Transcript Slide 1

The Brazilian Perspective
Alfred Szwarc
Workshop “Biofuels for Transport – Part of a Sustainable Future?”
Oslo - May 14, 2008
About UNICA
 UNICA (Sugarcane Industry Association) is based in
São Paulo, Brazil, and is the largest organization of its
kind representing the sugar, bioethanol and
bioelectricity industry in Brazil.
 UNICA’s more than 100 member companies represent
over 50% of the ethanol and 60% of the sugar
produced in Brazil.
 UNICA has two international offices (US, EU) and is
opening another one in Asia.
About UNICA
Mission
To spearhead the transformation of the traditional
sugarcane industry into a modern and sustainable
agribusiness sector.
Priorities


Consolidate ethanol as a global commodity in the fuels sector;
Promote demand for fuel ethanol and create new applications &
markets;

Foster large-scale production of bioelectricity for the Brazilian
market;

Help member companies become benchmarks for socioenvironmental sustainability;

Disseminate credible scientific data relating to the competitive
advantages of sugarcane ethanol.
Competitive Advantages of the
Brazilian Sugarcane Ethanol
SUGARCANE: Source of Energy
276 kg/t
50% humidity
1/3
JUICE
SUGAR
1/3
BAGASSE
ETHANOL
165 kg/t
15%humidity
1/3
STRAW
Lignin
BIOELECTRICITY
Gasification, pyrolisis ?
MOLASSES
Straw: tops and leaves of sugarcane
Source: UNICA
The World of Sugarcane
Approximately 100 countries could supply biofuels to many
nations. Currently 20 oil producing countries hold the oil
supply in their hands.
Source: British Sugar
Sugarcane Production in Brazil
Sources: NIPE-Unicamp, IBGE and CTC
Sugar, Bioethanol and Bioelectricity Plant in Brazil
Ethanol storage
tanks
Distillery
Sugar plant
Bagasse
Sugar cane field
Sugarcane in Brazil: harvested area, ethanol production
and sugar production
Area ('000 ha) Ethanol (mm litters) Sugar ('000 ton)
40,000
While sugarcane area increased 85%
since 90/91, ethanol has increased 130%
and sugar around 350%
35,000
30,000
Sugar
25,000
Ethanol
20,000
Annual growth
rate 2.7% in the
last decade
15,000
10,000
Area
5,000
0
90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09
Source: IBGE (2007) and UNICA.
Elaboration: UNICA.
Note: * estimated
Grains* in Brazil: harvested area and production
Production of food doubled in the
last decade mainly due to yield
gains
160,000
140,000
'000 ha and '000 ton
120,000
100,000
Production of grains
80,000
60,000
Area
40,000
20,000
0
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
Source: IBGE (2007)
Notes: 2008: estimated data.*Grains include rice, corn, wheat, soybeans and beans.
05
06
07
08
Evolution of oil and agricultural commodities prices
Deflated values for March 08 with CPI - base 100 in jan/95
In the last 10 years, while food prices increased
by 36%, oil prices have risen by 500%
Oil
Food
Agricultural non-food
raw materials
Note: “Agricultural non-food raw materials” include cotton. wood. wool. timber and leather.
Sources: FMI (2007) and US Bureau of Labor Statistics (2007). Elaboration: UNICA .
Sustainability and Land Use Changes
Direct Effect (Forest Conversion)
 UNICA acknowledges that the preoccupation for carbon stock
release resulting from land use changes is legitimate.
 No production of feedstock for biofuels or for any other uses must
take place in sensitive areas where the stocks of carbon are
substantial.
 Sugarcane expansion in Brazil is taking place mostly in existing
pasture areas, this may actually result in a carbon credit, not a
carbon debt; further, food will be produced during crop rotation.
Sustainability and Land Use Changes
Indirect Effect
 New case against biofuels presented in recent studies.
 However, currently none of the available models can provide a sound
assessment of the reallocation of agricultural production in some
countries due to the increase of biofuels feedstock production in other
countries.
 Models used in recent studies present numerous pitfalls:
 Ignore the huge improvements in yields that are taking place in
modern agriculture;
 Assume that any crop production that is displaced by another one (for
biofuels or not) will be necessarily reallocated in high biodiversity
areas;
 Adopt very simplistic assumptions that do not represent complexity of
real world conditions.
Reducing Fossil Fuels Use & Recycling CO2
100% Energy Self-Sufficiency
Brazil’s sugar and ethanol plants generate their own electrical energy by
burning bagasse and also produce surplus electricity that can be sold in the
commercial power market.
Mitigating Global Warming
GHG Reduction
Several well-to-wheel estimates show that Brazilian sugarcane ethanol reduces
emissions of greenhouse gases (GHG) by up to 90%, when used instead of
gasoline.
Fostering Energy Efficiency
The energy balance of Brazilian ethanol is 4.5 times better than that of
ethanol produced from sugar beet or wheat, and almost seven times better
than ethanol produced from corn.
Reducing Land Use
Liters per hectare
