Transcript Slide 1

The regulation and development of
the biofuels industry in Brazil
april/2008
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Brazil
• GDP – US$ 1,5 trillion - a 5.4% expansion in 2007
• Population – 186,5 million
• Area – 8.547.403,5 km2
• 60% of preserved areas and other usages (cities,
roads etc)
• 40% of arable area
• 29 sedimentary basins with oil and gas exploration
potential (7,5 million km²)
• Biofuels, oil and natural gas regulated under the same
institutional environment (same law, same agency).
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Energy within a worldwide context
• Accelerated growth of demand and prices
• Strong dependence on non-renewable energetic sources
• Negative impact on climate conditions
• Instability within producer countries.
Challenges
• Security in the supply
• Free and moderate prices
• Control of the environmental impact.
Brazil
biofuels
ethanol
biodiesel
regulation
Brazil within the worldwide
energetic context
Brazil is where the
world wants to get to
conclusion
Brazil automotive fuel matrix – 2007
About 18% of fuel consumed by the
Brazilian fleet are already renewable
Anhydrous
ethanol
6,2%
NonRenewable
World– 86%
Brazil – 55%
Natural gas
4,32%
B2
21,05%
Renewable
World – 14%
Brazil – 45%
Diesel
31,82%
Gas
26,84%
Hidrated
Ethanol
9,77%
Source: ANP/Simp
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Biofuel
Legal definition
A fuel produced from renewable biomass for use in
internal combustion engines or, in accordance with
regulations, for other types of energy generation, that
could partially or totally substitute fossil fuels.
(Law 11.097/2005)
Besides being renewable,
they reduce the emission of
greenhouse effect gases.
The gases produced during
combustion are absorbed
during the growth period of
the plant.
From vegetable or animal
biomass, they enable the
development of
agribusiness, familial
agriculture and
employment opportunities.
Brazil
biofuels
ethanol
1973
FIRST OIL CRISIS
biodiesel
1974
BRAZIL CREATES
THE PROALCOOL
PROGRAM
regulation
conclusion
1980
1979
1977
SECOND
PETROLEUM
CRISIS
ADDING OF 15%
OF ALCOHOL TO
GASOLINE
ADDING OF 4.5%
OF ALCOHOL TO
GASOLINE
1983
ALCOHOL-POWERED
CARS REPRESENT
MORE THAN 90% OF
SALES
The 90’s
1992
2003
ALCOHOL BECOMES 20
TO 25% OF THE
GASOLINE MIXTURE
BIOFUEL-ENGINE
CARS ARE PUT IN
THE MARKET
1985
1989
RIO 92: SIGNATURE
OF DOCUMENT ON
CLIMATIC
CHANGES
PETROLEUM PRICES
DROP AND GASOLINE
PRICES BECOME
EQUIVALENT TO THOSE
OF ALCOHOL
PERCENTAGE OF
ALCOHOL ADDED TO
GASOLINE REACHES
22%
2005
2007
THE NATIONAL
BIODIESEL
PROGRAM IS
LAUNCHED
THIRD
PETROLEUM
CRISIS
January
2008
MANDATORY B2
STARTS
March
2008
MANDATORY B3 IS
ESTABLISHED BY CNPE AS
OF JULY,2008
April
2008
ALCOHOL
CONSUMPTION
EQUALS THAT OF
GASOLINE
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
The Brazilian Industry of Ethanol
The choice for sugar-cane
Amount of energy obtained from each unit of fossil energy
matter (gasoline or diesel) employed during the process of
biofuels fabrication.
1,4
units of
energy
produced by
ethanol from
corn
3 units of
energy
produced by
oil seeds
9,2
units of energy
produced by
ethanol from
sugar-cane
Sources: Unica, National Geographic e Luiz Horta Nogueira
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Use of soil in Brazil
The Canasat Project
(850 million hectares)
Total
arable land
40%
The sugar-cane cultivation
region is more than 2000km
away from the Amazon Forest
Total
preserved
areas and
other uses
60%
Cane for
ethanol,
3.40
The Amazon is improper for
sugar cane culture and is a
protected area
Cane for
sugar, 7.80
Orange,
0.90
Brazil has the biggest area for
agricultural expansion in the
world: 100 million hectares
Pasture ans
avaliable
land, 277.00
(340 million hectares )
Sources: IBGE, Conab e Unica
see map
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Applications and benefits to the environment
Product
Application
Environmental Impact
Anhydrous
ethanol
Fuel blended
Less CO2 in atmosphere
Hydrated
ethanol
Flex fuel vehicles
Reduction of fossil fuel
Biomass
Energy generation
Lower costs
Ethane
Chemistry industries
and biodegradable
plastic
Recyclable products
To produce 1.000L of
ethanol 309kg of CO2
are liberated
To produce the same
amount of energy the
gasoline production
cycle liberates 3.368
kg of CO2
The difference
The gasoline emits
3.059 kg more of CO2
in the atmosphere
biofuels
ethanol
biodiesel
regulation
conclusion
FLEX +
Ethanol
Gasoline
•356 producers
•22.556 billion liters production in 2007
Hydrated ethanol consumption
Flex Vehicles
Gasoline Vehicles
Vehicles sells
49,39%
2500
9.242
2000
27,3%
mil veículos
1000
Total
29,3%
500
2006
42,6%
1500
6.187
mil m³
Brazil
2007
2004
2005
2006
2007
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Biodiesel
Legal definition
A fuel produced from renewable biomass for use in compressionignition internal combustion engines or, in accordance with regulations,
for other types of energy generation that could partially or totally
substitute fossil fuels. (Law 11.097/2005)
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Base of the program
To discourage any action that may generate environmental damage or
predatory competition with foodstuff cultures.
