BIOEN Workshop on the Impact of Land Use Change and Biofuel Crops on Soils and the Environment PROSPECTS FOR THE SUGARCANE BIOENERGY SECTOR Marcos S. Jank President, Brazilian Sugarcane Industry Association São Paulo June 16, 2009
ABOUT UNICA UNICA is the leading sugarcane industry association, representing 127 mills in Brazil Responsible for 60% of all ethanol and sugar production in Brazil Emerging as a leader in the generation of bioelectricity already meeting 3% of Brazil s electricity demand International presence, now in Washington & Brussels, to engage in constructive dialogue
OUTLINE I. Brazilian sugarcane sector: an overview The Brazilian ethanol evolution: building blocks of energy security. The increasing FFV fleet. II. Sugarcane s next frontiers Bioelectricity. Other uses for ethanol. III. Current issues regarding the sustainability of the sugarcane sector. IV. Proposed research agenda.
KEY NUMBERS OF BRAZILIAN SUGARCANE SECTOR Annual gross earnings US$ 23 billion Foreign revenue US$ 7.9 billion (2008) Direct investments more than US$ 20 bln (2006-2009) Composition 380 plants nationwide Sugarcane growers 70,000 People directly employed 845,000 Participation in Brazilian energy matrix Sugarcane production Sugar production 16.4%, ahead of hydroelectricity 562 mln ton 31.2 mln ton Ethanol production 27 bln liters Avoided CO 2 emissions 45 mln tons since 2003 Elaboration: UNICA. Note: data refers to the 2008/09 crop year
BRAZILIAN ENERGY MATRIX INPUT RENEWABLE Other renewable sources Wood and other biomass 41% 45% Hydroelectricity Sugarcane Uranium Coal Natural gas Petroleum and derivatives es Renewable energy supply structure World (2006): 12,9% OECD (2006): 6,7% Source: BEN (2009). Elaboration: UNICA
PROJECTIONS FOR THE BRAZILIAN SUGARCANE INDUSTRY 2008/09* 2015/16 2020/21 Sugarcane production (million t) 562 829 1,038 Sugar (million t) 31.2 41.3 45.0 Internal market and stocks 10.2 11.4 12.1 Surplus Export 21.0 29.9 32.9 Ethanol (billion l) 27.0 46.9 65.3 Internal market and stocks 22.2 34.6 49.6 Surplus Export 4.8 12.3 15.7 Bioelectricity (MW average) 1,800 8,158 13,158 Bioelectricity in Brazilian energy matrix (%) 3% 11% 14% Note: * - preliminary. Sources UNICA, Copersucar and Cogen.
BRAZILIAN LIGHT VEHICLES SALES (OTTO-CYCLE) 90% of new cars sold are Flex Fuel, representing over 25% of the Brazilian fleet Source: ANFAVEA. Elaboration: UNICA
GASOLINE AND ETHANOL CONSUMPTION IN BRAZIL Gasoline Ethanol Source: ANP and UNICA.
BRAZILIAN ETHANOL EXPORTS BY DESTINATIONS 3,4 bi liters US$ 1,6 bi 3,5 bi liters US$ 1,5 bi 5,1 bi liters US$ 2,4 bi Total exports Source: SECEX. Elaboration: UNICA
OUTLINE I. Brazilian sugarcane sector: an overview The Brazilian ethanol evolution: building blocks of energy security. The increasing FFV fleet. II. Sugarcane s next frontiers Bioelectricity. Other uses for ethanol. III. Current issues regarding the sustainability of the sugarcane sector. IV. Proposed research agenda.
