Professional Documents
Culture Documents
Clockwise from top left: The skyline of Ribeirão Preto is punctuated by a growing row of business and residential skyscrapers through the heart of the city. (Right) Housekeepers, janitors and other Photos by Marcelo Min / Agéncia Fotogarrafa
day laborers leave the posh condominium skyscrapers of Avenida João Fiusa at 5 p.m. to return to working-class neighborhoods across the city. (Lower left) Bicycle riders and pedestrians move
up and down the wide walkable sidewalks along Avenida João Fiusa in front of new residential buildings under construction.
BOOM CITY
Brazil’s ethanol investment has lessons for local economy
RIBEIRÃO PRETO, Brazil — If you have Eduardo Cunali, who was raised in the local Chamber of Commerce president in to the south.
to ask how much it costs to live here, you region’s cane industry and now runs two 1989. “You saw a lot of property ‘For Sale’
probably can’t afford to. John Deere farm equipment dealerships. signs, many signs, in some of the nicest
The diverse rebirth
In northeast São Paulo state, where 80 “Sunny, long days, those are the most neighborhoods. Everyone realized just how Tax revenue flowed into Ribeirão Preto
percent of Brazil’s sugar cane and ethanol important items to sugar cane region of much every aspect of our community was not from massive farms that surrounded it,
comes from, Ribeirão Preto is a boom-city Brazil. ... That is here.” tied to (oil).” but new businesses tied to the farming and
that owes much of its success to the coun- By the 1880s, this city was the world’s ethanol plant industries, said Afonso Reis
try’s focus on biofuels. largest coffee producer, and the boom
An ethanol artery Duarte, finance secretary for the city gov-
Property costs are rising by the minute, caused a rush of European immigrants to In the 1940s and 1950s, Ribeirão Preto ernment.
luxury skyscrapers sprout downtown as come and work for rich local coffee barons. began developing a new niche as the “Our taxes from sugar cane is less than
fast as the cane does, and imported car deal- It all came to a halt when the New York region’s education hub, where seven public 10 percent of our total,” he said. “But the
ers time their sales to the beat of sugar and Stock Exchange crashed and private universities are multiplying effect with businesses that deal
ethanol markets. in 1929. now established. The city in it has a major impact.”
“I’ve been here 15 years, and all this Ribeirão Preto’s econo- also built itself up as a med- Sertãozinho, a city of about 80,000 some
neighborhood doesn’t exist then,” said my was based solely on ical center for the state’s 40 minutes west of Ribeirão Preto, is con-
Carlos André Angerami, a real estate agent coffee, and U.S. buyers dis- northeast corner, a region of sidered the brain of Brazil’s ethanol tech-
serving posh new Avenida João Fiusa, appeared. As the city 80 cities totaling 3 million industry. It’s home to some 50 mills and 500
where $400,000 condos sell up to a year rebounded over the next people. companies supplying every type of sugar
before construction. “They’re building a 30 years it learned not to The second big agricul- and alcohol equipment imaginable, nick-
market for the rich.” put all its economic eggs ture boom hit in 1975, when named “Ethanol Silicon Valley” as an epi-
Deemed the Brazilian capital of in one basket. ã Brazil, then reliant on center of álcool research and development.
agribusiness, Ribeirão Preto has profited as Lafayette’s oil bust in importers for 75 percent of Following the cane boom, farmers and
much from agriculture as Lafayette has 1985 taught the same hard its oil, responded to the investors diversified the region to include
from oil. lesson. OPEC embargo with a oranges, cotton, rice, meat and dairy in its
Rapid growth fueled by the wealthy has State oil extraction national ethanol fuel pro- agriculture, and built up a textiles and man-
led to a lopsided real estate market, widen- peaked in 1969, and gram called Pro- ufacturing sector, too.