Higher yields
Sources: IEA – International Energy Agency (2005) e MTEC.
Increasing Productivity
• New sugarcane varieties
• Loss Reduction & New technologies
• Cellulosic ethanol
Productivity
Conventional
Conventional
+ Cellulosic
1 hectare
1 hectare
Sugarcane Juice +
Molasses
Sugarcane Juice
+ Molasses +
Bagasse, Tops &
Leaves
7,000 liters of ethanol
12,500 liters of
ethanol... or more
(7,000 L from juice +
5,500 L from bagasse
and leaves)
New Ethanol Markets
 ethanol-powered buses & trucks (E95) and hybrids
 flex-fuel - hybrids
 flex-fuel motorcycles (E20 - E100)
 Small aircrafts (E100) and regional aviation
 Alcochemical industry: bioplastics
 Fuel cells
Best Agricultural and Environmental Practices
relatively low levels of soil loss:
root system & sugarcane
replantation every 6 years + rotation
 Biological control to mitigate
pests & low use of pesticides
 No use of fungicides.
 .Sugarcane enhancement
programs
 Vinasse and organic residue
compost as organic fertilizers.
 Sugarcane fields in the C-S
of Brazil require practically
no irrigation.
 Fertirrigation:
vinasse
application (a water-based
nutrient-rich residue from
ethanol production).
 Industrial water use has been
decliningsignificantly:
less
3
than 1m /t.
UNICA’s Social-Environmental Agenda
GREEN PROTOCOL: voluntary agreement between UNICA and the São Paulo
State Environment Secretariat (June 04, 2007).
Goals
• Anticipation of the legal deadline for the elimination of the practice of pre-harvest
sugar cane straw burning: 2021  2014 where mechanical harvesting is currently
possible / 2031  2017 where topography requires new harvesting systems
• New sugarcane areas must be harvest mechanically.
• Protection of river side woods
• Measures for soil and water conservation & atmospheric emissions reduction
“Green Protocol”
Results (10 months after its signature)
 Significant progress in mechanical harvesting: from 34% of the sugarcane
harvested in the 2006/2007 crop to 47% in the 2007/2008 crop. The harvested
area without fire burning increased to 657,000 hectares (60%), or the
equivalent of 1 million soccer fields.
 Voluntarily, 141 of 170 sugarmills from the state of São Paulo have already
signed the Protocol
 Maintaining 2007 levels of mechanization (550 new harvest machines) it is
be possible to end burning prior to the Protocol deadlines.
 Recently, 13,000 sugarcane independent suppliers, members of the
Organization of Sugarcane Farmers of the Center-South Region (Orplana)
signed a similar Protocol  the entire production chain of São Paulo State
participates in this effort.
UNICA-FERAESP Protocol
 Signed on February 10, 2006 with the objective to improve the working
conditions of sugarcane workers and to evaluate and recommend best
practices for the following areas:
1. Gradual elimination of the practice of outsourcing in the sugarcane manual
cutting
UNICA understands outsourcing has been a strong source of problems and is
working towards its elimination by 2011.
2. Improvement in the transport & working conditions for rural workers.
3. Transparency in the systems of labor evaluation and payment in the production
of sugarcane.
Social Responsibility
Projects developed by UNICA
World
Bank
Institute
 Program of Social Responsibility and Sustainable
Competitiveness
 Sustainable Partnership Program
Social Balance Program IBASE
IBASE
 Between 2003 and 2005 47 mills participated
in the program
 70 mills in 2007
GRI Report
Social
Responsibility
GRI
Ethos
Institute
 10 mills in 2007
Indicator of Business Social Responsibility
 First phase: 33 mills
 Second phase: 30 mills
Project
Tear
Partneships: IDB/FUMIN / INST. ETHOS / UNICA
 Usina Santaelisa Vale
Sugarcane Discussion Group - SDG
Multistakeholder
Process
 GRI
 Instituto Observatório Social
 UNICA
 CI
 Sugar mills
 TNC
 Suppliers
 WWF
 SOS Mata Atlântica etc
ARES (facilitator)
 Working Groups
 Task themes
 Governance
Sugarcane
Social-Environmental
Agenda
 External Communication
ETHANOL: International Demand
• Very protected market in developed countries. Ethanol is
classified as an agricultural product – high tariffs – as
opposed to biodiesel that is classified as industrial “other
chemicals” – US (2.5% + US$ 0.54/ gallon – EU (EUR
102/1000 l)
• Preferential access for some developing countries: CBI
(US), ACPs (EU), LDCs etc
• Domestic Subsidies
Ethanol Certification – “The Babel of Certifications”
EU Directives
European Union
Ethanol
PBCB
Brazilian Biofuels Program
Certification
Brazilian Goverment
Biofuels Certification
Meó Consulting Team
German Government
Sustainable Production of Biomass
Cramer Commission
Dutch Government
RTFO
Renewable Transport Fuel Obligation
UK Government
Several certification
initiatives are under
discussion now
How to attend to all
certification
discussions?
RTSB
Round Table on Sustainable Biofuels
Switzerland
National Compliance/Certifications
SEKAB, GREENERGY
Sweden, United Kingdom
Certification of Bioethanol – UNICA’s View

