Clean Energy: Meeting the Energy Challenges of the 21st Century

Transcription

1 Organization of American States José Sergio Gabrielli de Azevedo CEO and President June, 2007 Clean Energy: Meeting the Energy Challenges of the 21st Century

2 Latin American Share of Oil World Reserves Latin American oil reserves are becoming increasingly important R/P* = 26,77 R/P* = 41,78 R/P* = 41,84 4,8% 8,0% 8,5% 5,0% 3,8% 3,5% 13,4% 8,8% 5,1% 7,6% 56,5% 6,4% 7,9% 65,1% 9,4% 11,7% 61,8% 12,7% Total 762 billion barrels Total billion barrels Middle East Europe & Eurasia Africa North America Pacific Asia Latin America Total billion barrels In 20 years, Latin America proven reserves increased from 36.6 billion barrels (1984) to 101 billion. Source: BP Statistical Review of World Energy * Reserves/Production Latin America (years) 2

3 Net Oil Availability Latin America Russia Mbpd Asia United States OECD(- Mexico) Projectedgrowthin oil production and demand suggests balance and independence of supply from politically unstable regions Source: Internacional Energy Agency Reference Scenario Includes Bitumen and non-conventionals, including synthetic oils. 3

4 Gas Rich Region with limited infrastructure Proven Reserves as of January 1, 2005 Ample gas reserves will allow for: ::: Regional growth in consumption substituting some demand for oil ::: Higher exports of liquids But: ::: Will require increasing energy integration and ::: Substantial investments in infrastructure covering great distances and environmentally sensitive regions 0.41 T m Tcf Mexico 2005 Gas Proven Reserves World: 179,8 T m 3 South and Central America: 7,02 T m T m Tcf Perú 0.74 T m 3 Bolivia 26.1 Tcf 4.3 T m T m 152 Tcf Tcf Venezuela Trinidad Brazil 0.74 T m Tcf 0.50 T m Tcf Argentina Source: Cambridge Energy Research Associates. 4

5 PRODUCTION X DEMAND X REFINING CAPACITY: REACHING SELF-SUFFICIENCY Production/ Consumption (%) , , , , , , , , , , ,6 2011F 112, Brazil: first major market to shift from import dependency to self sufficiency since first oil from North Sea in 1971 began to shift european balance Proj. Production THOUSAND BPD Consumption Refining

6 Business Plan Total Production Oil, NGL s and Natural Gas Thousand boed 7.5% p.a. 4,556 Total Investment: US$ 87.1 billion in (US$ 49.3 billion in E&P) 2.036, 85 2, , Meta 2006 Oil + NGL Brazil Óleo + LGN Br asil Oil + NGL International 2,403 Ól eo + LGN I nter naci onal 7.8% p.a. 3,493 Heavy 185 oil production technology development will expand LA reserve growth 551 possibilities; Successful Doha Round Negotiations are essential to permit greater trade of agricultural commodities and increase 2.374agricultural productivity considering comparative advantages; Technological breakthroughs in enzyme technology for the use of Lignocelluloses Meta biomass Meta and BTL; Further progress in regional Natural Gas Brazil integration. Gás Natur al Br asil International Natural Gas Gás Natur al Inter nacional Target Target 2011 Forecast 2015

7 Brazil is the 1st country to reap benefits from Ethanol Original drivers were energy security and economic attractiveness; Today environmental benefits are also considered Beginning of the sector deregulation End of regulation 1999 Alcohol Exports 2005 FFV PROÁLCOOL Alcohol Vehicles CNG ETHANOL 1000 BEP Source: MME, BEN 2006 Accumulated effective economy: 1 Billion boe ~US$ 52 bi GASOLINE During this period, ethanol utilization saved 644 million ton. of CO 2 emission

8 Quais seriam os motivos do diferencial de produtividade brasileira? Greater production cost reduction when compared to gasoline Ethanol Engine Relative Performance* 132,4% 103,3% 110,0% 110,0% US$/GJ Power Consumption Gasoline 100% Gasohol 22% Ethanol 100% 0 Ethanol prices in Brazil Rotterdam regular gasoline price Source: Goldemberg 2004 Source: Volkswagen (Brazil) - Presentation prepared for review within The Warren Centre for Advanced Engineering at Sydney University