ing of the pay gap and debates over master Lafayette rode through Álcool (Pro- It’s now one of the fastest developing
planning for future growth. the OPEC oil embargo of Alcohol). cities in Brazil, trailing only São Paulo, Rio
1973 on momentum and Heavy govern- de Janeiro and the nation’s capital, Brasília,
Born through the soil steady demand for ment subsidies for new money flowing into banks and local
The city was started in 1856 by farmers drilling in the Gulf of convinced Ribeirão investments, Duarte said.
in southeast São Paulo state looking for Mexico. Preto farmers to In Lafayette, the crash helped local lead-
good climate and soil to grow coffee. Almost 70 percent of local jobs focus on cane for ers look hard at what the city had to offer
They found both in Ribeirão Preto, hinged on fossil fuel exploration in par- new ethanol mills, other than oil and gas. Tourism and health
where practically anything grows in the ticular. New wells were rampant in the built by investors care quickly came to the forefront.
rich red soil (called terra roxa, or “purple early 1980s, but plummeting oil prices sent a with federal backing. The region’s rich soil Festival International de Louisiane was
earth”) that’s flatter than most other parts ripple effect through any city that lived and turned it into one of the world’s most prof- started in 1986 to boost the city’s morale and
of the state. Year-round sunshine spawned died by oil and gas. itable areas for sugar and alcohol. image. And in 1989, Sides and the chamber
the city’s nickname, “Brazilian California,” By 1986, local unemployment was at 14 Farms there now contribute about 30 started the Gateway Lafayette Project, a $1.1
and 1,400 to 1,500 milliliters of rain per year percent. percent of the whole country’s sugar cane- million effort to relocate the tourist infor-
fall here just when the crop needs it. “Everyone in Lafayette suddenly real- based fuel, and one of the first major mation center to its current spot on
“The temperature is much more warm in ized they were in the oil and gas industry, intrastate highways built mid-century con- Evangeline Thruway from the opposite side
Ribeirão Preto because it’s four hours north whether they were or not,” said Larry nected Ribeirão Preto like a fuel artery to of town.
from the coastal end of the state,” said Sides, president of Sides & Associates, and metropolis São Paulo, four hours See BOOM CITY on Page 2
Careers created
Continued from Page 1
High-tech jobs
Boom City change the face
“Companies volunteered to move it, all of agriculture
the trees out there were planted by Boy
Scout groups,” Sides said. “We created PIRACICABA, Brazil — A sweet,
an attractive gateway to our communi- gritty taste of hand-cut sugar cane
ty.” between the teeth reminds Carlos
UL President Ray Authement is cred- Roberto Manochio Jr. why he gave
ited with expanding engineering and his life to agriculture.
science departments during the down Ten-foot-high stalks grew every-
period that are now key parts of UL’s where he looked as a child in rural
technology niche. UL also started a São Paulo state. It’s the richest
Microbusiness Development Center region for cane growth in Brazil,
meant for very small entrepreneurs try- the world leader in sugar produc-
ing to start fresh after an oil or gas lay- tion and ethanol export. All a kid
off. like Manochio needed was a pock-
Today, about 50 percent of Lafayette’s etknife and some patience, and
economy is tied to the energy industry, summer days were always better
said Gregg Gothreaux, CEO of the with slices of sugary stalk to chew
Lafayette Economic Development and suck dry.
Authority. The local oil and gas influ- “I never get to do this anymore,”
ence is now mostly service companies said Manochio, 28, from a cane field
that can respond to global needs, and owned by Cosan Costa Pinto, one of
are less dependent on what’s being the largest sugar and ethanol mills
explored in any one region. in Brazil. He passed on farming to
“We will always need energy as a become an agronomic engineer,
society,” Gothreaux said. “So to be staying close to the cane he loves by
involved in the energy business as a learning how to make it grow taller
community is good because that’s an and faster.
economy that won’t go away.” Brazil’s government started a
Dealing with growth national ethanol program in 1975,
and by the mid-1980s rural youth
Construction crews building stucco like Manochio saw agriculture and
homes, rush-hour traffic and new mini- any science related to it as the
malls look the same in Ribeirão Preto as “future profession.” Photos by Marcelo Min/Agéncia Fotogarrafa
in Lafayette. “We believe that now we’re in
But the Brazilian boom-city has a Engineers monitor every aspect of the Santa Elisa sugar and ethanol mill in Sertãozinho, Brazil, from one control room.
