Biofuels policy: Some insights from Brazil

Transcription

1 A Global Perspective on the EU Biofuel Subsidies Reform Biofuels policy: Some insights from Brazil Géraldine Kutas Senior Advisor to the President for International Affairs Head of International Affairs Brazilian Sugarcane Industry Association (UNICA) The European Parliament, 4 December 2012

2 THE BRAZILIAN ETHANOL POLICY Proálcool Program started in 1975 with a clear objective: Increase energy security by reducing oil imports Established an E-5 mandate and encouraged the development and demand of pure ethanol-fueled cars (E-100) Implemented measures to increase sugar production and exports Brazil has successfully transitioned from importing almost 80% of its total oil consumption in the 1970s to becoming a key player in energy and a renewable energy leader. Current Brazilian ethanol policy: Flexibility Government intervention:18-25% mandatory blend. The mandate has been reduced 4 times over the decade. Ethanol in the mandate averaged 35% of total fuel ethanol consumption in the last 5 years. Consumer-driven market: pure ethanol used in Flex Fuel vehicles (FFVs). 65% of fuel ethanol consumption. Provides adjustment flexibility in case of market tensions as consumers can use indifferently gasoline or ethanol in their car. No import tariff Allows supply from abroad, at no extra-cost, when necessary

3 THE BRAZILIAN SUGARCANE INDUSTRY Brazil became the world leading exporter of sugar (50% market share) while it expanded its ethanol production and consumption Flexible food and fuel production 75% of the mills produce sugar and ethanol All of them have the flexibility to re-direct 10% of their production to one or the other product 10% of the ethanol produced in these units is made of molasses, a residue of the sugar industry that has no market for other uses in Brazil Strong investment in R&D, including in agronomy Since 2003, annual world sugar consumption increased by 2.4% on average 1. Over the same period, Brazilian sugar production grew by almost 5% per year. Sugar is not a staple food. Brazilian grains production has more than doubled over the last decade.

4 BRAZILIAN ENERGY MATRIX INPUT 47.3% 45.5% 44.1% Natural Gas 10.1% Wood and Other Biomass 9.7% Other Coal and Renewables Derivatives 4.1% 5.6% Hydro 14.7% Uranium 1.5% Petroleum and Derivatives 38.6% Sugarcane 15.7% 52.7% 54.5% 55.9% Non-renewable Renewable WORLD (%) #1 Source of Renewable Energy in BR World (2008) OCDE (2009) Non-renewable Renewable Source: Balanço Energético Nacional BEN (2011) and International Energy Agency. Key World Statistics Elaboration: UNICA

5 Thousands km 2 /year Cane area (Million hectares) SUGARCANE AREA AND ANNUAL DEFORESTATION RATE IN THE LEGAL AMAZON Empirical data shows no correlation between ethanol expansion and deforestation. - 83% Amazon: deforestation rate Sugarcane Area Sources: Prepared by UNICA. INPE / PRODES (deforestation rates) and IBGE and UNICA (sugarcane area).

6 SUGARCANE AGROECOLOGICAL ZONING IN BRAZIL 1. It excludes sugarcane expansion in the most sensitive biomes e.g. Amazonia and Pantanal. 2. It excludes sugarcane expansion on any type of native vegetation (Cerrados, Campos, etc.) 3. Authorized areas for sugarcane expansion: 64.7 ml hectares, equivalent to 7.5% of the Brazilian territory (Currently 1% of the area is used for sugarcane)

7 SUGARCANE PRODUCTS: STEP BY STEP Current technology Sugar Drop-in fuels (diesel, jet fuel, gasoline) Technology under development Cane stalks Cane juice (Sucrose) Detergents & solvents Ethanol Cosmetics Sugarcane Bagasse (Cellulose) Biopolymers (bioplastics, isoprene, etc) Lubricants Straw (Tops and Leaves) (Cellulose) Bioelectricity Flavors and Fragrances Food

8 CONCLUDING REMARKS Transportation is the GHG emissions fastest growing sector and solutions are URGENTLY needed to tackle them. There is no magic solution and trade-offs between resource uses are necessary. Renewable energy needs public support: According to the IEA, fossil fuels received U$ 523 bn in 2011 (+ 27% compared to 2010) Fossil fuels prices don t reflect their negative environmental externalities Market conditions are imperfect due to the market power held by fuels producer/distributors Fair and stable legislation that reward each type of biofuels according to their environmental merits + open market are essential for sustainable biofuels to develop as a viable option in the pool of transport fuels. Excess of prudence regarding all biofuels will simply promote an increase in fossil fuels consumption and therefore more GHG emissions.

9 VISIT SUGARCANE.ORG

10 Thank you!