9 World Energy Consumption reached 7,639 Mtoe in 2004; Como se distribui a Oferta Mundial de Energia? According to the International Energy Agency estimates, it will reach 11,664 Mtoe in 2030, which means an increase of 1,8% p.a.; Oil, Coal, Gas and Nuclear Energy, which are non renewable energies, are responsible for over 85% of total world supply; 35 Non-Renewables % 25 Shares (%) Renewables 87% Oil Coal Gas Nuclear Biomass and Waste Hydro Other Renew ables Source: World Energy Outlook 2006

10 Mas esta estrutura gera externalidades negativas Fossil fuels usage increases global temperature, generating urban pollution. During the last 20 years, 25% of CO 2 emissions were caused by fossil fuels usage in transportation activities. Million Metric Tons of Carbon Dioxide World Total Asia & Oceania North America United States China Europe Eurasia Region/Country Middle East Central & South America Africa 224% 170% 167% % 2004/ % 67% 48% 27% 24% China Asia & Oceania Middle East Africa Central & South America World Total North America United States Source: Energy Information Administration, 2004

11 Biofuels usage can reduce CO 2 emissions at a 5:1 rate; O Etanol contribui para a redução do aquecimento global Besides being a cleaner source of energy, sugar cane ethanol produces 8,3 more energy than the fossil energy used in its production process. Ethanol usage in Brazil has decreased the emission of Greenhouse Effect Gases at 13% (1994 data); Sugar-cane is the most productive among ethanol raw materials and the production of ethanol has limited affect on food supply. 10 Energetic balance - Ethanol 7000 Ethanol Productivity Energetic ratio liters per hectar Sugar cane Wheat Corn 0 sugar-cane - Brazil Beetroot sugarbeet- EU sugar-cane - India corn - USA wheat - EU Source: World Watch Institute

12 Bio-fuel usage in OECD Countries will benefit LA Global warming, energy security and/or cost effectiveness are encouraging renewable fuels with two principle initiatives ethanol and biodiesel. Both can be produced and consumed in Latin America advantageously US$/ Liter of Ethanol (Without taxes) Sugar-cane - Brazil 0,22 Ethanol gasoline additive or substitute Corn - USA 0,30 US (2007 State of the Union) target of billion liters by 2017 (target of 20% of current gasoline consumption to be substituted by ethanol by 2017 and cost efficient by 2012); US (2006 State of the Union) target of 30% of current gasoline consumption to be substituted by ethanol by 2030 and cost efficient by 2012; Japan 3% ethanol for gasoline mixture by 2010; China pilot programs and fiscal incentives for use of ethanol. Corn - Canada Cereals - EU Sugar - beet - EU 0,33 0,45 0,53 12

13 Cenário para a demanda A strong increase in the demand for ethanol is expected; This amount of future consume may be levered if new countries adhere the compulsive blend with ethanol. Strong Increase in Demand Renewable Fuels Standard Ethanol Global Demand (Million liters/year) Clean Air Act Lead Substitution MTBE Substitution Source: F.O. LICHT, 2004

14 The potential to expand world production is enormous North and Central America 37% Brazil 35% Europe 9.8% South America 38% Asia 16.2% Current Market Distribution of World Consumption Ethanol global market is 46.5 Billions Liters Ethanol as a Fuel is 30.6 Billions Liters, or 67% of total ethanol production Today the ethanol consumption is 2,6% of gasoline MKT Increasing ethanol to 10% of gasoline will represent 118 Billions Lt 14

15 A PROMISING MARKET Country Potential demand (Billion liters) Ethanol addition Comment Japan 1.7 3% Potential demand considering 3% ethanol addition to the gasoline formula US Expected demand in 2012, according with the Renewables Fuels Law China % Potential demand considering 10% ethanol addition to the gasoline formula EU 7.4 5% Potential demand considering 5% ethanol addition to the gasoline formula in 2011 India? 5% Percentage approved only in some regions Thailand 0.7 5% Potential demand considering 5% ethanol addition to the gasoline formula Total: 31.1 billion liters Only in the US, a 5.7% addition of ethanol the gasoline would translate into a consumption of 30 billion liters of ethanol per year. Souce: EIA/DOE; Comissão Européia; FO Licht; Copersucar

