ministério de minas e energia g-15 training workshop: best practices on renewable energies...

Ministério de Minas e Energia

G-15 TRAINING WORKSHOP: BEST PRACTICES ON RENEWABLE ENERGIES

BRAZILIAN EXPERIENCE ON BIOFUELS

Marlon Arraes JardimGeneral Coordinator - Renewable Fuels Department

[email protected]

Dakar, November 5th, 2012

http://www.recortecole.com.br/links/BandeiraBrasil.gif


Brazilian Energy Mix – 2010/2020 (%)



Brazilian Energy Mix Evolution

Renewable Energy (2010): 45.5%14.0% Hydro17.8% Sugarcane Products 9.7% Firewood and Charcoal 4.0% Others



Brazilian Electricity Supply by Source



Fuel Mix - 2011 and Recent Evolution

Source: MME (2012)

Highlights:

1. Biodiesel growth;

2. Ethanol shortening.



Let’s Take a Look in History…

10

2

3

4

5 6

T0 = First Oil ShockT1 = Proalcool is launchedT2 = Second Oil Shock; E100 begins in Brazil T3 = Ethanol CrisisT4 = End of Ethanol SubsidiesT5 = Government begins to study biodiesel policiesT6 = Biodiesel Program is launched



The Deregulation of Fuel Market and the Ethanol Fuel

1993

1995

1999Liberalization of Hydrated Alcohol prices at the producer with the subsidy reduction (Feb/99)End of subsidies for Hydrated Alcohol (Nov/99)

Constitutional Amendment Nº 09: petroleum monopoly made flexible (Nov/05)

2002 Complete Liberalization of Fuel Prices (Jan/02)

Free prices in the whole chain of production and commercialization

Mandatory blending of ethanol and gasoline introduced by Law

1975 National Alcohol Program (Proalcool) goals:1. To introduce in the market the mixture gasoline-ethanol2. To stimulate the development of pure ethanol motors

Two types of ethanol used, produced and tested in Brazil:

anhydrous

hydrated

Mixed with pure gasoline (20 to 25%)

Directly used in Otto-cycle motors (100%)

1979



97.5%

3.1%Fósseis

Biocombustíveis

77%

23%

Fósseis

Biocombustíveis

... Brazil

World

2011 Data (Source: BP / MME)Middle and Light Destilates: Diesel, Gasoline e Jet Kerosene

0,11 x 1012 liters/year

3,5 x 1012 liters/year

79 x 109 liters/year

24 x 109 liters/year

Biofuels x Fossil Fuels

Fossil Fuels

Biofuels

Fossil Fuels

Biofuels



Brazil: 2011 Data (Source: MME)Other Countries: 2010 Data (Source: multiple)Obs: Size of the country is total energy demand

Share of Renewables in Different Countries% Renewables



Retailers

Gas Stations (37.243)

TRR (471)

Airports and Aviation Gas Stations (90)

Lubricant distributers

Retailers of LPG (31.800)Source: MME–ANP–MAPA June/2012

Diesel

Biodiesel

Gasoline C

Ethanol

Querosene

QAV

Oil Fuels.

Lubricants

LPG

Solvents

Asphalt

Final

Consumers

Freight and Passengers Transport

Companies

Aviation Companies

Industries

General Consumers

Petrochemicals(4)

Ethanol Producers (427)

Refineries (13)

Importers (216)

Biodiesel Producers (64)

E&P

Distribution (207)

Agriculture Producers

Distribution Bases (570)

Market Players



Observation:GASOLINE “A” = Pure Gasoline, without ethanol, not commercialized to final consumerGASOLINE “C” = With ethanol, commercialized in the whole country.

GASOLINE “C” (GAS “A” + Anhydrous)

GAS STATION

GASOLINE “A” (*)

RETAILER

OIL REFINERY

ANHYDROUS ETHANOL

SUGAR MILL

Mixture

Consumer

GASOLINE “C” (GAS “A” + Anhydrous)

GASOLINE “A”: TAXATION

CIDE -

PIS & COFINS

R$ 0,26/ liter.

