20th Datagro Conference on Sugar and Ethanol: COVID 19 Impacts and Renovabio Set the Agenda

November 27, 2020

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by Isabela Rodrigues* (Advanced Biofuels USA) In October, The 20th Datagro Conference on Sugar and Ethanol 2020 took place over a virtual platform with more than 4000 attendees. This year, Brazilian government authorities including Vice President Hamilton Mourão, Secretary of Amazon and Environmental Services at the Ministry of the Environment Joaquim Pereira Leite and the former President, Michel Temer, attended. All speeches supported the production of national sugar and ethanol and the Brazilian Renovabio program.

A topic that proved itself important and widely talked about was the protection of the environment, including several mentions of the Paris agreement. The fact that ethanol is much more sustainable and less polluting than gasoline was repeated several times during the lectures. Renovabio was also a prominent topic, gathering the support of Datagro and of important national actors, such as the Santander Bank, which was represented by its vice president, Mario Roberto Opice Leão.

Public health was another important topic on the conference agenda. The lecture, “Air Pollution and Health,” was given by Teresa Vendramini from the Brazilian Rural Society (Sociedade Rural Brasileira), Patrícia Iglecias from the Environmental Company of São Paulo (Companhia Ambiental do Estado de São Paulo) and Paulo Saldiva from the Pathology sector at University of São Paulo (USP), a researcher in the area for over 40 years. Saldiva’s research reveals the positive impact on the health of citizens when ethanol is used. Further, the link between the improvements of gas emissions in large cities with better health conditions for the population was also highlighted.

The panel on “Development of New Markets for Ethanol” was moderated by Evandro Gussi CEO of the Brazilian Sugarcane Industry Association, Abinash Verma, General Director at the Indian Sugar Mills Association, and Pipat Suttiwisedsak, President of Thai Ethanol Manufacturing Association, presented. Verma acknowledged the great development of Brazilian ethanol production, and reported on India's production targets. That country intends to focus on aid for sugarcane producers and encourages its local sugar industries to reduce their oil consumption. Suttiwisedsak highlighted the presence of investments in electric cars and the decrease in sugar consumption caused by the covid-19 pandemic to explain the reduction in ethanol consumption in Thailand.

On the subject of “Ethanol Pricing and Planning,” José Mauro Coelho from UNICA mentioned several important aspects in relation to the trajectory of incentives to biofuels such as “Pró-alcool”, the emergence of “CONSECANA,” which combined sugarcane and ethanol producers, and the creation of Renovabio and the effectiveness of credits from Renovabio (Cbios). The speaker's conclusion was regarding the complexity of ethanol pricing, as it reflects several factors such as the exchange rate, corn, electricity, DDGs and CBIOs and even oil. It is important to remember that, despite the deep relationship between sugar and ethanol, both belong to different markets. While sugar is considered a global commodity and its price depends on interactions between buyers and sellers, ethanol is significantly influenced by the price of gasoline.

In addition, Ricardo Busato Carvalho, BP Bunge's representative, also highlighted the relationship between ethanol and sugar pricing. National taxation on ethanol is considerably influenced by sugar, which follows a specific table for each Brazilian state. According to the speaker, this issue can be a major obstacle to the national production of biofuel. A defender of open markets, Carvalho also criticized the incentives granted to gasoline by the Dilma Roussef administration, which, according to him, harmed the national biofuel market.

At the lecture "Opening and Expanding Ethanol Exports," Lara Bacellar, executive manager of Ethanol Trading Copersucar, brought up the topic of governmental ethanol incentive programs. The countries cited were China, the European Union, Russia, Brazil, Mexico, the United States and Canada. Despite this, the speaker defended them saying, "It is necessary to rely on the expansion, maintenance and implementation of these programs across the world, which follows the goals of Paris agreement, thus we need to expand a renewable fuel matrix in the world."

Bacellar's speech was connected to Brian Healy’s considerations who, as director of Global Ethanol US Grains Council, acknowledged the decrease in production and consumption due to the pandemic, but thinks that a return to the ethanol market is already taking place. The speaker also confirmed that the effects of the quarantine reverberated in international trade, and that we will still feel the impact of the pandemic.

Healy also mentioned the production of sanitizer by the biofuels industry which generated awareness of ethanol as a health product.

Regarding the production of ethanol in the United States, we can see that the market recovered a large part of the reduction. Regarding world ethanol production, the reduction was 23 billion liters, which will not be recovered until 2022. The reduction was 16% to 19% between the continents.

The speaker also argued about American ethanol exports over the years. Before domestic policies, the US was not a major exporter of biofuel. Production increased in 2011 and 2012 until the United States produced about 50% of global ethanol in 2019. In 2020, while global trade has declined, industrial use has increased mainly from South Korea, India and Nigeria, which are key markets for the export of American ethanol. In 2021, policy implementation and environmental promotion can be keys for expanding global demand.

According to Brian Healy, there are still no certainties regarding government and citizens’ responses to second wave, vaccine timing or readjusting to social proximity. The focus must be on reducing barriers to trade and creating tariff parity with other energy products and continue to support ethanol incentive policies. It is also advisable that the government invest in a generic marketing of ethanol as an environmental good.

After five intense days of interactions and speakers from all over the world, it is worth seeing how the sector must coordinate its actions in order to meet the challenges imposed by the COVID-19 pandemic situation.

* Isabela Rodrigues expects her master’s degree in Political Science and International Relations from the Federal University of Goiás in 2021. She’s interested in doing research about the ethanol lobby in the United States.

Etanol de biomasa, solución moderna y eficiente para la movilidad sostenible/Biomass ethanol, modern and efficient solution for sustainable mobility (Federacion Nacional de Biocombustibles/DATAGRO and the Brazilian Institute of Bioenergy and Bioeconomy, IBIO)

Excerpt from Federacion Nacional de Biocombustibles (Google Translation): Sugarcane ethanol, which occupies only 0.7% of the Brazilian territory, produces enough ethanol to replace 46% of all gasoline sold in the country (2019). This is possible by mixing anhydrous ethanol with gasoline in a proportion of 27% by volume, and its use as a single fuel, in the form of hydrated ethanol, in flexible fuel vehicles that represent more than 80% of the light vehicle fleet. . . Gasool and pure hydrated ethanol are sold in more than 41,700 service stations, where consumers select fuel based on freely determined market prices. The goal of many countries to obtain higher blends of ethanol in gasoline has been a reality in Brazil since the late 1970s. Biodiesel is mixed with diesel oil at a rate of 12%, with a projected increase to 15% by 2023 .

The social, economic and environmental benefits of the Brazilian renewable fuel matrix through biofuels are far reaching.

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Air pollution has improved significantly as ethanol replaces tetraethyl lead and carcinogenic aromatics in gasoline. Instead of the formaldehydes that are formed in the combustion of gasoline, ethanol generates acetaldehydes that are much less toxic. The volatile organic compounds from the combustion of ethanol are less reactive than those caused by gasoline, reducing the formation of secondary pollutants. Furthermore, ethanol and biodiesel do not generate particulate matter, particularly fine PM2.5, which is directly related to respiratory diseases of particular importance in today's pandemic times. READ MORE