The interaction between the sugar & biofuel industry

Transcription

1 The interaction between the sugar & biofuel industry Plinio Nastari President, DATAGRO Civil Society Representative at Brazil s National Council on Energy Policy (CNPE) 2017 EU Agricultural Outlook Conference Food & Farming Brussels, December 18-19, 2017 Room De Gasperi, Charlemagne Building

2 Relevance of Biofuels in World Energy Consumption Source: REN21, 2017.

3 Trends in World Ethanol & Biodiesel Production Source: REN21, 2017.

4 World Ethanol Production, 2016 Billion liters (fuel + non-fuel) 70,0 60,0 50,0 40,0 58,2 World: billion liters 30,0 27,3 20,0 10,0-8,9 5,2 1,7 1,2 1,0 0,9 1,9 Source: Various compiled by DATAGRO

5 % of Ethanol in Otto cycle Fuel Consumption, ,0% 40,0% 39,4% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 9,9% 9,5% 12,4% 12,0% 8,0% 5,0% 0,0% 3,5% 1,5% 3,2% Source: DATAGRO

6 World Biodiesel Production, 2016 Billion liters 14,0 12,0 10,0 13,2 World: 32.0 billion liters 8,0 6,0 5,9 4,0 3,8 2,7 2,5 3,1 2,0 0,8 - Source: Various compiled by DATAGRO

7 Sugar & Biofuel Feedstocks Corn Sugar cane Biofuels Oilseeds + Palm + Tallow Beets Cellulosic Materials

8 World Corn Production, 2016 Million tonnes 400,0 370,3 350,0 300,0 250,0 200,0 215,0 170,8 150,0 100,0 50,0 97,4 59,6 42,0 26,2 25,0 25,0 15,0 - Source: Various compiled by DATAGRO

9 Million tonnes % of US Corn converted to Ethanol 400 Production For ethanol What would happen to grain markets if ethanol was not absorbing all this corn? 70% % % % % % 40.0% 43.1% 38.4% 37.9% 45% 40% % 36.8% 36.6% 36.0% 35% % 30% % 25% /08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 20% Source: USDA, RFA.

10 World Soy Production, 2016 Million tonnes 140,0 120,4 120,0 108,0 100,0 80,0 60,0 57,0 40,0 20,0 14,2 10,0 9,4 4,0 3,7 3,4 18,8 - Source: Various compiled by DATAGRO

11 World Beet Production, Million metric tonnes European Union Russia USA Turkey Ukraine Egypt China Iran Belarus ROW Source: Various compiled by DATAGRO

12 World Cane Production, Million metric tonnes Brazil India China Thailand Pakistan Mexico Colombia Australia Guatemala ROW Source: Various compiled by DATAGRO

13 Million tonnes of Total Reducing Sugars % of Brazil s Cane converted to Ethanol 90,0 17/18e 75,0 60,0 Sugar Anhydrous Hydrous 29.9% 45,0 23.4% 30,0 15,0 46.7% - Source: DATAGRO

14 Brazil s sugar cane production mix 65% 60% Sugar Anhydrous+Hydrous 59,2% 59,1% 55% 50% 45% 53,30% 46,70% 40% 40,8% 40,9% 35% Source: DATAGRO

15 1st H Apr 2nd H Apr 1st H May 2nd H May 1st H Jun 2nd H Jun 1st H Jul 2nd H Jul 1st H Aug 2nd H Aug 1st H Sep 2nd H Sep 1st H Oct 2nd H Oct 1st H Nov 2nd H Nov 1st H Dec 2nd H Dec 1st H Jan 2nd H Jan 1st H Feb 2nd H Feb 1st H Mar 2nd H Mar Centre-South Brazil sugarcane mix for sugar (biweekly series) 55% 50% Adaptability through diversification: relevant mix flexibility over the years, and within a single year, reveals ability to react to relative prices 45% 40% 35% 30% 25% 2012/ / /15 20% 15% 2015/ / /18 10% 5% Source: DATAGRO

