PICMET 08

Ethanol from Sugar Cane: a successful alternative energy strategy for Brazil

Ericson de Paula

Cape Town July 27-31 2008

Abstract

Pro-Alcool the National Alcohol Program began in 1975 and was a government financed program,developed on account of the petrol crisis of 1973, and fortified due to the second impact of 1979. Thisprogram aimed to substitute gasoline with ethanol from sugar cane on a grand scale, thereby reducing thedependence on imported petroleum.

During the decades to follow, as the international price of petrol went down, the program entered adecline. With cheap petrol, alcohol fuel held little advantage either for the consumer or the producer. Inthe same period that petrol prices were lowering, the price of sugar began to rise on the internationalmarket, which made sugar production more profitable than alcohol.

Technological developments in bi-fuelled cars, soon to be followed by world pressure for lesspolluting fuels, together with successive petrol price peaks, not only revitalized alcohol production butalso led to a demand for its increase.

Thi t ft th f P Al l B il i i h th f di fi ld dThirty years after the appearance of Pro-Alcool, Brazil is in a rhythm of expanding cane-fields andnew technology aiming at better efficiency. All this is being performed on a grand scale, both forinternal consumption and the international market, in order to present ethanol from sugar cane asalternative fuel.

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BRAZILIAN FUEL ETHANOL HISTORY

WORLD PRODUCTION

Million Tones, 2005

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WORLD: COST AND PRODUCTIVITY OF ETHANOL

Productivity – liters / ha Production cost – U$c / liter

Source: International Energy Agency, 2007 Source: FO Litch, 2007

ETHANOL AND SUGAR CANE:PRODUCTIVITY EVOLUTION

Source: Unica, 2007

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WORLD ETHANOL PRODUCTION

WORLD ETHANOL EXPORTS

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GHG BALANCE ON A LIFE-CYCLE BASIS

CO2 Emission biomass (Brazil) = 27%

RENEWABLE SOURCES 44,8%

14,8%9,6%

6,0% 1,6%

12,4%

14,6%37,9%

,

3,0%

,

Hidroelectricity Other Biomass

Sugar Cane Other Renewable Sources

Petroleum and Derivatives Natural Gas

Coal UraniumSource: MME – BEN, 2007

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SOURCES OF GENERATION

Coal1,5%

SHP, Proinfa, etc.2 8%

Diesel Oil1,5%

Hydro

Fuel Oil1,4%

<= Jan/2007 - 92.404 MW

Diesel Oil1 4%

SHP, Proinfa, etc.

Coal2,8%

2,8%

Others18,8%

Gas9,4%

Nuclear2,1%

Hydro81,2%

Biomass0,1%

Source: PDEE 2007-2016, EPE, 2007

Hydro75,3%

Others24,7%

Fuel Oil1,2%

1,4%

Biomass2,6%

Gas9,6%

S , o a, etc.4,7%

Nuclear2,4%

Dez/2016 – 137.486 MW =>

BIOELECTRICITY: POTENTIAL IN BRAZIL

GWh/year ave. MW GWh/year ave. MW2006/07 425 106 87 193 12684 1448 12684 14482007/08 460 115 94 209 15599 1781 17356 19812008/09 502 126 102 228 19266 2199 23837 27212009/10 547 137 112 248 23889 2727 32863 3751

Potential with bagasse

Potential with bagasse + strawSugar

CaneBagasse Straw Bagasse

+ Straw

2009/10 547 137 112 248 23889 2727 32863 37512010/11 601 150 123 273 29745 3396 45495 51932011/12 659 165 134 299 37201 4247 63264 72222012/13 728 182 149 331 46737 5335 88332 10084Source: Unica, 2007

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BRAZILIAN: LIGHT VEHICLES FLEET (OTTO-CYCLE)

Source: Copersucar and Unica, 2007

SUGAR CANE INDUSTRY: FORECAST

ACTUAL FUTURE - 2012/13

350 plants 412 plants

475 million t of sugar cane 720 million t of sugar cane

30 million t of sugar 38 million t of sugar

10 million internal market 11 million internal market

20 million to export 27 million to export

20 billion liters of ethanol 38 billion liters of ethanol

17 billion internal market 27,5 billion internal market

3 billion to export 10,5 billion to exportSource: Unica, 2007

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INVESTMENTS IN THE BRAZILIAN SUGARCANE INDUSTRY

Investments (2008-2012)Investments (2008 2012)New Plants US$ 23.0 billionExisting plants US$ 10.0 billionTOTAL US$ 33.0 billion

Plants controlled byforeign capital

Note: (*) Upgrade and expansion of existing plantsSource: UNICA, 2007

foreign capital2007/08 2012/13

22 plants (36 MT) 31 plants (83 MT)7% 12%

Production of Steam > Sugar + Ethanol + Bioelectricity + CO2 (after jun/05)

BIOELECTRICITYIMPROVEMENT IN TECHNOLOGY

P (bar)_____

T (°C)

21

300

42

400

65

520

92

520

Consumption

(kg vapor/kW)

12,50 7,80 5,70 4,74

Boiler

100 t/h

Production of Steam > Sugar + Ethanol (before jun/05)

Energy

(MWh year)

38.400 61.500 84.200 101.300Generator

Process100 t/h

1,5 bar130 °C

+ 60%+ 219%

+ 263%

Governance > Higher EfficiencySource: COGEN, 2007

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Availability of arable land in BrazilMillion Hectares (2007)

Problem statement : Will the expansion of the sugarcane sector push other agricultural activities, such as cattle and soybean, into the Rainforest?

Brazil 850Total preserved areas and other uses* 510 (60%)Total Arable Land 340 (40%) % of total land % arable land1 Cultivated Land: All crops 63,1 7,4% 18,6%

Soybeans 20,6 2,4% 6,1%Corn 14,0 1,6% 4,1%Sugar cane ** 7,8 0,9% 2,3%

Sugar cane for ethanol *** 3,4 0,4% 1,0%Oranges 0,9 0,1% 0,3%g , , ,

2 Pastures 200 23,5% 58,8%3 Available land (ag/ livestock) 77 9,1% 22,6%

*** harvest area for ethanol productionSources: IBGE, Conab and Unica, 2007 Data compiled by Icone and Unica

* These areas include Amazon Rain Forest, protected areas, conservation areas and reforestation, cities and town, roads, lakes and rivers.** cultivated area

BRAZIL: LOCATION OF PLANTS

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SUGAR CANE WORLD MAP

Ethanol from sugar cane: a successful alternative energy strategy for Brazil

CONCLUSIONS:CONCLUSIONS:

• Brazil: 30 years leader of the ethanol industry

• 1.0% of hectarage: 263MM ha agric+past/7,8MM ha cane

• Potential 20 MM ha / 200 MM pasture

• Production : 18 bln liters : 14 bln domestic, 4 bln export

Di ill i 373 i 61 i• Distilleries: 373 operation, 61 construction

• Productivity: 7000 l / ha, increasing with technology

• Production cost: Brazil US$ 0.28 / l ; EUA: US$ 0.45 / l

• Ethanol v. Amazon: inappropriate region for production

• Ethanol as a trade commodity

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