IVA 25% a 31%

Anhydrous Taxation

CIDE --

PIS & COFINS

R$ 8,57 + R$ 12,86

IVA Differed to GAS “A”

No TaxationHere

Commercialization of Ethanol for Blending

Anhydrous Taxation

CIDE --

PIS & COFINS R$ 39,43 + R$ 59,14

IVA Differed to GASOLINE

“A”



Government and Private Associations

Ethanol Governance includes:

CNPE (Energy Policy National Council) CIMA (Interministerial Council):

1. Ministry of Agriculture, Livestock and Food Supply;

2. Ministry of Mines and Energy

3. Ministry of Finance

4. Ministry of Development, Industry and Foreign Trade. Staff Office of the Presidency and the MFA (Ministry of Foreign Affairs) ANP (Regulatory Agency for Oil, Natural Gas and Biofuels) National Sucroenergetic Forum (Association of Producers) UNICA (Center-South region Association of Producers) Agriculture Sector Chamber SINDICOM (Union of Distributors and Fuel Retailers) BNDES (National Development Bank)

Biodiesel Governance also includes: Staff Office of the Presidency - CEIB (Interministerial Council) Ministry of Mines and Energy – Grupo Gestor (Program Manager) Brazilian Biodiesel Union (UBRABIO), Brazilian Association of Vegetable Oil Industries

(ABIOVE) and Brazilian Biodiesel Producers Association (APROBIO)



The General Policies for Biofuels

The law of Brazilian energy policy includes as one of the objectives: to increase the share of biofuels in the national energy mix. The main general instruments include:

Mandatory mix: ethanol (E18-25) and biodiesel (B5). Tax differentiation regime in federal level. Line of credit for ethanol strategic buffer stocks (conceived to improve

off-season supply conditions). Public auctions for biodiesel market supply. Research funding (CT-Petro, created in 1999 and CT-Energ, created in

2000). Agro-ecological zoning that orients and guarantees that raw-material

production will take place only in suitable areas. The Brazilian government managed to conclude the sugarcane (2009) and palm oil (2010).



Recent Modifications on Biofuels Regulation

Biofuels are now treated as fuels and not only as an agriculture product inserted in the Brazilian energy mix. This understanding is boosted by the growing ethanol utilization of ethanol and biodiesel, both in Brazil and abroad, that demonstrates the extraordinary role and potential of biofuels.

Biofuels have an uniform treatment regarding their role in National Energy Policy. That includes both ethanol and biodiesel, as well as any other new biofuel that eventually will be produced in commercial scale in the future.

The National Energy Policy Council (CNPE) has, from now on, authority to establish the directions for biofuels imports and exports in the same way that it already has for all oil derivatives such as gasoline, diesel and jet fuel.



Ethanol Savings and Benefits for Brazil

1.5 billion barrels of oil displaced



+53% [Jan-Jun(12)]/[Jan-Jun(06)]

(E25)

(E100)

Light-Vehicles Fuel Demand in Brazil: Trendsmillion m³ (Gasoline Equivalent)



Why Ethanol Decreased Its Share in 2011?

Conjunction of different but interconnected factors:

1. International financial crisis in 2008;

2. Climate event (excess of rainfalls) in 2009/2010 season;

3. Climate event (lack of rainfalls) in 2010/2011 season;

4. Higher sugar prices, since 2009;

5. Fuel demand (internal market) skyrocketed!

Why Biodiesel Increased Its Share in 2011?

Main factors:

1. Mandatory mixture was raised from B3 (1st half 2009) and B4 (2nd

half of 2009) to B5 (since Jan/2010);

2. Brazilian economy growth.



What the Government is Doing for Ethanol? Highlights:

1. Finishing the necessary regulatory instruments by ANP after the recent Biofuels’ Law (Law 12.490/2011) approved;

2. Public policy design is being conducted by Government officials considering next ten years scenarios for ethanol demand;

3. Incentives package for production expansion investments;

4. The strengthening of future market contracts as a tool for ethanol commercialization;

5. Permanent dialogue with the private sector representatives of the whole chain of production and commercialization.



mill

ion

m³

Ethanol for Internal Fuel Market

PDE 2021 is under public consultancyuntil Oct. 31st Contribution must be sent to [email protected]

Ethanol: What the Government plan is showing?

