Ethanol

Sugar Cane
&
Ethanol Industry
UNICA - BRAZIL
Laura Tetti
Cana-de-açúcar no Brasil
Territory: 8.5 million km2
SP – século XIX interior
NE século XVI e XVII
litoral
BRAZILIAN SUGAR-CANE
PRODUCTION
~500 million tons/year
~ half for sugar production
(domestic and export markets) 48%
~ half for ethanol production 52%
BRAZIL: REGIONS AND SEASONALITY
North-Northeast
15% of the production
crop: October-March
Center-South
São Paulo
62% of the total sugar-cane
76% of the sugar (CS region)
71% of the ethanol (CS region)
85% of the production
crop: April-December
Demographic Concentration
Inhabitants
Inhabitants per
per km
km22
Less
Less than
than 11
11 –– 10
10
10
10 –– 50
50
50
50 –– 100
100
More
More than
than 100
100
07
07
Sugar Cane Areas
Floresta Amazônica
Produção
estabilizada desde
a década de 70
1 milhão hec
Pantanal
Expansion area
4 million hec
Cana-de-Açúcar
Mata Atlântica
Fontes: IBGE (Vegetação) e CTC (Cana)
Evolução da Área de Cana colhida
Á rea c olhida (1000 ha)
6.000
5.000
Bras il
4.000
3.000
2.000
1.000
0
Fonte: IBGE
Centro-Sul
São Paulo
Norte
Nordes te
Uso do Solo no estado de São Paulo - 2005
Infraestrutura
Vegetação Nativa
11%
13%
Cana
15%
Culturas
Agrícolas
Milho
31%
4%
Soja
3%
Laranja
Pastagens
3%
41%
Café
1%
Reflorestamento
4%
Demais
5%
Fonte : IEA : Instituto de Economia Agrícola
Remaining natural vegetation area in São Paulo State
Area (1,000 km 2)
80
72.6
60
43.9
40
33.3
34.6
20
1962-1963
1971-1973
1990-1992
2000-2001
Area (1000 km2)
SUGAR-CANE
AND
THE ENVIRONMENT
• An agricultural activity that displays one of the
world’s lowest soil erosion rates (the lowest erosion
rate in the American Hemisphere),
• An agricultural activity that displays one of the
world’s lowest chemical and agrochemical utilization
rates (by using biological pest control and soil
fertigation with sugar-cane industrial processing
waste —vinasse),
SUGAR-CANE ETHANOL
AND
THE GREENHOUSE EFFECT
BRAZIL = 16 billion liters/year (of ethanol)
WHICH MITIGATES MORE THAN 40 PERCENT OF THE TOTAL EMISSIONS FROM THE
USE OF FOSSIL FUELS IN THE COUNTRY’S TRANSPORTATION SYSTEM
Given the agricultural peculiarities of sugar-cane in Brazil,
each ton of sugar-cane used to produce fuel ethanol
absorbs 0,18 ton of CO2 (i.e. figure inclusive of the
emissions resulting from the industrial process and the
burning of ethanol as a fuel),
Ethanol Production & Energy
Balance by Feedstock
Feedstock
Wheat
Corn (USA)
Sugar Beet (EU)
Sugar Cane (Brazil)
Gasoline
Energy Output/Energy Input
1.2
1.3 – 1.8
1.9
8.3
0.83
(experimental stage)
,
Source: IEA, May 2004, Conference Press on Biofuels
Source: IEA, May 2004, Conference Press on Biofuels
Custos e Produtividade - Etanol
MATÉRIAPRIMA /
PAÍS
CANA-DEAÇÚCAR
BRASIL
MILHO
BETERRABA
USA
EU
Custo de
produção por
litro (US$)
0,22
0,30
0,53
Produtividade
em litros por
hectare
6.000
3.100
5.000
LEARNING CURVE
Productivity Gain 4% year
120,0
NTERESSE
100,0
80,0
60,0