BREAKDOWN OF SUGARCANE S ENERGY Energy equivalent of 1 ton of sugarcane = 1.2 oil barrel Alcochemical Bio-plastic Source: UNICA
SUGARCANE PRODUCTS
ETHANOL USE: NOT LIMITED TO PASSENGER CARS Ethanol-powered buses (E95) - still a pilot project in Brazil Biobutanol Bio-plastics (PHB, polyethylene, PVC) Brazilian-made crop dusting planes running on ethanol Flex-fuel el Production of diesel from motorcycles sugarcane at commercial Honda 150 cc Flex scale after 2010 in the market
NEW PLAYERS IN THE BRAZILIAN SUGARCANE SECTOR Automobile sector Toyota Mitsubishi Corporation Energy sector Rede Group Companhia de Energia Renovável Other sectors Bioplastic company TGM Turbinas Construcap Dow Chemical Encalso Pactual Bank Braskem/ ETH Bioenergiai Solvay Grandene Concessionárias Rodovias SP Agro-food industry and trading companies Bertin Bunge Cargill ADM Adecoagro Louis Dreyfus Commodities Noble Group Tereos BP Petrobrás Oil company
BIOELECTRICITY: POTENTIAL IN BRAZIL 2It Itaipus Notes: 1 ton of sugarcane produces 250 kg of bagasse and 204 kg of straw, 1 ton of sugarcane (bagasse + straw) generates 199,9 KWh for exporting; the straw inferior calorific value = 1,7 bagasse inferior calorific value; capacity factor = 0,5 (Koblitz). It is assumed that 75% of the bagasse is used for cogeneration. The percentage of straw use starts at 5% (2008) going up to 70% (2015). Until 2010 the potential market prediction consider the regulated energy auctioning; for 2011 an increase of 1600 MW is assumed, for subsequent years a 2000 MW increase per year is assumed. Source: Cogen, UNICA.
BENEFITS OF BIOELECTRICITY Experience and know how Units are self-sufficient in energy Reduced construction period Construction in 24-30 months Renewable and clean energy Low environmental impact Provide carbon credits Synergy with hydro production pattern Bioelectricity is produced during the dry season í Smaller projects and broader range of investors Eliminate risks of delay and construction problems Strengthen the national equipment industry and create jobs Location close to main load centers Source: PSR, Cogen, UNICA, Elaboration: UNICA,
OUTLINE I. Brazilian sugarcane sector: an overview The Brazilian ethanol evolution: building blocks of energy security. The increasing FFV fleet. II. Sugarcane s next frontiers Bioelectricity. Other uses for ethanol. III. Current issues regarding the sustainability of the sugarcane sector. IV. Proposed research agenda.
MECHANIZED HARVEST IN THE STATE OF SÃO PAULO Source: INPE, UNICA and SMA.
MITIGATING GLOBAL WARMING Energy balance: 9.3 Productivity: 7,000 liters/ha
A CARBON ABSORBING MACHINE? 3 METERS 2 METERS 1 METER 22-36 tons C/ha 5-7 years 1 METER 3-5 tons C/ha 2 METERS 3 METERS 4 METERS Source: Polo de Biocombustivel (Weber Amaral) from various sources.
U.S. RENEWABLE FUELS STANDARD (RFS) Sugarcane ethanol with +50% GHG reduction L O G W H E G R Sources: EISA of 2008, Dept of Energy, ITC; E-10 Blend Wall Limit based on EIA s projections of gasoline consumption and do not include bottleneck and other infrastructure concerns.
CALIFORNIA S LOW CARBON FUELS STANDARD (LCFS) Grams of e f CO 2 per megajoule ILUC using GTA AP Source: California Air Resources Board s Low Carbon Fuel Standard, March 2009.
1% OF ARABLE LAND DISPLACES 50% GASOLINE Millions of Hectares (2007) BRAZIL 851 % total TOTAL ARABLE LAND 354.8 land % arable land 1. Total Crop Land 76.77 90% 9.0% 21.6% Soybean 20.6 2.4% 5.8% Corn 14.0 16% 1.6% 39% 3.9% Sugarcane 7.8 0.9% 2.2% Sugarcane for ethanol 3.4 0.4% 1.0% Orange 0.9 0.1% 0.3% 2. Pastures 172.3 20% 49% 3. Available area Total arable land (crop land + pastures) 105.8 12% 30% Sources: IBGE, UNICA
EPA: INDIRECT LAND USE EFFECT Source:s See Figure 2.1-2. Lifecycle GHG Results Using 100-Year Net Present Value with 2% Discount Rate in page 282 of Discussion Draft of Environmental Protection Agency (EPA) Regulatory Impact Analysis, May 2009. Range shows net emissions if EPA assumes all land conversion from forest (upper bound) and all from grassland (lower bound).
