Brazil's Green Energy Revolution

With nearly half of all its energy produced from renewable sources, Brazil has one of the world’s cleanest energy matrixes. Sugarcane stands out as the country’s second most utilized source of green energy, slightly behind hydroelectricity. Today, sugarcane is processed to generate food, feed and energy in modern integrated bio-refineries that produce sugar, alcohol, fuel ethanol, bioelectricity and in the near future, bioplastics.

Preliminary data shows that ethanol production in the South-Central region of Brazil reached 19.9 billion litres in the 2007/08 sugarcane harvest, 11% more than Brazil’s total output for the previous year. As in other years, Brazil’s domestic market absorbed the major portion of the ethanol produced, and projections for 2008 are promising. Thirty new plants should go on stream this year, with total investments expected to reach US$ 33 billion by 2012.

The success of Brazil’s ethanol program is driven by two main factors: mandatory blending and the success of Flex-Fuel Vehicles (FFVs). All gasoline sold is blended with 25% ethanol, and almost nine of every ten new cars sold in the Brazilian market are FFVs. By the end of 2008, 26% of Brazil’s light vehicle fleet (more than six million vehicles) will be FFVs, with the figure expected to reach 50% in 2012 and 65% in 2015. The auto industry has invested heavily in Flex technology and now offers more than 63 models at the same price as straight gasoline-powered versions.

The use of fuel ethanol is not limited to light vehicles. By mid-2008, a fleet of 17 buses running on ethanol will be launched in São Paulo as a pilot project. The environmental benefits from the introduction of biofuels in public transportation can be substantial. It’s estimated that replacing 1,000 diesel buses with ethanol-powered models would reduce CO2 emissions by 96,000 tons per year, which is equivalent to the emissions of 18,000 gasoline cars. Some motorcycles and small airplanes made in Brazil also run on ethanol.

Looking at the international market, the Brazilian Sugarcane Industry Association (UNICA) welcomes recent legislative steps announced by the United States and the European Union. The new Renewable Fuels Standard adopted last December and the proposed directive on renewable energy sources submitted by the European Commission on January 23rd will consolidate the ethanol market in these two regions, opening potential opportunities for imports from Brazil.

Although 2007/08 export volumes originating in South-Central Brazil, the country’s main ethanol-producing region, are expected to be similar to the year before, the destination of Brazilian ethanol has become substantially diversified. Sales to the US have decreased as a result of increased domestic production, while exports to the European Union jumped from 230 million litres in 2006 to almost 800 million litres in 2007.