16 Ethanol Logistics System in Brazil Large scale marine terminals improve efficiency Large storage capacity necessary to regulate supply Pipelines reduce transport costs; improve energy efficiency Ethanol collection, storage and distribution centers are spread out through producing and consuming regions Primary Base Secondary Base Collection Centers Inland Navigation Railways Road Multi product pipelines

17 US Ethanol producers are concentrated in upper mid-west with little or no integration with oil facilities ETHANOL HIDRATED DISTRIBUTION AVOID REGIONALIZATION While most oil and product pipelines run from the south to northeast, north or southwest; Shipment in the Pacific will have a comparative advantage in supplying California.

18 Diferenças de produtividade na cana de açúcar Availability of lands, water and low labor cost also benefit production in Central and South America. Latin America has the largest potential arable land per capita and only uses 13,9% of it. Sugar-Cane Productivity Yeld per Hectar Potential Arable Land (1.000 ha per capita) % of Potential Arable Land actually in use 72,41 67,77 69,34 71, ,2 61,4 55,6 1,7 48, Kg/Ha 0,6 13,9 0,2 Asia USA Central America South America Brazil Asia and Pacific Europe North America Latin America Asia and Pacific Europe North America Latin America World Average Source: FAO

19 Diferenças de produtividade na cana de açúcar 33% of the world s internal renewable water resources are concentrated in Central and Latin America; Annual water use by sector Internal renewable water resources (m³ per capita 1997) Brazil Latin America and Caribbean % 19% 9% % 61% 73% World % % % 0 World Latin America and Caribbean Brazil Agriculture Domestic Industrial Source: FAO

20 Increasing Efficiency in Raw Material Use Raw Material Wheat Corn Sugar Beet Sugar Cane (under Brazilian Production Condictions) Energy output / energy input Tomorrow Potential ethanol production would grow by more than 100% based on Lignocelluloses Biomass technology 1 metric ton of sugar cane Molasses yields only 85 l of ethanol, But Cane bagasse yields 185 L of ethanol Base calculation 20

21 Principal Conclusions, Hurdles and Challenges Latin America is in a privileged position as regards oil reserves, and energy independence; Prospects for the use of natural gas are encouraging and should contribute to increase availability of liquid fossil fuel exports but integration and financial issues are a main concern; Land, water and human resource availability and bio-diversity put Central and South America and Caribbean in a privileged position to use and supply OECD countries with renewable fuels, further liberating liquid fossil fuels for export. 21

22 Principal Conclusions, Hurdles and Challenges But the main hurdles and challenges are: Successful Doha Round Negotiations are essential to permit greater trade of agricultural commodities and increase agricultural productivity considering comparative advantages; Technological breakthroughs in enzyme technology for the use of Lignocelluloses biomass; Further progress in regional integration. 22

23 Main Obstacles to Greater Integration Oil sector has different impact on each economy that affects fiscal, balance of trade, and pricing policies; Different social and economic realities and historical origins; Changing legal environments; Financing for infrastructure; Lack of strategic coordination; Need for institutional reforms; Need to coordinate different energy models: competitive markets and public services; Localized supply disruptions. 23

24 New Frontiers for Ethanol Development Ethanol can be used in place of gasoline, as a substitute for additives (lead, MTBE), particularly important in Central America, or for export; CAFTA-DR countries may export to the USA up to 7% of US consumption without countervailing duties (54 cents per gallon); Export by the Pacific Coast to California avoids problem with US logistics. New Initiatives IDB will offer a different set of services, such as financing, to exporting countries like Costa Rica and El Salvador; Costa Rica adopts pilot program for using up to 10% ethanol in gasoline; El Salvador has plans to regulate ethanol content in domestic gasoline; Honduras announces that it can be self-sufficient in ethanol; Venezuela uses ethanol as a substitute for lead.

25 Organization of American States José Sergio Gabrielli de Azevedo CEO and President June, 2007 Clean Energy: Meeting the Energy Challenges of the 21st Century