Create a multilateral and multistakeholder forum for the certification
of the ETHANOL as a global commodity. This process must consider
the sustainability of all feedstocks and production processes
involved: sugar cane, corn, wheat, sugar beats, forest and
agriculture residues etc.

Should be based on the three elements of sustainability. The product
must be economically feasible (preferebly without subsidies),
environmentally sound and socially fair.

The process must follow the accepted methodology: create a forum
→ agree on general principles → define criteria → create indicators
→ implement monitoring systems.

Must consider sustainability of fossil versus renewable fuels.

Must consider the energy balance and the reduction of GHG
emissions.
Final Remarks
1. Biofuels use will expand in the world.
2. Sugarcane is the most competitive feedstock to produce ethanol:
higher yields, low costs (competitive at US$ 40 the barrel of crude)
and very good energy and environmental performance.
3. Biofuels represent an opportunity for developing countries: land,
water, sunlight, temperature, labor, potential genetic improvements
(corn/wheat vs. sugarcane), incorporation of new technologies (crop
rotation, agriculture-livestock integration, no-till).
4. Although the US and EU have set up new governmental programs to
incentive the production and consumption of biofuels, the global
ethanol market continues to be small and very volatile in the short
term, due to tariff and non-tariff barriers and lack of commoditization.
5. Everyone`s challenge: ethanol traded as a global commodity.
Thank you
www.unica.com.br
[email protected]