The Fulbright Scholar Program at UNL: Bioenergy systems in Brazil: challenges and future perspectives. Prof. Weber A. Neves do Amaral, PhD ESALQ USP

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1 The Fulbright Scholar Program at UNL: Bioenergy systems in Brazil: challenges and future perspectives Prof. Weber A. Neves do Amaral, PhD ESALQ USP September 9,

2 Objetives of this short Fulbright Scholar Program Mid term: Understand the key drivers of agriculture innovation using a comparative approach USA and BR To what extend these innovations in the feedstock production and conversion technologies are towards or contribute to sustainability What constraints their adoption or deployment? Long term: 2 Contribute to a long term research agenda between these countries and organizations, addressing the findings and gaps of the mid term goals assessment

3 UNIVERSIDADE DE SÃO PAULO 7 Campi

4 UNIVERSIDADE DE SÃO PAULO 70k students and ca. 7,2k faculty 1 st place in Brazil 1 st place in Latin America 94 th place in the world* Armando Sales Oliveira Campus 19 schools 5 schools in metropolitan São Paulo

5 GLOBAL BIOENERGY Major international drivers are pushing for a very favorable global bioenergy markets. But some fundamental questions remain to be answered The total fuels market is very large and growing at 3-4% per year Biofuels are ca. 3.0% of total consumption of gasoline and diesel. Conservative projections estimate at least 5.0-7,0% by The profitability of ethanol is reinforced by increasing prices of fossil fuels; current oil reserves are reducing and new ones are being discovered at higher cost sites (e.g. deep waters, tar sands, etc) Environmental concerns are also pushing demand for biofuels (e.g.: GHG) US is producing ethanol from corn, while ethanol from sugar cane is made in BR. Biodiesel economic feasibility yet to be proven at current stage of development without tax incentives and considering projected oil prices. But there are new developments towards value added bioproducts, using the biorefineries as a business framework Increase demand for food, fuel, feed will demand more from less and more efficient and sustainable production systems 5 August 17, 2011 the US-Brazil Strategic Energy Dialogue was launched

6 Oil dependent economies and global economy recover Yesterday President Obama said that building the the next generation of manufacturing, including advanced biofuels, is how America can be number one again. How? Which feedstock? Where? How much? Which winning technologies?

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10 INTRODUCTION Biofuels: beyond agriculture production a system dynamics complex of multiple interactions Global awareness + Climate change + GHGs + - Gasoline/Dies el Querosene - Oil reserves + Hydro Environment al taxes & policies Trends in consumption Economic growth Energy demand + Roles and functions of government, private sector and NGOs + - Quality of life and livelihood s Energy supply Nuclea r Wind Hydrogen Ethanol & biodiesel Jobs Quality of jobs Diversification - - Land use patterns Food + + Food safety + Native vegetation and forests + Biodiversity

11 M Sustainability: countries without clear targets - GHG Market: higher growth rate with strong pressure on the resources Higher oil prices Sustainability: Economic, energy and climatic policies integrated Market: higher growth rates Diversification of the energy matrix Business as usual scenario Sustainability: A fragmented agenda; Green investments not viable Market: same growth rate:, market regulations driven by government Failure of a common international agenda: Sustainability: social awareness and targets Market: effective policies, but not sufficient Fiscal policies still not business friendly S

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17 Future challenges Land use and availability Environmental framewokrs and biodiversity conservation IP rights

18 Land availability: A) Land use changes Region dependent Stringency of environmental frameworks and levels of compliance B) Optimization of current land use

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20 Yield and productivity potential - challenges Market size Levels of investment in applied research Crop dependent learning curve and new agricultural frontiers Level of genetic improvement and the role of biotechnology Ex: application of synthetic biology for novel crops and traits ca. 10 years for full deployment An issue of concern: How to leverage existing crop productivity? Sugar cane 88 ton/ha ( ton/ha) Eucalyptus 44 m3/ha/year ( m3/ha/year) How? Precision farming and logistics New tools for monitoring productivity: nutrient efficiency and water

21 How to reconcile feedstock production and conservation strategies? Environmemtal framework and the Brazilian Forest Code Several certification schemes being discussed for bioenergy VERACEL Cia Atlantic forest Eucalyptus plantation

