Transcript Slide 1

Brazil: A partner for the
Chinese Fuel Ethanol
Program
Eduardo Pereira de Carvalho
Brazil-China Trade Delegation
May 26, 2004 – Shanghai, China
Fuel Ethanol Use in China
• Central Government included fuel ethanol use in
the 2001- 2005 National Development Plan
• June 2001: E10 experimental use in 3 Provinces
(Henan, Heilongjian and Jilin)
• March 2004: Central Government announces E10
implementation in 9 Provinces (3 previous + Anhui,
Liaoning, Shandong, Hubei, Hebei and Jiangsu)
 consumption of 1.3 million m3 ethanol is
expected by the end of 2005
Note: E10 is a blend of 10% ethanol and 90% gasoline
Fuel Ethanol Use in China
• Present potential market of fuel ethanol is about
4.5 million m3, considering E10 use nationwide
• Reduction of grain stocks and increase of grain
prices may limit ethanol feedstock availability and
slow down program progress
• Price of fuel ethanol in China is differentiated
• China seeks energy diversification & security
Note: E10 is a blend of 10% ethanol and 90% gasoline
What would be the role of Brazil ?
Supply fuel ethanol to China, on a supplementary
basis to domestic production, in order to:
• speed up and consolidate ethanol program
• reduce costs
• contribute to the sustainability of the ethanol
program in the long run
Can Brazil do it ?
YES !
Brazil has a large experience with fuel ethanol and is
the largest fuel ethanol producer worldwide!
Brazil: 1997/98 - 2003/04
Million tons
Sugar Cane Production
380
360
340
320 303,1
300
280
260
240
220
200
97/98
357,5
314,9
320,6
306,9
293,1
257,6
98/99
99/00
00/01
Crop season
Source: UNICA
01/02
02/03
03/04
SUGAR CANE
- 5 million ha
- 60,000 producers
- all-year-round harvest
~ 10% of total cultivated
land
N-NE
(20% land)
harvest: sept/march
~ 1% of total land available
for agriculture
C-S
(80% land)
harvest: april/november
Brazil’s Center-South production capacity
• Sugar: 140 thousand tons/day
• Ethanol: 100 million liters/day
Sugar cane mills operate approximately
180 days/year and most of them have an
integrated sugar & ethanol production 
flexibility of supply
BRAZIL: AGRIBUSINESS EXPANSION
BRAZIL IS ONE OF THE FEW COUNTRIES IN THE
WORLD WITH GREAT CAPACITY TO EXPAND ITS
AGRICULTURAL PRODUCTION
Expansion area in the
“ Brazilian Cerrado” region
(million hectares)
Total Area ………………...........
Area good for agriculture......
Area in use for cattle raising...
Occupied area (forests & plantations)
Available Area ……...........
Source: EMBRAPA
204
137
(35)
(12)
90
Brazil: 1997/98 - 2003/04
Ethanol production
18
16
15,4
13,9
Million m3
14
14,7
13,0
12
10,6
11,5
12,6
01/02
02/03
10
8
6
4
2
0
97/98
98/99
99/00
00/01
Crop season
Source: UNICA
03/04
51,2% gain in
productivity
SUGAR & ETHANOL PLANT IN BRAZIL
Bagasse
The Brazilian Ethanol Experience
- Brazilian ethanol, gasohol &
Flex-Fuel vehicles
- Imported gasohol vehicles
% Ethanol in
Gasoline
(gasohol)
1977: 4.5%
1979: 15%
1981: 20%
1985: 22%
1998: 24%
1999: 20 to 24%
SINCE 2002
20% to 25%
FLEX FUEL VEHICLES
• First Brazilian Flex Fuel Vehicle
introduced in the market in March,
2003
• Flex Fuel Vehicles can run on
gasoline or on 100% ethanol or on any
blend of ethanol & gasoline
• Until April 2004 over 80,000 units
were marketed (operate mostly on
100% ethanol)
• Market projections indicate sales of
about 250,000 Flex Fuel vehicles in
2004
NEW MARKETS FOR ETHANOL
AVIATION FUEL
(100% ethanol airplane by
Embraer. In process of
homologation)
INDUSTRIAL FUEL
100% ethanol boiler
(can operate also on CNG or LPG)
Ethanol Vaporizer
ETHANOL TO PRODUCE BIODIESEL
Vegetable Oils
+
Anhydrous Ethanol
transesterification
SOY BEAN
OR  PEANUTS, SUNFLOWER, CORN,
COTTON, PALM TREE......ETC.
=
Biodiesel
ETHYL ESTER
+
SUGAR CANE
AIR POLLUTION
CO2
SOx
HC
O3
VEHICLES HAVE
BECOME THE MOST
IMPORTANT AIR
POLLUTION SOURCE IN
URBAN AREAS AND
ETHANOL IS A FAST
AND COST-EFFECTIVE
WAY TO REDUCE
POLLUTION
CH4
SUGAR CANE, ETHANOL AND THE
GREENHOUSE EFFECT
The substitution of bagasse for fuel oil in the production
of ethanol combined with the substitution of ethanol for
gasoline avoids the emission of 2.6 t CO2 equiv./m3
of fuel ethanol
CO2 is absorbed
by sugar cane
photosynthesis
Ethanol
Source: Macedo et alii, 2004
CO2
SUGARCANE INDUSTRY PROFILE
• Existing Ethanol Production Capacity: 16 million m3
• Ethanol Production Units: 302 (252 sugar & ethanol, 50 ethanol)
• Productivity: > 3% per year
• Jobs: ~ 1 million
• Balance payment savings in the order of US$ 52 billion (period
1976 - 2002)
• Ethanol Consumption in Brazil: over 200,000 barrels/day of
gasoline equivalent (at 28,000 fuel service stations)  ~ 40% of
spark ignition vehicle consumption
• Estimated Fleet using Ethanol: 16,5 million gasohol vehicles,
3,5 million gasohol motorcycles & 2.4 million neat ethanol
Source: UNICA, DATAGRO
BRAZILIAN ETHANOL EXPORTS
short term....................... 1.8 billion liters/year
mid term ( 3 to 5 years).. 5 billion liters/year
EXPORT INFRASTRUCURE IS BEING EXPANDED
NUMBER OF COUNTRIES USING
ETHANOL-GASOLINE BLENDS IS GROWING
Up to 5% Ethanol
Up to 10% Ethanol
More than 10%
European Union
USA
Brazil
India
Canada
USA**
Japan
China
Canada**
Thailand
Sweden**
South Africa
Peru
Colombia
Paraguay
* Under discussion
** flex-fuel vehicles E85
Australia*
Mexico*
FINAL REMARKS
 Brazil produces large volumes of fuel
ethanol with high productivity
 Exports of fuel ethanol from Brazil to
China are feasible and price competitive
 Brazil could become a preferential supplier
of fuel ethanol to China
 China and Brazil should strenghten the
ethanol cooperation agreement
Obrigado
Xie Xie
Thank You
WWW.UNICA.COM.BR