FT Sustainable Agriculture Summit Spotlight on Brazil SUGARCANE ETHANOL: PRODUCING SUSTAINABLE FOOD AND FUEL Marcos Sawaya Jank President and CEO Brazilian Sugarcane Industry Association (UNICA) London, March 29, 2012
Overview of the Brazilian Sugarcane Industry: Key numbers, achievements and perspectives Imagine a future with Sugarcane... By sugarcane.org 2
KEY NUMBERS - BRAZILIAN SUGARCANE SECTOR Number of mills: 430 Sugarcane growers: 70,000 Direct employment: 1.2 million Sector annual revenue: US$ 48 billion Foreign revenue (Exports): US$ 15 billion % Energy Matrix: 18% - 2 nd source (behind oil) and 1 st source of renewable energy 1 st SUGAR PRODUCER IN THE WORLD 25% of world production 50% of world exports 2 nd ETHANOL PRODUCER IN THE WORLD 20% of world production 20% of world exports Source: LMC, F.O.Licht s, Secex, UNICA e Rais.
KEY NUMBERS - BRAZILIAN SUGARCANE SECTOR Flex Fuel Vehicles: 50% of the light vehicle fleet and almost 90% of new car sales in 2011. Over 90 models of FFVs are offered by 12 automakers. Sugarcane bioelectricity represents 2% of the Brazilian electricity matrix. Estimates indicate it can represent 18% by 2020. Complementarities: cane harvest occurs during the dry season, when hydroelectric reservoirs are low and marginal sources of electricity are needed.
21 st Century: Beginning of a New Era We are here 100 90 80 70 60 Biomass (firewood) % Hydro Nuclear Natural Gas Modern Biomass Solar 50 40 Oil 30 20 10 0 Coal Other 1850 1900 1950 2000 2050 2100 Sources: Nakícenovic, Grübler and MacDonald, 1998 Main challenges: - Diversify energy sources - Produce more using less natural resources - Reduce CO2 emissions
SUGARCANE ETHANOL ENVIRONMENTAL PERFORMANCE Advantages of sugarcane ethanol Source Cana-deaçúcar Milho (EUA) Trigo (UE) Beterraba (UE) Country Brazil USA EU EU Energy balance (units of renewable energy per unit of fossil fuel input) 9.3 1.4 2.0 2.0 Productivity (liters/hectare) 7,000 3,800 2,500 5,500 GHG reduction (from US and EU legislations) 61%-91% 0%-38% 16%-69% 52% *Note: reduction of avoided emissions with ethanol as a gasoline substitute and calculated according to life-cycle analysis. Source: World Watch Institute (2006) and Macedo et al. (2008) energy balance. Productivity: IEA International Energy Agency (2005), MTEC, EU Commission, EPA and UNICA. GEE: IEA International Energy Agency (2004) and Macedo, I. de C. et al. (2004 and 2008). Elaboration: UNICA
SUGARCANE PRODUCTS: STEP BY STEP Current technology Sugar Drop-in fuels (diesel, jet fuel, gasoline) Technology under development Cane juice (Sucrose) 3 generation Detergents & solvents Cane stalks Ethanol Cosmetics Sugarcane Bagasse (Cellulose) Lubricants Biopolymers (bioplastics, isoprene, etc) Straw (Tops and Leaves) (Cellulose) Bioelectricity Flavors and Fragrances Food
Brazilian Sugarcane Industry: Producing sustainable food and fuel 8
Million Ha* LAND USE IN BRAZIL Total Area Protected Area Arable Land Others 851 496 330 26 100% 58% 39% 3% Other Arable Land Others 111 Pastures 34% 159 48% Crop Land 60 18% Sugarcane 9.5 2.9% Sugarcane FOR ETHANOL 4.6 1.4% Ethanol Productivity 16.000 12.000 8.000 4.000 * Area refers to 2010 civil year Sources: ICONE, ESALQ and IBGE. Elaboration: Cosan and UNICA. 0 70 s Today Future
AGRICULTURE IN BRAZIL: HARVESTED AREA, YIELDS AND PRODUCTION FROM 1996-2011 12% Area Production 10% 10,23% Annual (%) Change 8% 6% 4% 2% 0% -2% 7,51% 5,78% 5,96% 4,33% 4,54% 3,89% 2,39% 0,56% -0,07% Cotton Soy Corn Sugarcane Pastures Sources: Conab, IBGE, UNICA, MAPA, UFMG, INPE, Bigma Consultoria and ICONE. Elaboration: UNICA.
INCREASE IN AGRICULTURAL PRODUCTIVITY 1960-2005 (%) 2 2,0 1,8 1,5 1,5 1,5 1,3 1,2 1,2 1,1 1 1,0 0,9 0,9 0,8 0,8 0,8 0,7 0,5 0 Sources: FGV, cited in Ernst & Young, 2009 (Brasil sustentável: perspectivas do Brasil na Agroindústria). Elaboration: ICONE.
SUGARCANE AGROECOLOGICAL ZONING IN BRAZIL 1. Excludes sugarcane production in the most sensitive biomes, e.g. Amazonia and Pantanal. 2. Excludes the clearing of any type of native vegetation for sugarcane expansion, e.g. Cerrados, Campos. 3. Authorized areas for sugarcane expansion: 64.7 m hectares, or 7.5% of the Brazilian territory. Currently 1% of the area is used for sugarcane.
SUGARCANE AREA AND ANNUAL DEFORESTATION RATE IN THE LEGAL AMAZON Th housands km 2 /year 40 35 30 25 20 15 10 5 Empirical data shows no correlation between ethanol expansion and deforestation. 10 9 8 7 6 5 4 3 2 1 Cane are ea (Million hectares) 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Amazon: deforestation rate Sugarcane Area Sources: INPE (deforestation rates) and IBGE (sugarcane area). Prepared by UNICA.
WORLD SUGARCANE MAP Ethanol production in 100 countries would also enhance energy security by reducing world reliance on only 20 oil producing countries. Source: British Sugar
OPPORTUNITY FOR DEVELOPING COUNTRIES 1. No competition between biofuels and food production: 50% of gasoline consumption was replaced by ethanol produced on 1.4% of the Brazilian arable land, while food production has doubled in the last decade 2. According to the FAO, only 10% of the world's land that is available and suitable for cane production is actually used for sugarcane cultivation. 3. More than 100 tropical countries could produce sugarcane ethanol. If all of them achieve the Brazilian yields, an extra 20 billion liters of ethanol could be produced (2% of world gasoline needs). 4. This industry would create rural jobs, increase access to electricity, and reduce dependency on oil imports in the world s poorest countries. 5. Elimination of trade barriers from developed countries would allow real opportunities for developing countries to produce 5 Fs - Food, Feed, Fibers, Forests and Fuel.
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