EU DIRECTIVE ON RENEWABLE ENERGIES The Directive establishes the adoption of a 10% mandatory target by 2020 for renewables in the transport sector. The majority of this 10% is expected to be fulfilled by biofuels and this could represent a market for ethanol up to 14 billion liters. The mandatory 10% target includes sustainability criteria: Requirements for greenhouse gas emissions savings compared to fossil fuels: from 35% when the Directive enters into force in 2010, to 50% by 2017 and 60% for new projects launched as of 2017. Establishment of areas of high biodiversity and carbon stock as no go areas - where the production of biofuels is prohibitive. Forests, wetlands and pastures with high h biodiversity it (still under discussion the correct definition of these geographical areas).
DEFORESTATION UNRELATED TO SUGARCANE 0,04 004-0,38-0,84 084 1992 2008 Source: INPE and UNICA. Deforestation data is calendar year while sugarcane production is based on harvest.
CANASAT PROJECT Provides credible, useful information regarding the spatial distribution ib ti of cultivated t sugarcane area in South-Central region, using remote sensing satellite images Examines evidences on the relationship between agricultural land-use changes, soil productivity and indicators of environmental sensitivity Several inquiries can be performed about sugarcane location, amount of cultivated area and sugarcane crop evolution over the past years at both municipality and State levels Initiative of INPE, UNICA and CTC http://www.dsr.inpe.br/mapdsr/
SUGARCANE AGRO-ENVIRONMENTAL ZONING IN SÃO PAULO STATE São Paulo State, where 60% of sugarcane is grown, has performed and adopted an agro-environmental zoning that induces sugarcane expansion in the most appropriate areas and prohibit new planting in sensitive areas
Sustainability initiatives for biofuels: A universe in constant expansion SUSTAINABLE BIOFUELS EU Directives NATIONAL INITIATIVES INTERNATIONAL BODIES GLOBAL MULTISTAKEHOLDER INITIATIVES IDB IFC OCDE IEA G8 +5 FAO UNEP ISO NL UK DE SE USA BR CRAMER Cramer Commission CEN European Committee for Standardization RTFO Renewable Transport Fuel Obligation Greenergy Meó/ISCC Biofuel Quota Law Ordinance for sustainability requirements Low CVP Fuels PBCB Scorecard SEI LCFS Equator Prop. T ask 39 GBEP RSB Principles ABNT+DIN Stockholm Environment Institute VERIFIED SUSTAINABLE ETHANOL SEKAB BAFF Low Carbon Fuel Standard Brazilian Biofuels Certification Program RFS Renewable Fuel Standard INMETRO PRIVATE BANKS Liquid Biofuels from Biomass BSI Better Sugarcane Initiative Global Bioenergy Round Table Partnership on Sustainable Biofuels RSPO Roundtable on Sustainable Palm Oil RTRS Roundtable on Responsible Soy Prepared by UNICA v. mar09 IB Sistema de Verificação. da Atividade Agropecuária SDG Sugarcane Discussion Group WWF
OUTLINE I. Brazilian sugarcane sector: an overview The Brazilian ethanol evolution: building blocks of energy security. The increasing FFV fleet. II. Sugarcane s next frontiers Bioelectricity. Other uses for ethanol. III. Current issues regarding the sustainability of the sugarcane sector. IV. Proposed research agenda.
SUGARCANE SECTORS RESEARCH AGENDA Food vs fuel and deforestation debate Climate change Certification schemes International markets Emission reductions 2 nd and 3 rd generations GTAP LUC and iluc HCVA and HBG Lifecycle analysis R&D Bioelectricity BLUM International deforestation patterns Carbon stock measurements Degraded pastures data GREET Mechanized harvest CANASAT Database Industry s participation: involved not yet involved
SUGGESTIONS FOR RESEARCH AGENDA 1. Proliferation of low impact projects must be avoided. Focus on multidisciplinary initiatives to concentrate and maximize research s results: Coordination and information exchanges are extremely important to avoid duplication of work. From laboratory experiments to commercial scale testing needs an expressive amount of resources. 2. Research structure cannot be exclusively based on public institutions, it cannot rely only on the private sector either. A new cooperation model is needed (for research and funding) 3. We should (A) map all of the current initiatives (what is the situation today), (B) define 3 or 4 main objectives and (C) define each actors role. There must be a common agenda, involving private sector, government and universities/research institutes. 4. To expand cooperation under the MoU US-Brazil on biofuels.
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