40,0
DEFLATED BY IGP-DI - prices of December 2004
- producers’ prices excluding taxes
(*) - oversupply
20
04
20
02
*
20
00
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
20,0
Source: UNICA
Sugar-Cane Expansion
Brazil
million tons
559
600
487
427
500
521
455
403
400
300
198
49%
200
47%
203
45%
210
43%
217
42%
200
100
205
51%
227
53%
252
55%
277
57%
2005/06
2006/07
2007/08
2008/09
304
58%
2009/10
225
40%
334
60%
0
2010/11
For Sugar
From 27 to 30 million tons/year
For Ethanol
Expected increase in Ethanol consumption in the
Domestic Market (BR)
and
Gains in Reduced Emissions
In the year 2010, Brazil will have an additional
consumption of
7 billion liters of ethanol
(replacing gasoline
in flex-fuel cars)
decrease in emissions of
~ 49 million tons of CO2/year
Expected growth of the sugar-cane industry
and
Development
•
Crop area: 2,3 million hectares
•
Milling capacity increase: 800,000 tons of sugar-cane per day
•
Equivalent to: 67 new plants
•
New jobs: 300,000
•
Addition to the balance of payments:
•
•
•
Investments (Sugar-Cane Crops, Machinery, Implements): US$ 1,0 billion
•
Investments in infrastructure:
Investments (Industry):
US$ 3,0 billion
US$ 5,0 billion
Logistics, Ports, etc,
Mapa da Expansão – Cana-de-Açúcar
Áreas Preferenciais
RO
AM
AM
AC
RO
Brasil: Safra 06/07
REG./EST.
REG./EST.
PA
UP´s
UP´s
CANA (MMT)
(MMT)
CANA
PART. %
%
PART.
N/NE
SP
MG
MS
MT
PR
GO
RJ
ES
RS
74
148
25
10
11
27
15
8
6
1
53
264
29
12
13
32
16
3
3
0
12,46%
62,06%
6,83%
2,74%
3,10%
7,52%
3,79%
0,81%
0,68%
0,02%
TOTAL
325
425
100,00%
MA
PI
TO
MT
BA
GO
CE
SE
RN
PB
PE
AL
MS
MG
PR
SP
ES
Brasil: Safra 12/13
RJ
REG./EST.
SC
RS
UP´s
CANA (MMT)
PART. %
N/NE
SP
MG
MS
MT
PR
GO
RJ
ES
RS
75
179
45
23
11
31
32
9
6
1
60
387
79
59
18
56
57
7
6
0
8,24%
53,11%
10,90%
8,04%
2,45%
7,65%
7,85%
0,98%
0,77%
0,03%
TOTAL
412
728
100,00%
Brazil has the Capacity to Expand its Production
Brazil's Territory
Total Arable Land
Cultivated - all crops
- with Sugar Cane
- for ethanol
million hectares
~850,00
320,00
60,40
5,34
2,66
• Example:
Area needed to supply Japan
with
with
E3
E10
Source: Ministry of Agriculture, Livestock and Food Supplies
0,27
0,90
Ecological Characteristics
FOREST
FOREST FORMATIONS
FORMATIONS
Amazon
Amazon Forest
Forest
Coconut
Coconut Tree
Tree Forest
Forest
Tropical
Tropical Forest
Forest
Atlantic
Atlantic Forest
Forest
Pine
Pine Forest
Forest (or
(or composed
composed of
of Araucária)
Araucária)
ABUSIVE
ABUSIVE AND
AND HERBACEOUS
HERBACEOUS FORMATIONS
FORMATIONS
Savanna
Savanna and
and Scrub
Scrub
Heath
Heath forest
forest
Fields
Fields
COMPLEX
COMPLEX AND
AND COASTAL
COASTAL FORMATIONS
FORMATIONS
Vegetation
Vegetation of
of the
the Pantanal
Pantanal
Coastal
Coastal Vegetation
Vegetation
15
15
Potential Expansion Area
in the “Cerrado” Region
Brazilian Cerrado (million hectares)
Total Area ………………
Area good for agriculture …….
Area in use for cattle raising..
Occupied area (plantations)…………..