the future,” he said.
plan in place to manage growth, and Brazil’s booming ethanol indus-
already has multiple historic, walkable try spawned new markets for farm- Career in biofuels
mixed-use areas where residents shop, ers, foresters and a host of techni-
work, eat and live all within a few cal industries. Similar growth is If you’re seeking a job in the
blocks. already being seen throughout the ethanol industry, or are an employer
Behind Duarte in the city govern- United States, and Louisiana’s bud- looking for qualified help, visit
ment conference room hangs a map of www.ethanol-jobs.com
ding ethanol industry could expect
Ribeirão Preto with a yellow border of the same.
the city limits. our environmental science or agri-
“New real estate is only inside the A job infusion culture science students is great.”
yellow,” Duarte said. “(Developers) can’t Ethanol in the U.S. now creates Brazil’s ethanol infrastructure
build outside the yellow but some spe- more employment in rural areas may be growing faster than its sup-
cial construction … and if we allow the than any other economic activity. ply of qualified engineers.
infrastructure must be built by the con- The biofuels industry supported For each unit of energy generat-
struction company, water and electrici- more than 160,000 new jobs in 2006 ed in Brazil, oil creates one job,
ty lines, so they prefer to be near the throughout the economy, and boost- coal production makes four and
urban area.” ed U.S. household income by $6.7 ethanol 152, according to the
billion, according to the Renewable Interamerican Ethanol Com-
Fuels Association. There were 119 mission, a world biofuels advocate
Comparative city statistics: ethanol plants and more than 85 based in Coral Gables, Fla.
currently being built or expanding, Growth in general business,
Ribeirão Preto compared to 16 two years ago. paper and steel mills are just a few
Population - 550,000 Brazil had 369 ethanol plants competiting industries drawing
running this year, with 44 more away chemical, mechanical and
Total area - 252 square miles under construction, another 59 as electrical engineers needed by men A technician examines parts of a new turbine and electricity generator in the factories of
City Budget - U.S. $445 million approved projects, and 232 more in like Luiz Biagi. Renk Zanini in Sertãozinho, Brazil. The country’s ethanol industry is expanding too quickly
Lot size/price planning stages. Some 712,000 peo- He co-owns Sermatec and Renk for domestic training of engineers and technicians to keep up.
ple worked in ethanol plants or Zanini, machinery manufacturers
3,013 sq-ft lot / $75,000 cane farming as of 2005, according for ethanol and sugar processing, like Chile and Argentina.” the tonnage ground per day rose
to the São Paulo Sugarcane and owns nine mills in São Paulo. from 4,000 to 1.2 million.
Higher yields, fewer farmers “There were 46 mills then, there
Agroindustry Union. Between them all he employs 27,000
Lafayette “If we build an ethanol infra- people, but 300 jobs remain vacant, Most new jobs in the industry are 11 mills now,” Thibodeaux said.
Population - 119,485 (as of July 2006) structure you’re going to need all many entry-level engineers for aren’t in farming, and U.S. agricul- “It’s economies of scale, but we still
kinds of people we could be educat- mills that start at U.S. $42,000. ture has become more efficient in grow more cane than ever.”