16 China sets 2020 target for nationwide 10% ethanol blend China s Ethanol Production China s Gasoline Consumption Billion liters Billion liters Industrial Fuel Source: DATAGRO China's ethanol production will rise 8.7% to 8.91 billion liters in 2017, of which 3.55 bi liters for fuel purpose (+12.5%, as the country implements measures to boost ethanol output, in a drive to encourage consumption of its huge corn stocks. Chinese gasoline consumption is projected to increase by around 5.1% CAGR until 2024 to 200 bi liters. It could mean building as many as 35 new plants each with 500,000 cbm per year of capacity to meet the demand.

17 India new ethanol policy Fuel Ethanol Demand and Supply - India 1.6 Billion liters Supply 0.98 Required volume to meet 5% blend Source: DATAGRO India has set a target to blend 10% ethanol in all gasoline sold in the country. To encourage 2G ethanol, India plans to increase the blend mandate from 10% to 22.5%. While India does not allow ethanol imports for fuel proposes, imports are projected to increase in order to meet industrial demand.

18 Russia aims 10% ethanol blend in 2020 To help its ethanol industry achieve 10% blend by 2020, Russia is prepared 56 Billion liters Russia s Gasoline Demand to lift a heavy $1.62 per liter excise tax 54 currently levied upon domestic fuel 52 ethanol by year s end. 50 Such a move will stimulate production as the tax represents 90% of 48 production price, and aims to bring investors to the table to help ramp up 46 production. 44 The excise tax was used as means to avoid vodka being produced under the disguise of fuel ethanol. Russia consumes almost 53 billion liters of gasoline annually Source: EIA.

19 COP23-Fiji in Bonn Declaration of Vision, by 19 Nations representing over 50% of world population, 37% of world GDP + IEA + IRENA Bonn, November 16, 2017 Target for 2030 (2DS) % of Bioenergy in world energy demand must double. % of sustainable low carbon Biofuels in transport fuels, including sea and air transport, must triple. Scaling up the bioeconomy is possible, given smart agricultural practices, better use of rural and urban waste, and proper policies.

20 Innovation and efficiency in biofuel production and use have been at center of Brazil s strategy for the use of low carbon sources of energy. RenovaBio is not subsidy, nor carbon tax. Applies to all biofuels: ethanol, biodiesel, biogas / biomethane, bio-kerosene.

21 RenovaBio is a regulation based on 2 pilars: Induction of energy efficiency in production and use of biofuels; Recognition of the capacity of each biofuel to promote carbon reduction.

22 Target Market-driven carbon pricing mechanism (endogenous, not exogenous determination), rewarding achievement of individual efficiency, not a common or equal coverage. Unleash market forces to implement and drive innovation for increased competitiveness in biofuel/bioenergy production. Stimulate continued demand growth, independent of government mandate. RenovaBio does not elect/predefine champions expansion of bioenergy will be driven by energy-environmental efficiency and sustainable production.

23 Mechanism Voluntary certification of biofuel producers for their energyenvironmental efficiency, based on life-cycle assessment (LCA), which will determine ability to request issuance of Decarbonization Credits (CBios); Financial institutions will issue Decarbonization Credits (CBios) to be freely negotiated at public exchange; Definition of long term country carbon reduction target for the fuel sector will lead to individual fuel distributor carbon reduction targets, to be met with acquisition of CBios.

24 Producer Voluntary Certification to receive a Energy-Environmental Efficiency Grade Energy Efficiency: MJ/cbm or tonne; Environmental impact: g CO 2 e / cbm or tonne; g CO 2 eq/cbm = g CO 2 e / MJ MJ/cbm g CO 2 e / MJ differential between fossil & biofuel will define Grade for each biofuel producer.