Available Area for expansion
Source: Ministry of Agriculture, Livestock and Food Supplies
204
137
(35)
(12)
90
Expansão.
Área Potencial de Cana-de-Açúcar
Sem Irrigação: 15x a área atual
Com Irrigação: 20x a área atual
Potencial de Produção Sem Irrigação
ÁREA
POTENCIAL
milhões de ha
ALTO
8
MÉDIO
114
BAIXO
149
IMPRÓPRIO
91
TOTAIS
362
%
2
32
41
25
100
Potencial de Produção Com Irrigação
ÁREA
POTENCIAL
milhões de ha
ALTO
38
MÉDIO
98
BAIXO
168
IMPRÓPRIO
58
TOTAIS
362
%
11
27
46
16
100
Ethanol – Supply Prospects
• To add 5% of ethanol to all gasoline in the world,
58 billion liters/year would be needed
• Nowadays Brazil uses 2,7 million hectares to
produce 16 billion liters/year
• ~10 million (additional) hectares would be
required for meeting the world demand (E-5)
Countries & Regions
Sugar-Cane World Map
ATTACHMENTS
ITALY
GERMANY
GERMANY
SPAIN
USA
Brazil
8,5 million Km2
04
04
WORLD ALCOHOL PRODUCTION
42,2 billion liters (2004)
India
5%
China
9%
Other
11%
Brazil
36%
EU
6%
USA
33%
Source: FO Licht
Includes all types of alcohol (potable, synthetic, biomass-derived) of a variety of values and
grades and for several purposes,
AN EXAMPLE
(Gains in Reduced Emissions)
CONSUMPTION INCREASE OF 500 MILLION LITERS PER YEAR
(less than 1,5% of the current production scenario):
100,000 new ethanol cars in Brazil
or
Replacement of MTBE with ethanol (20%) in 1 million gasoline-powered cars
or
US case = 2 million cars/10% ethanol
EU case = 4 million cars/5% ethanol)
GAINS IN REDUCED EMISSIONS
3,500,000 tons/year of CO2
FACTS of the EXAMPLE
Additional consumption of 500 million liters of Ethanol
ECONOMIC BENEFITS
500 million liters of ethanol = 6,2 million tons of sugar-cane
Additional funds in the supply chain:
US$ 150 million/year
Additional amount of taxes paid (federal, state and
municipal taxes):
US$ 84 million/year
Considering the set of taxes that are currently paid in Brazil by the sugar and alcohol
production activity (ICMS [Tax on Products and Services], PIS [Social Integration Program]
contribution, COFINS [Social Security Funding Contribution], etc —estimated at 30%)
FACTS of the EXAMPLE
(additional consumption of 500 million liters of ethanol)
SOCIAL RESULTS
JOB CREATION:
~ 14,000 direct jobs
(average consideration > US$ 300/month)
*minimum wage (BR) US$ 100
~ 42,000 indirect jobs
(large size of the industry’s supply chain)
500,000,000 liters of ethanol = 80,000 ha of sugar-cane
Jobs in the sugar-cane industry (2001): 2 million direct and 6 million indirect jobs
Greenhouse Effect and Climate Changes
Transportation: ~25% of the world’s CO2 emissions
Low-carbon renewable fuels are of the essence as a strategy
to mitigate the greenhouse effect and climate changes
SOURCE: IPCC 2001
CO2 EMISSIONS
FUELS
NATURAL GAS = 1,96 kg/cubic meter
GASOLINE (BR, 22% ethanol) = 2,17 kg/liter
STRAIGHT GASOLINE = 2,35 kg/liter
DIESEL = 2,62 kg/liter
Ethanol = 1,38 kg/liter (biomass = recyclable)
Theoretical emissions
Source: Suzana Kahn de Oliveira, UFRJ (Federal University of Rio de Janeiro)
POTENTIAL MARKET
FOR FUEL ETHANOL
Country
Potential Ethanol
Demand Addition
bil, liters
JAPAN
1,8
Remarks
%
3%
Potential consumption if the voluntary 3% addition of
ethanol to gasoline is adopted for all of the gasoline
consumed in the country
Changes by 2012, as set forth by the Renewable Fuels
Act, which is pending approval, for a
permitted addition of 5,7% (1)
USA
today
13,5
10%
CHINA
4,5
10%
Potential consumption if the 10% addition to gasoline,
currently effective in some provinces, is implemented
for all of the gasoline consumed in China,
EU
7,4
5%
Potential 5% addition of ethanol to all gasoline
in 2011, which is the limit permitted by the European
Directive for the 5,75% of biofuels
INDIA
?