Total area - 48 square miles (city) the past century.
ing,” said Leon Labbe, head of UL’s “When students leave the uni- Less than 5 percent of graduates
City Budget - $548 million renewable resources department. versity they are automatically From 1964 to 2007, the number of from LSU’s College of Agriculture
Lot size (River Ranch)/price “Government regulatory and employed in these areas,” Biagi sugar cane farmers hauling to now work on a farm after college,
inspectors, technicians for plants, said. “Engineers we get have come Cajun Sugar Cooperative in New
4,800 sq-ft patio home / $75,000 lab testing — the potential here for from the countries around Brazil, Iberia dropped from 220 to 60. But See CAREERS on Page 3
• Go to theadvertiser.com/ethanol for photos and more information on the ethanol industry in Brazil •
Saturday, Nov. 3, 2007 The Daily Advertiser • 3
• Go to theadvertiser.com/ethanol for photos and more information on the ethanol industry in Brazil •
4 • The Daily Advertiser The Daily Advertiser • 5
10,719
9,668
301 million 8,367
7,274 190 million
2007 estimated population 5,222 2007 estimated population
4,146 3,836 3,706 1,017
3,289 2,938 2,802 2,785 3,103 2,630 2,534
Size comparison 2,218 2,183 2,157 2,068 502
251 202 171 153 122 102 8,456,510 sq.km.
U.S. Brazil total land size.
Saudi Russia United Iran China Mexico Canada United Arab Venezuela Norway United China Japan Russia Germany India Canada Brazil South Saudi United Brazil China India France Germany Russia Canada Spain South
Arabia States Emirates States Korea Arabia States Africa
Source: Energy Information Administration Source: Renewable Fuels Association
9,161,923 sq.km. Top world ethanol Top U.S. oil Top U.S. corn ethanol Top 5 oil importers to U.S.
total land size. producers producing states producing states Top 5 ethanol importers to U.S.
7.4%
GREENLAND Percentage of farmland used
18.01% for growing crops.
Percentage of farmland (Less than 1 percent used for
used for growing crops. sugar cane, which is already
meeting nation’s ethanol needs.)
119
Number of ethanol plants, North
as of 2007. Sea
369
Number of ethanol plants,
as of 2007.
NORTH AMERICA
RUSSIA
CANADA
Corn
Primary source of ethanol.
FRANCE
EUROPE Sugar cane
Primary source of ethanol.
0-10% UNITED
Percentage of ethanol STATES
in regular gasoline.
Pacific Atlantic 25%
Ocean Ocean Percentage of ethanol
in regular gasoline.
E-85 (85% ethanol) CHINA
Main ethanol-based fuel.
E-100 (100% ethanol)
MEXICO SAUDI Main ethanol-based fuel.
ARABIA INDIA
Louisiana’s sugar production, TRINIDAD
AFRICA ASIA
by parish JAMAICA AND TOBAGO
3.5% Top 10 raw sugar producers, 2006: EL SALVADOR
Percentage of total fuel (In millions of pounds) NIGERIA
consumption. COSTA RICA VENEZUELA
Iberia 327
Assumption 259
40%
Percentage of total fuel
Iberville 252
86 Pointe Coupee 212
consumption.
Number of ethanol plants
under construction/expanding. Lafourche 195
St. Mary 193
St. Martin 190 BRAZIL
■ By 2010, U.S. ethanol pro- St. James 145 Indian
duction could displace the Vermilion 123 Ocean
equivalent of 311,000 barrels West Baton Rouge 104
of crude imported oil per day SOUTH
— more than one large oil
tanker per week.
AMERICA AUSTRALIA 44
Number of ethanol plants
under construction/expanding.
■ Oil accounts for about 99% 59 more as approved projects,
of U.S. transportation fuel 232 in planning stage.
supply, 65% of which is
imported. Sources for U.S. and Brazil Energy
Facts: Renewable Fuels Association;
■ The Energy Information CIA World Factbook; Jose Luiz Olive-
Administration (EIA) projects rio, vice president of Technology and
Development for Dedini; Energy Infor-
that, by 2025, the U.S. will Source: LSU AgCenter mation Administration; Interamerican
import 71% of its petroleum Ethanol Commission; Louisiana Mid-
needs. Continent Oil & Gas Association.
An ethanol timeline
Brazil
Source: UNICA (Såo Paulo 1975: Brazil’s military government 1976: Govern- 1977: All fuel 1978: All taxis, 1979-1980: Iranian Revolution leads to 1984: Alcohol- 1986: Oil crisis passes. 1989: Alcohol supply crisis reaches peak, 1990-1999: Dropping demand for hydrated alcohol (100 2000: Brazil’s Society of 2003: Volkswagen 2005: Seventy- 2006: 1.3 mil- 2007:
Sugarcane Agroindustry
Union) starts national ethanol program, named ment man- stations in police cars and second world oil shock. Brazil orders only cars Government support for Brazilians are upset they bought new cars percent) for alcohol-only cars was countered by growing Automotive Engineers marks its 50th anniver- three percent of lion flex-fuel Automakers
“Pro-Alcool,” to wean itself off foreign oil dates only Brazil required vehicles used automakers to start making ethanol- account for 94.4 alcohol production and new and now ethanol costs more than gasoline. popularity of small, light cars in Brazil, and mixing of leads development of a sary by debuting the new cars sold in vehicles on approach mak-
— which supplied almost 80 percent of ethanol be to offer ethanol by state-run powered vehicles for domestic sale. percent of auto- vehicles wanes. World The annual production of alcohol-only vehi- unhydrated alcohol in gasoline for those cars. new flex-fuel engine, first commercial flex-fuel Brazil came with Brazilian roads. ing 100 per-
its fuel at the time. Large public and pri- used in Brazil- (law remains utilities have to Companies had been modifying tradi- manufacturers’ demand for sugar rises, cles drops quickly to 10 percent in 1990, All Brazilian gasoline is required to have 20-25 percent which has complex soft- car, its Gol TotalFlex. flex-fuel engines. cent of new
vate investments supported by the ian motor- today). run on ethanol. tional engine designs to meet growing production. and mill owners focus more then 0.06 percent of factory output in 1997 alcohol mixed in, which the government oversees, and ware able to calibrate General Motors brings cars as flex.
World Bank helped expand sugar cane sports, a move demand for vehicles to run on ethanol, Brazilian sugar cane on (about 1,075 vehicles), settling at 1.02 per- adjusts based on supply and demand of sugar and alco- immediately to any fuel its first flex-fuel vehicle
farming and construction of alcohol dis- meant to boost which had problems. Now, they’re pro- this, abandoning supply of cent in 2001. hol throughout the year. mix, all the way up to to market.
tilleries. Large-scale use started as a acceptance. ducing a newly designed engine. national alcohol production. 100 percent ethanol.
gasoline additive of 20 percent.
OPEC
oil
1970 crisis 1975 1980 1985 1990 1995 2000 2005 2010
U.S.
Source: Energy Information 1974: The Solar 1975: U.S. 1978: Gasohol is defined in 1979: Marketing of com- 1980: Less than 10 1980: Congress 1983: Ethanol 1984: Ethanol 1985: price crash 1997: Major U.S. auto 1998: The ethanol 1999: Some states began 2000: EPA rec- 2002: Over 3 2003: A total of 18 2007: 4.5 million vehicles on U.S.
Administration
Energy Research, begins to the Energy Tax Act of 1978 mercial alcohol-blended ethanol facilities existed, placed an import subsidy rises plants in the pushes ethanol pro- manufacturers began subsidy of 54 cents to pass bans on MTBE, an ommended million E-85- States had passed roads capable of E-85 use, and
Development, and phase out as a blend of gasoline with fuels began. Amoco Oil making 50 million gallons fee (tariff) on for- to 50 cents per U.S. peaked at ducers out of busi- mass production of flex- per gallon extended octane additive in gasoline, that MTBE capable vehi- legislation to ban more than 1,300 fuel stations
Demonstration Act lead in gaso- at least 10 percent alcohol Company began market- of ethanol per year. Con- eign-produced gallon. 163. The ness, despite the fuel vehicle models able through 2007, but will because traces were show- should be cles in use, MTBE. California offer it (of 179,000 total stations).
led to research of line. Ethanol made from renewable feed- ing commercial alcohol- gress enacted a series of ethanol. Previously, ethanol sub- subsidies. Only 74 of to run on E-85, gasoline, be reduced gradually ing up in drinking water phased out though only began its ban in Most are concentrated in the
converting cellulose becomes stocks. The law amounted to blended fuels, followed by tax benefits to ethanol pro- foreign producers, sidy to 60 163 ethanol plants or both. Done mostly by to 51 cents per gal- sources, presumably from nationally. 169 fuel sta- January 2004, cre- upper Midwest where corn and
and other organic more attractive a 40 cents per gallon sub- Ashland, Chevron, Bea- ducers and blenders, loan such as Brazil, were cents per gal- stayed open by end automakers to tap into lon in 2005. leaking gasoline storage tions in U.S. ating a large ethanol plants are located. Oil
materials (including as a possible sidy for every gallon of con, and Texaco. About guarantees for small pro- able to ship less lon. of year. environmental credits, tanks. Ethanol as an alter- offer E-85. demand for refiners receive a 51-cent tax
wastes) into useful octane boost- ethanol blended into gaso- $1 billion to go to biomass ducers to build plants, and expensive ethanol E-85 fuel is available native additive to take ethanol. credit for every gallon of ethanol
energy or fuels. er for gasoline. line. related projects from the purchase agreements for into the United almost nowhere. MTBE’s place. they blend into gasoline.
There’s no cellulose- Interior and Related Agen- ethanol. States.
conversion plant cies Appropriation Act.
operating today.
• Go to theadvertiser.com/ethanol for photos and more information on the ethanol industry in Brazil • • Go to theadvertiser.com/ethanol for photos and more information on the ethanol industry in Brazil •
6 • The Daily Advertiser Saturday, Nov. 3, 2007
KYOTOPROTOCOL
An international agreement in which 36
countries are required to cut greenhouse
gas emissions to near-1990 levels by 2012.
• Go to theadvertiser.com/ethanol for photos and more information on the ethanol industry in Brazil •
Saturday, Nov. 3, 2007 The Daily Advertiser • 7
• Go to theadvertiser.com/ethanol for photos and more information on the ethanol industry in Brazil •
8 • The Daily Advertiser Saturday, Nov. 3, 2007
After spending two weeks in São come to expect and accept in the energy companies. fairly quickly, and it’s important for
Paulo, Brazil, in early August, I U.S. Now it’s exciting to see the U.S. reporters like me to point this out.
boarded the plane for home feeling I admire Brazil for seeing in 1975 Congress possibly boost the renew- We may make mistakes with
like a million bucks. that energy independence was able fuels mandate in a new Energy ethanol, fuel cells or electric vehi-
The country was beautiful, the worth the hassle of subsidies and Bill. It could require fuel refiners to cles along the way. Brazil took 30
food was fresh, and the pride I uncertainty to build an ethanol blend 36 billion gallons of ethanol years to get all its ethanol ducks in
found Brazilians took in their peace industry from scratch. into gasoline by 2022, ensuring a row. I hope this series will give
and relative self-sufficiency was Seeing and reading about suc- demand long enough for investment readers some perspective to see that
refreshing. cess with alternative energy else- and ingenuity to give American- maturation of alternative energy in
I got back to Lafayette and sank where in the world has drawn my made ethanol some firm legs to the U.S. could be worth the growing
from this high fairly quickly. News patience thin for progress here at stand on. pains.
that first night of more war deaths, home. Comparing the U.S. and Brazil
rising oil prices and the woes of A “can-do” attitude toward bio- certainly isn’t apples to apples. Bob Moser covers business, regional
local farmers were like weights fuels, solar and electric-hybrids Differences in climate, culture and growth and agriculture for The
around my neck, pulling me back over the next decade would be nice government allowed Brazil to Daily Advertiser. Contact him at
down into a day-to-day reality we’ve to see in U.S. automakers and become a biofuels success story bmoser@theadvertiser.com.
• Go to theadvertiser.com/ethanol for photos and more information on the ethanol industry in Brazil •