22 Environmentally friendly protocol of the sugarcane industry : the Green Protocol of the Secretary of Environment São Paulo State - 1/2 One of the main targets of this protocol is related with the anticipation of sugar cane burning regime from 2017 to 2014 in flat areas, and from 2031 to 2017 in slope areas* Mecanized areas Non-mecanized areas % of harvested sugarcane without burn * Are considered sloping areas, when the inclinaiton is more than 12% Source: Única

23 Sugarcane zoning and revision of the Forestry Code (1965) The main resolutions and suitable areas for planting sugarcane are shown below: Protect the areas with original native vegetation and the prohibition of the planting in the Amazonia, Pantanal e Bacia do Alto Paraguai biomes; Sugarcane planting in areas where the use of water is minimum as possible (rain feed primarily); A draft law project to recommend the growth of the planting based in the food safety without harming food production; Look for new places to produce sugarcane, using pasture areas or those occupied by cattle raising. Subtitles: -Suitable areas - Amazonia, Pantanal and Bacia do Alto Paraguai biomas Source: EMBRAPA

24 Environmental services Ecological tax (ICMS ecologico and Pro-ambiente) REDD and market instruments Alianca Brasileira para Mudancas Climaticas several stakeholders Pasture Degraded Area of Permanent Preservation (APP) Eucalypt Restored APP

25 25 IP rights another issue of concern... Evolution of productivity of Brazilian ethanol: Continuous investment in R&D mainly in the public domain x situation of IP rights to secure long term investments in BR For business the levels of protection are low

26 Examples from Brazil Sugar cane ethanol Biodiesel Innovation

27 Location of mills and sugarcane production Equator Capricornia Nr mills M ton New frontier Frontier Traditional MT MS PA PR RS 2-1 TO 1-0,2 GO SP MA 3-2 BA 5-6 MG ES 6-4 RJ 11-7 NE Source: AGRIANUAL / IDEA 27

28 Sugar cane value chain: where are the opportunities for bio-products? 7 M ha 72 thousand growers Harvest 400 M tons 400 mills & distilleries (Operation & projects) ETHANOL 22 billion liters SUGAR 30 million tons BAGASSE Bioplastic Ethanol Food Pharmacy Derived Lysine Carbon credits 28

29 BRAZIL BIOFUELS Total production of sugar cane increased significantly with the deployment of the ethanol vehicles The evolution of the Brazilian ethanol industry M tons of processed sugar cane Flex fuel car sector boom Last Strategical plan to the sector: Próalcool Ethanol car increase of demand Stagnation of the sector Change the mix of production from ethanol to sugar Release the prices of ethanol 29 Source: Datagro

30 BRAZIL BIOFUELS Flex fuel cars account for more than 80% of total cars produced in Brazil Evolution of light vehicles production and Total Brazilian Fleet 000 vehicles Brazilian Fleet (2007) 21, % Gasoline 14,797 FFV 2, Ethanol 1,446 CNG 1,385 Diesel 1,045 Source: ANFAVEA; VPB estimates

31 GLOBAL BIOFUELS Sugar cane is an important feedstock to produce ethanol first and advanced generations Energy balance of ethanol production from different feed stocks 12 Energy out put input ratio Sugarcane Subar beet Wheat straw Corn Wood Raw material Production /ha (kg) Quantity of Ethanol /ha Energy Output/ Energy Input Sugar Cane liter Corn liter Source: Petrobrás, Coehlo/Cenbio

32 Challenges Today, only 1/3 of the energy content of the sugarcane plant is used to produce ethanol. 2 nd generation biofuels (hydrolysis and fermentation) might cover this gap, but with what costs? Energy cane 1 ton of sugar cane stem Energy (MJ) kg of sugar 2500 Technology l/tc l/ha l/tc l/ha l/tc l/ha 135 kg stem fibers (bs) 2400 Conventional kg leaves fibers (bs) 2500 Hydrolysis Total 7400 (1.25 boe) Total Note: 2 nd generation is equivalent to cellulosic Source:Unicamp, Canavialis

33 Distribution of bioenergy projects in Brazil for electricity generation 33 Fonte: ANEEL

34 Sugarcane bagasse complements the hydro-electricity generation in the winter Sugarcane and its contribution to the energy matrix/month Jan Fev Mar Abr Mai Jun Jul Ago Set Out Nov Dez Energia Natural Novas Hidrelétricas Biomassa 34 Fonte: UNICA Etanol e bioeletricidade

35 ITAIPU = Sugarcane bagasse in 2015/ : 94,5 TW/H/YEAR

36 Feedstock diversity

37 Is biodiesel a social or an energy program? 80% soybean dependent Over the targets 4% The role of Petrobras Brazil Oil Company

38 38 Assessment of new feedstocks and technologies critical issues associated with the economics...

