend with Sugarcane Ethanol using exaggerated ILUC COMPLIANCE WITH CREDITS? Source: California Air Resources Board s Low Carbon Fuel Standard, August See also Table 3.4: LCFS Complying E10 Blends of California Energy Commission report Transportation Energy Forecasts and Analyses for the 2009 Integrated Energy Policy Report. 18

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20 AND IT IS NOT JUST FOR FUEL EITHER There s a Great Future in Plastics" Sugarcane is now being used to replace fossil fuel inputs in the petrochemical industry Various companies have begun to produce and market plastics from sugarcane ethanol Source: Braskem, Johnson & Johnson, The Coca-Cola Company, Tetra-Pak, and The Graduate (1967) 20

21 A LOW CARBON, ADVANCED RENEWABLE FUEL 21