Source: PDE 2021 (Public Consultancy Version)

1. Internal Market will remain as main driver (flex-fuel car sales)

2. Neverending quest between sugar prices and ethanol prices

3. Not to mention the new products from sugarcane...

mailto:[email protected]



Biodiesel Main Policies Mandatory mix (5%)

Social Fuel Certificate (SFC) Granted to biodiesel producer who stimulates feedstock supply

from household agriculture SFC ensures preferential biodiesel market access Lower taxation

Public Auctions promoted by ANP Trade rule between biodiesel producers (suppliers) and diesel

producers (buyers)


Ministério de Minas e Energia Social Fuel Certificate

1. Minimum feedstock's purchase from household agriculture • 15% at Mid West or North• 30% at Southeast or Northeast• 35% at South (40% from 2013/14 season on)

2. Diversifying, regionalization and cooperatives The multipliers concept:

• 2x for non-soya oilseeds• 2x for Northeast and Semiarid• 1.2x for Household Cooperatives• Cumulative Situations -> (2 x 2 x 1.2 = 4.8)



Biodiesel Production in Brazil

Key to Symbols:WITH SFC* WITHOUT SFC*1,000 m³/Year 1,000 m³/Year

(*) Social Fuel Certificate

2005 2006 2007 2008 2009 2010 20110

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

736 69,002 404,329

1,167,128

1,608,448

2,386,399 2,672,760

Biodiesel Production

Th

ou

san

ds

of

m³

Source: ANPElaboration: MME



BiodieselFa

mili

es

US$ / Family per Year

Total Biodiesel Production Total Income

of the Families due to Biodiesel

Higher levels of income since the mandate period

confirms the policy

Source: MDA, MME (2011)

m³



Biodiesel: Positive Impacts Already obtained with B5… Brazil is one of the top3 world biodiesel consumers (USA and

Germany) GDP: US$ 3,6 billions/year Investments: US$ 2 billion on biodiesel plants (B5) International trade: US$ 6.5 billion savings of diesel imports Employment: 86 thousand new jobs Household agriculture: 104,000 small farm’s units Estimated environmental and health benefits:

- 57% CO2 emissions- 13,000 hospitals’ admissions- 1,800 deaths due to emissions



Land Use in Brazil *Total Area Native Vegetation Arable Land

Available

Pasture

AgricultureSugarcane

Others 15 2%

* 2009 Data

Source: ICONE, ESALQ and IBGE. Elaboration: COSAN and UNICA



Sugarcane Expansion withAgroecological Requirements

Agrozoning for Soy, Sunflower, Castor,Palm, Cotton Seed etc.

Maximum allowed: 65 million haor 7,5% (green areas)

Agricultural zoning as a guarantee for public and private investments and a recommendation of suitable areas for harvest

North RegionFocus = arc of deforestation

Northeast RegionFocus = coast areas



New Uses in Other Sectors (P&D)

The BNDES launched PAISS (Joint Programme of Technological and Innovation Support for Sugarcane Sector), were selected from 25 companies that submitted 35 business plans, which will generate investments of about R$ 3 billion. The PAISS fosters research and development of cellulosic ethanol. If made

viable economically, the cellulosic ethanol could increase the productivity of the sector in more than 40%.

Among the entities who study the processes of production of ethanol from lignocellulose in Brazil, stand out:

CENPES-Petrobras CTBE;

Centro de Tecnologia Canavieira – CTC Dow & DSM

Embrapa Agroenergia ETH Bioenergy

Dedini S/A Indústrias de Base Graal Bio

Amyris LS9



Bioenergy International Cooperation

* Includes MoUs, partnerships and other agreements signed directly by any Federal Government Department or Agency or Public Enterprise. It was considered bilateral agreements, cooperation in third countries and agreements signed with economic or regional blocks.

Map of International Agreements on Bioenergy sign by Brazilian Representatives

77 countriesNearly 1/3 of the whole nations



Renewable energy source

Energy security

Better CO2 and pollutants emissions

Income improvement at rural areas

Bioenergy industry helps to deconcentrate energy markets

It is much lower capital intensive than oil industry

Bioenergy can be produced in a sustainable way worldwide while oil is concentrated in a few countries (many of them with political instability)

Some Bioenergy Externalities…



Maintain the best environment for investments with a clear regulatory framework

Articulate the different interests involved

Assure the proper incentives to best practices

Pursue the most sustainable path to expand the industry and promote development

Give ways to assure and respect contracts

Induce and facilitate the international trade

Correct market distortions that might lead in long term to imbalances in economic activity

The Government Role (as we see)



Thank You!

Marlon Arraes [email protected]


ministério de minas e energia g-15 training workshop: best practices on renewable energies...

Documents