5%
5% addition of ethanol authorized
in some regions
THAILAND
0,7
5%
Potential consumption considering a piece of legislation
that requires a 5% addition to all gasoline consumed
Estimated total: 30 billion
(1) In the United States, the 5,7% addition to all gasoline means consumption
of 30 billion liters of ethanol per year,
Source: Various: EIA/DOE; European Commission, FO Licht; Copersucar
SUGAR AND ETHANOL INDUSTRY
AND
ENERGY POTENTIAL
Primary Energy contained in 1 ton of sugar-cane (BR)
(data = CTC Copersucar)
•
(2/3 of the energy contained in sugar-cane is in the form of bagasse
and straw)
POTENTIAL ENERGY
ENERGY (Mcal)
75 liters of Ethanol
280 kg of bagasse
280 kg of straw
500
630
630
0,046
0,058
0,060
1,760
0,162
TOTAL
TEP
COST OF CREATING
PERMANENT JOBS
IN BRAZIL
INVESTMENT PER PERMANENT JOB
SECTOR
INVESTMENT
(in USD per job)
RATIO
(to ethanol)
Chemical and Petrochemical
220,000
20,1
Metallurgy
145,000
13,3
Capital Goods
98,000
9,0
Automotive (Industry)
91,000
8,3
Consumer Durables
70,000
6,4
Consumer Goods
44,000
4,0
Ethanol
10,918
1,0
CONSUMPTION IN GASOLINE EQUIVALENT
40
35
2.4
30
million m3
3.8
1.9
1.6
25
2.9
3.4
4.2
4.6
7.5
8.7
10.0
5.1
6.4
11.4
5.6
23.1
23.6
23.5
23.2
22.,8
22.4
22.,0
2004
2005
2006
2007
2008
2009
2010
4.8
20
15
10
21.6
5
0
2003
C Gasoline: 26% ethanol
Hydrous Ethanol
VNG (Vehicle Natural Gas)
Market Projection
Fuel Ethanol - Brazil
billion liters
25.0
21,1
19.3
17.7
20.0
16.2
14.8
13.8
15.0
10.0
7.7
8.7
6.1
6.1
10.2
11.8
13.5
15.4
5.0
6.0
5.9
5.8
5.7
0.0
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
Anhydrous
Hydrous
SALES OF NEW VEHICLES
Cars + Light-Duty Commercial Vehicles
1,000 vehicles
Gasoline
Ethanol
2004
1,099
51
2005
750
30
2006
413
0
2007
434
0
2008
456
0
2009
478
0
2010
502
0
Mean Annual Growth Rate
Flex-Fuel
328
780
1,240
1,302
1,367
1,435
1,507
Total
1,478
1,559
1,653
1,735
1,822
1,913
2,009
5.2%
PROJECTION FOR THE SUGAR MARKET
BRAZIL
million tons
35.0
30.0
27.2
27.4
25.0
27.8
9.7
9.9
10.0
17.5
17.5
17.8
28.8
10.2
29.8
10.4
30.8
10.6
20.0
15.0
10.0
18.6
19.4
20.2
5.0
0.0
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
Domestic Market
International Market
SHARE IN WORLD TRADE
Other
Approx. 100 countries
26%
Brazil
South Africa
2%
Brazil
35%
39%
Other
Colombia
3%
61%
Guatemala
3%
Cuba
3%
EU-25
7%
Australia
10%
2004
Thailand
11%
Projection for 2010