25 Relevance of the distribution system Brazil can take advantage of its fuel distribution system for: Hydrous Ethanol used as sole fuel, in fleet which is already 65% flex and growing, Anhydrous Ethanol blended at 27% v/v in all gasoline nationwide (E27) Brazil has been using mid-level blends for a long time, Biodiesel blended in all fossil-based diesel nationwide (B8), going to B10 in March/18. Biofuel is SOLAR ENERGY captured, stored and distributed in an efficient, economical & safe manner.

26 Relevance of the distribution system Brazil can take advantage of its fuel distribution system for: Hydrous Ethanol used as sole fuel, in fleet which is already 65% flex and growing, Anhydrous Ethanol blended at 27% v/v in all gasoline nationwide (E27) Brazil has been using mid-level blends for a long time, Biodiesel blended in all fossil-based diesel Nationwide (B8), going to B10 in March/18. Biofuel is HYDROGEN captured, stored and distributed in an efficient, economical & safe manner.

27 Objective Stimulate & reward investments in efficiency / competitiveness, leading to lower costs & lower prices to consumers, and sustainable bioenergy expansion.

28 A reward for those who do right, not punishment for doing wrong (use of fossil energy). Market-driven mechanism for carbon pricing. Stimulate private investment for expansion of energy-environmental efficient biofuel/bioenergy production. Legislation approved 24 days after introduction in both Houses of Congress (PLC 160/2017), on December 12, 2017.

29 Simultaneously addresses Public Policy objectives in the areas of Energy Environment Agriculture Industry Social & Economic Development Economy reform

30 Relevant strategy for achievement of Brazil s commitments before the Paris Climate Agreement. Can be applied to other countries, as well.

31 Current World Energy Demand: 533 EJ Modern Bioenergy is projected to rise from 22 EJ 53 EJ 22 EJ Source (compiled from Table 2.1 and data on page 219 on IEA, World Energy Outlook

32 World Energy Demand, 2035: 720 EJ to 50 EJ in WEO New Policy Scenario 79 EJ 50 EJ Source (compiled from Table 2.1 and data on page 219 on IEA, World Energy Outlook

33 Area required in the world for bioenergy production is achievable with technology ready to implement

34 Recently, electric battery cars have captured a lot of attention worldwide

35 But it is the Conceptual Vision that will define the Technological Pathway adopted for Fuel & Auto Technology Well-to-Wheel (WtW) Life-Cycle Assessment or Tank-to-Wheel (TtW)

36 Energy Consumption Ce ( MJ/km) Ethanol is a modern & efficient option (WtW) Ce x E TGGE - Energy Consumption (MJ/km) x Total Emission of GHG (gco 2 e/km) 1, , ICE Fossil/MH ICE E100/MH 1,50 1,30 Hybrid Ethanol 1,10 0,90 0, /PH /PH Eth Fuel Cell /MH 2040/MH/2G /MH 2040/MH/2G /MH 2040/MH/2G 2040/PH /PH /MH /MH Hybrid Fossil ICE HOF/MH ICE Brazil E39-55 Hybrid Fossil EU Hybrid E100 Electric EU Electric Biomass Ethanol Fuel Cell ICE-Internal Combustion Engine MH - Mild (Leve) Hybrid PH - Hybrid Plug-in EU - Europe Green- renewable C/ RBio - w/ RenovaBio 0, Total Emission of GHG - E TGEE (gco 2 e/km) Source: AEA, Brazilian Association of Automotive Engineering

37 Ethanol is a modern & efficient option (WtW) 180 Total GHG Emission in gco2e/km 2017 & Source: AEA, Brazilian Association of Automotive Engineering