39 Biofuels initiatives in Brazil cover many 1 st and 2 nd Gen pathways for gasoline substitutes... The Amyris case and Braskem investments Raw Material Sugar crops, e.g. - beet - cane Grain crops,e.g. - wheat - corn Energy Crops Agricultural Waste Forest Residues Municipal Waste (MSW) Preparation Process Sugar extraction Harvesting starch, separating, cleaning, milling Separation into cellulose, hemicelullose and lignin components Gasification of raw material through heat Separation into cellulose, hemicelullose and lignin components Feedstock 6-carbon sugar Starchy crop parts (kernels) Cellulosic and hemicellulosic material (crops, waste) Syngas (e.g., CH4, CO, CO2, N, H) Cellulosic and hemicellulosic material (crops, waste) Conversion Process I Fermentation to ethanol, using yeast & other microbes Conversion to 6-C-sugar (hightemperat. enzyme) Cellulose conversion to sugar via saccharfication (hydrolysis); thermal, chemical and biological processes applied Fisher-Tropsch Process Genetically engineered microbes produce fuel product via metabolic pathways Conversion Process II Distillation and evtl. removal of water Fermentation using A.B.E Process Special fermentation for 5-6 carbon sugars produced by saccharification Water Gas Shift & Separation Catalysed Synthesis N/A Biofuel Product Ethanol BioButanol Cellulosic Ethanol Hydrogen Syngasoline Methanol Synthetic Biology Fuel Substitutes 39 Key: 1st Generation 2nd Generation

40 Potential feedstocks for biorefineries Other feedstocks for advances biofuels Source of feedstock Area [000 ha] Production [000 t/year] Produtivity [t/ha.year] Proprieties (%) lignin celullose hemicelullose Potential Cane Straw 6,600 72,600 9 a High Bagasse 6,600 72,600 9 a High Corn stover Soybean stover 11,549 22,933 64,029 80,747 5 a 8 3 a a a a a a 35 Medium Medium Rice stover 3,919 2,937 4 a 6 23 a a 40 - Medium Eucalyptus residues 4,000 94, a High Pine residues 2,000 38, a Medium Pastures 115, ,000 3 a 5 10 a a a 50 Low Fonte: McMillan, 1994; Wood for Alcohol Fuels, 2002; Saad, 2005; IBGE; CONAB; SBS 40

41 Brazil is establishing a Cellulosic Ethanol cluster with a significant number of players... NON-EXHAUSTIVE Suppliers 2 nd Generation Biofuels Feedstock/ Conversion Fund suppliers Research Institutes Universities UFPE 41

42 4. PROJETO URBANÍSTICO 42

43 4. PROJETO URBANÍSTICO 43

44 4. PROJETO URBANÍSTICO 44

45 An example of future approach for research The Biorefinary Business Models (BBM) can be assessed based on their long term value creation potential NPV [$ MM] High Low Portfolio review of existing platforms... Integrated business model Operational efficiency Deployment phase Low High Implementation complexity Proposal Market Entry Almirall

46 Biorefinaries, attraction of capital for innovation and densifying knowledge frameworks Academia Private Government Universities Innovation centers Agencies Foundations R&D Incubators Innovation agencies Advisors Partners networks Media Business partners Seminars Tech parks Brazil Business pipeline 46 International exchange International partners

47 Remaining challenges and discussions Food systems How to integrate these systems at landscape level? Energy systems Food Production Systems Bioenergy Production Systems Environmental services Managing landscapes sustainably Multiple products with value added and environmental services Increase farmer s income Improve GHGs balances of current ethanol s benchmark Reduce the dependence on fossil fuels while contributing to the production of other goods and services 47

48 Sustainable production of any feedstock (or biomass) is vital for the viability of the bioenergy/bioeconomy based products and services How? Where? With whom? When?

49 49 Information assessment & market signals

50 Bioenergy and biofuels are not the panacea to solve all energy problems, but can effectively contribute towards a low carbon economy scenario in the present and in the near future.

51 Thanks Contact info Weber Antonio Neves do Amaral Cel phone: