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Sugarcane-Based Bioethanol

Chapter 6: Sugarcane bioethanol in Brazil

Leandro Nardi Mauro Arantes

Introduction
6.1 Evolution of bioethanol fuel in Brazil 6.2. Sugarcane agroindustry in Brazil 6.3 Technological research and development

6.1 Evolution of bioethanol fuel in Brazil 1903 - First National Congress on Industrial Applications of Alcohol 1920 - National Technology Institute 1920s - Several pioneers at the time promote the use of bioethanol to power vehicles.

6.1 Evolution of bioethanol fuel in Brazil 1931 - Brazilian government implements a compulsory blend of at least 5% anhydrous bioethanol in gasoline. Until the early 1970s - The amount of ethanol in gasoline varies.

6.1 Evolution of bioethanol fuel in Brazil Mid-1970s The first petroleum crisis: a proposal is developed to reduce the dependence on imported oil. 1974: After discussions between the private sector and the government, a document with recommendations is submitted to the National Petroleum Council.

6.1 Evolution of bioethanol fuel in Brazil 1975 Specially adapted engines using pure hydrated bioethanol are tested. 11/14/1975 The Federal Government institutes the National Alcohol Program (Proalcool).

6.1 Evolution of bioethanol fuel in Brazil The incentives of Proalcool included:


 establishing higher minimum levels of anhydrous ethanol in gasoline;  guarantying lower consumer prices for hydrated ethanol relative to gasoline;  guarantying competitive prices to the bioethanol producer (competition subsidy);  creating credit lines with favourable conditions for mills to increase their production capacity;

6.1 Evolution of bioethanol fuel in Brazil The incentives of Proalcool included:


 reducing taxes on new cars and on annual registration fees for hydrated bioethanol vehicles;  making the sale of hydrated bioethanol at gas stations compulsory;  maintaining strategic reserves to ensure supply out of season.

6.1 Evolution of bioethanol fuel in Brazil Between 1975 and 1979 Bioethanol production increases significantly. 1979 Petroleum prices reach new heights and the Proalcool program expands itself.

6.1 Evolution of bioethanol fuel in Brazil 1985 The scenario changes: ethanol production becomes unattractive. 1986 The governmental incentives are reduced. 1989 Consumers start facing supply shortages.

6.1 Evolution of bioethanol fuel in Brazil 1989 Brazilian consumers lose their confidence on ethanol and the consumption of the biofuel starts decreasing. This situation is gonna last until the launch of flexible fuel vehicles (2003).

6.1 Evolution of bioethanol fuel in Brazil In the early 1990s The brazilian sugarcane industry is out of shape and lacks competitiveness. In this context, the brazilian government starts the liberalization of the national economy.

6.1 Evolution of bioethanol fuel in Brazil


1991 Beginning of the progressive removal of subsides and reduction of the governments participation in fixing the ethanol prices (a process that was completed only by 1999). The result of these changes are the creation of a new set of rules to organize the relationship between sugarcane producers, bioethanol producers and fuel distributors.

6.1 Evolution of bioethanol fuel in Brazil 1997 Two important institutions are created: CNPE (National Energy Policy Council) and ANP (National Petroleum Agency). 2000 Creation of the CIMA (Interministerial Sugar and Alcohol Council)

6.1 Evolution of bioethanol fuel in Brazil


2003 Development of flexible fuel cars (about 9 million vehicles capable of using this fuel by 2010). Ever since then, the Brazilian sugarcane industry has been expanding at high rates, consolidating itself economically and achieving positive indicators for environmental sustainability.

6.2. Sugarcane agroindustry in Brazil

The sugarcane industry reborned in the 1930s and expanded itself to the Southeast of Brazil from that moment on. Nowadays: sugarcane occupies almost 9% of Brazils cultivated land, and the biggest producing area is the MidSouth-Southeast.

6.2. Sugarcane agroindustry in Brazil

80% of the sugarcane received by the plants come from land owned by the plants owners (or linked to them). Brazilian plants can be classified due to their production: only sugar, sugar + bioethanol (close to 60% of the total amount) and only bioethanol (distilleries close to 35% of the total amount).

6.2. Sugarcane agroindustry in Brazil

So Paulo State: confluence of factors such as climate, logistics and localization, all favorable to sugarcane. Although the growing prices of the land is pushing the sugarcane industry towards other areas.

6.2. Sugarcane agroindustry in Brazil

Brazilians current sugarcane plants can be separated in:


 Stagnated companies  Profitable companies  Innovative companies

6.2. Sugarcane agroindustry in Brazil

The expansion of sugar-alcohol production brought the diversification in the composition and origin of the capital invested in the agroindustry. Besides, the current expansion of these productions are also related to gains of productivity and not only to the increase of the cultivated areas.

6.2. Sugarcane agroindustry in Brazil

The increasing productivity generates reduction in costs (learning curve). The sugarcane industry has witnessed the formation of clusters, as well as better conditions in terms of logistics.

6.3. Technological research and development


Essential role in the expansion of bioethanol production.
1. Production efficiency 2. Lowering of environmental impacts

6.3. Technological research and development


Importance of public institutions and private businesses to provide know-how to the production chain. Main location: State of So Paulo
1. Majority of sugarcane in Brazil is grown and processed. 2. Home to the most productive Brazilian university complex.

6.3. Technological research and development


Some examples: IAC (Agronomic Institute of Campinas) ProCana Program for the genetic improvement of sugarcane varieties. Economic impact = 13 times the amount of investments

6.3. Technological research and development


Some examples:
CTC (sugarcane technology center) Nonprofit corporation with 161 plants as members (60% of the sugarcane produced in Brazil). More than 60 sugarcane varieties launched Rural administration Harvest systems

6.3. Technological research and development


Some examples:
Fapesp (Research support foundation of the State of Sao Paulo)

More than 100 research studies involving the academic community and private companies.

6.3. Technological research and development


Fapesp (Research support foundation of the State of Sao Paulo) Dedini: 100 million research projects on technologies for elaboration of ethanol. Brasken: 50 million synthesis-process research using renewable raw materials derived from sugars, bioethanol and others biofuel chain products

6.3. Technological research and development


The primary factor that triggered this dynamics of innovation? Difficult to say. Parallel and simultaneous process of value generation. Studies based on immediate reality.

6.3. Technological research and development


Applied knowledge

Tech Improvements Better perspectives Efficiency improvements Entrepreneurial motivation Larger profits

6.3. Technological research and development


CT Etanol
Suggested as one possible way to provide sustainable financing of research and development. 0,5% of net income from bioethanol sales

Thanks!