38 Energy Consumption Ce ( MJ/km) Ethanol is a modern & efficient option (WtW) Ce x E TGGE - Energy Consumption (MJ/km) x Total Emission of GHG (gco 2 e/km) 1, , ICE Fossil/MH ICE E100/MH 1,50 1,30 1, /MH 2040/MH/2G Hybrid Ethanol 2027/MH 2040/MH/2G /MH 2040/MH/2G /MH /MH Hybrid Fossil 2017 ICE HOF/MH ICE Brazil E39-55 Hybrid Fossil EU Hybrid E100 Electric EU Electric Biomass Ethanol Fuel Cell 0,90 0, /PH /PH Eth Fuel Cell /PH /PH ICE-Internal Combustion Engine MH - Mild (Leve) Hybrid PH - Hybrid Plug-in EU - Europe Green- renewable C/ RBio - w/ RenovaBio 0, Total Emission of GHG - E TGEE (gco 2 e/km) Source: AEA, Brazilian Association of Automotive Engineering

39 Energy Consumption Ce ( MJ/km) Ethanol is a modern & efficient option (WtW) Ce x E TGGE - Energy Consumption (MJ/km) x Total Emission of GHG (gco 2 e/km) 1, , ICE Fossil/MH ICE E100/MH 1,50 1,30 1, /MH 2040/MH/2G Hybrid Ethanol 2027/MH 2040/MH/2G /MH 2040/MH/2G /MH /MH Hybrid Fossil 2017 ICE HOF/MH ICE Brazil E39-55 Hybrid Fossil EU Hybrid E100 Electric EU Electric Biomass Ethanol Fuel Cell 0,90 0, /PH /PH Eth Fuel Cell /PH /PH ICE-Internal Combustion Engine MH - Mild (Leve) Hybrid PH - Hybrid Plug-in EU - Europe Green- renewable C/ RBio - w/ RenovaBio 0, Total Emission of GHG - E TGEE (gco 2 e/km) Source: AEA, Brazilian Association of Automotive Engineering

40 Electrification with Biofuels Eletrification with biofuels is environmentally clean & accessible. Electric battery car is clean only if source of energy is clean & it is also very expense, i.e. has low accessibility.

41 Electric Battery Cars are really clean?

42 KPMG Global Automotive Executive Survey 2017 Electric Battery Vehicles (EBVs) will fail due to infrastructure challenges, while Fuel Cell Vehicles (FCVs) represent the real advance in electrification in mobility 62% of executives agree totally or partially that EBVs will fail due to infrastructure challenges 78% of executives agree totally or partially that FCVs represent the real advance in electrification in mobility Concordam tofalmente 22% Concordam tofalmente 33% Concordam parcialmente 40% Concordam parcialmente 45% Neutro 20% Neutro 16% 12% Discordam parcialmente 5% Discordam parcialmente 6% Discordam totalmente 1% Discordam totalmente Source: 18th consecutive Global Automotive Executive Survey, Feb 2017

43 2-Degree Scenario: Transport Energy by Fuel Even with aggressive reductions in travel growth, shifts to mass transport modes, strong efficiency improvements, and deep market penetration by vehicles running on electricity and hydrogen, there remains a large demand for dense liquid fuels in 2050 (80% of transportation fuel) and even in 2075 (50%). Source: Fulton et al., Biofuels, Bioprod. Bioref. 9: (2015); doi: /bbb.

44 Biofuels & Sugar Energy Agriculture has proven to be a sustainable, viable and beneficial complement to Food Agriculture. Biofuels provide stability to sweeteners & grains markets, absorbing surpluses, reducing price volatility, and enabling production where it would otherwise not be feasible. Biofuels contribute to energy independence, cleaner environment, lower GHG emissions, lower health costs, decentralized economic development and can represent a superior alternative for eletrification in transport.

45 Plinio Nastari T F

46 PLANTING DATA HARVESTING SOLUTIONS Next events 9 May 2018 (New York Sugar Dinner) XII ISO DATAGRO New York Sugar & Ethanol Conference New York Midtown Hilton New York, NY July 2018 Global Agribusiness Forum 2018 Grand Hyatt Sao Paulo São Paulo, Brazil