Incentive to production
• Creates the concept of “Social
Fuel”, which is a product by the
commitment of the biodiesel
producer with the family
agriculture.
• Establishes the federal taxation
model as a function of the kind of
producer, region and type of oil
producing seeds.
Generation of demand
and regulation of offer
• Establishes a minimum
percentage of the mixture of
biodiesel to the actual diesel,
besides the follow-up of the
insertion of the new fuel in the
market .
• Defines the ANP as the organ
in charge of regulation of the
biodiesel.
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Raw Materials
Soy
Castor beans
Animal fat or lard
Palm
Sunflower
Rapeseed
Babassu
Peanut
Tucuma
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Participation of biodiesel in the diesel market
2005
to
2007
2% optional;
potential
market:
840 million
litres per
year
Jan 2008
to
Jun 2008
2%
mandatory;
crystalized
market
1 billion litres
per year
Jul 2008
to
2012
3%
mandatory;
crystalized
market:
1,2 billion
litres per
year
From
2013 on
5%
mandatory;
crystalized
market:
2.4 billion
litres per
year
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Diesel and biodiesel market
Consumption
Biodiesel production
2006
402.726
Biodiesel,
2,278
2007
Biodiesel
12.959
Pure
diesel
28.508
1.000 m³
Pure
diesel,
36,730
69.002
736
2005
2006
2007
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Regulation: the role of ANP
• Regulation of the current production and supply chain.
• Organization of surveys towards biofuels trade.
• Establishing of updated specifications.
• Development of Quality and Price Fuel Monitoring Programmes.
• Enforcement actions all over the country.
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Supply Regulations
Biodiesel
•Law # 11.097/ 2005 - Introduces biodiesel to the Brazilian energy matrix and
defines ANP´s assignments
•CNPE Act # 5/2007 - Establishes the acquisition of biodiesel through public
auctions to be held by ANP
•MME Regulation # 284/ 2007 and MME Regulation # 301/2007 – Define policies for
the implementation of the auctions to be held by ANP
•ANP Act # 33/2007 - Establishes the minimal mandatory levels of biodiesel to be
contracted in the auctions for 2008
•CNPE Act # 2/ 2008 - Increases the minimal percentage of biodiesel added to
diesel to 3%
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Supply Regulations
Ethanol
• Law # 11.097/ 2005 - Defines ANP´s assignments regarding biofuels, including the
authorization process for all activities related to the national supply of ethanol, with the
goal of guaranteeing adequate supply
• ANP Regulation# 116/ 2000 - Regulates retail sale activities
• ANP Act # 36/2005 – Defines anhydrous ethanol and hydrated ethanol specifications for
automotive use and mandatory addition of coloring to a anhydrous ethanol
• ANP Act # 5/ 2006 - Electronic register of productive plants, remittance to ANP of data
related to the commercialization of ethanol, and rules of commercialization to be
adopted by productive plants.
• ANP Act # 7/ 2007 - Limits to operations among distributors and observance of the
brand.
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Ethanol Specifications
ANP Act 36/2005, from December 6th 2005 (AEHC and AEAC)
Key points
• Produced from sugar cane
• Anhydrous: The compulsory use is 25% in the blend
• Hydrated: use pure in flex fuel vehicles
• Inhibition of ethanol fuel adulteration
Relevant difference: water level (White Paper)
Brazilian solution: after 30 years of use, experience shows that the 0,4% level
defined in Brazil does not create problems for final use in the 25% fuel blend.
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Biodiesel Specifications
ANP Act 07/2008, from March 19th 2008
Key points
• Takes regional diversity into account
• Ester level (96,5%): Related to the purity of the product
• Water level (500 ppm, max.): Related to performance
• Stability to oxidation (6h, min): Related to stability during
transportation and storage
White Paper
• Difference in end uses (light and heavy vehicles);
• Differences in composition and blends
(B100 in Europe; B20 in USA and B2 in Brazil);
• Source differences;
• Difference on legislated emissions.
Brazil
biofuels
ethanol
biodiesel
regulation
conclusion
Challenges to the usage of biofuels in the
global market
• Elimination of technical barriers is vital for sustainable biofuels in the world market.
• Acceptance of the biofuels in the market depends on transparency and
trustworthiness of the fuel which should be obtained by standardization.
• Development of consistent terminology and reference materials.
• Deepening of standards harmonization has to take into account essentially the
development of world test methods appropriate for fuels from different sources, and
also limits of properties wherever possible.
• Creation of worldwide specification must cover all ranges of products (wider
feedstocks base) and be consistent with different engines.
Thank you!
Nelson Narciso
Director
[email protected]
Tel: 55 21 2112-8152