All Eyes On Ethanol: Brazil’s Ethanol Industry Continues to Grow with the Help of Renewable Fuel Goals and International Partnerships.

by Tim Albrecht (Ethanol Producer Magazine) More than 90 percent of all new cars licensed in Brazil each year are flex fuel. Every liter of fuel sold in Brazil includes 27 percent ethanol. Consumers have chosen to replace almost 40 percent of the country’s gasoline needs with sugarcane ethanol, says Leticia Phillips, North America representative for the Brazilian Sugarcane Industry Association, UNICA.

Ethanol use in Brazil has risen in the past two decades, and now is supported by the country’s 2015 Paris Climate Summit commitment to reduce greenhouse gas emissions by 43 percent of 2005 levels by 2030. That goal supports Brazil’s continued development and use of low-carbon, clean biofuels as part of RenovaBio, the country’s new renewables policy.

Even corn ethanol production in Brazil is growing, with the help of a U.S.-based agricultural group.

It (RenovaBio) mandates that Brazil fuel distributors gradually increase the amount of biofuels they trade each year to help cut carbon emissions. It’s expected to be a game changer that will help stabilize the country’s sugarcane industry and “benefit global biofuels players,” Phillips says.

“Brazilian consumers have enjoyed subsidized gasoline prices for many years, which weakens demand for ethanol. RenovaBio will alter this dynamic and encourage fuel distributors to boost sales of biofuels versus gasoline by requiring them to lend a hand meeting greenhouse gas reduction goals.”

Brazil’s president recently signed a decree that would regulate RenovaBio. According to the new guidelines, responsibilities will be shared between the National Energy Policy Council (CNPE), the National Petroleum Agency (ANP) and the RenovaBio Committee.

The CNPE will be in charge of defining annual emission reduction targets in the country’s fuel sales, the ANP will evaluate the criteria for the certification of biofuels and accreditation of its producers and the RenovaBio Committee will work as a technical support body for CNPE. The Committee will be responsible for conducting studies and public consultations, as well as monitoring Brazil’s biofuels supply and production chain.

“It became pretty clear to me in traveling Brazil that biotechnology, such as the advent of second crop over the last decade, was going to increase Brazil’s ability to produce a significant amount of corn,” says Bruce Rastetter, CEO of Summit Agricultural Group. “In believing that, we thought a corn ethanol plant in Brazil made sense for us.” Summit partnered with Fiagril Ltda of Brazil to build FS Bioenergia, Brazil’s first large-scale corn ethanol plant. The ICM-designed facility is located in the center of Mato Grosso, Brazil’s Corn Belt. Summit is the majority owner of FS Bioenergia.

Rastetter views corn ethanol production in Brazil as a growing opportunity. He isn’t surprised the corn industry in Brazil is looking for a new source of demand for its corn, with global corn prices being as depressed as they are. Ethanol is a “very logical” choice for that source of demand, he says.
In the past few months, FS Bioenergia announced plans to develop a second corn ethanol plant in Brazil and a $100 million expansion of its first facility, which is expected to more than double capacity to 130 MMgy. The second facility is planned for Sorriso, Mato Grosso, Brazil, with a capacity of 160 MMgy.

Brazil’s push for renewable fuels aided Summit’s movement into the country and is a primary reason FS Bioenergia is building a second facility, Rastetter says. “We think the economics made sense. Brazil is truly a model for the U.S. to follow on ethanol consumption and having consumer choice at the pumps. Plus, you have a government who’s stated goal is to dramatically increase ethanol use and production.”

Rastetter says Brazil’s growing corn ethanol market won’t hinder U.S. corn ethanol imports to the country. Production will take years to ramp up significantly, and RenovaBio will ensure demand for U.S. corn ethanol continues. “I think as Brazil goes from 7 billion gallons per year in ethanol consumption to the 13 billion they want to reach with the RenovaBio program, there will be continued need over the next decade for U.S. corn ethanol exports to Brazil to supplement their demand for ethanol,” Rastetter says.

Import Tariff
In August of 2017, Brazil implemented a 20 percent tariff on U.S. ethanol imports over a 600 million-liter-per-year quota. The Tariff-Rate Quota was based on Brazil’s average annual ethanol imports from 2014 to 2016, Phillips says.

“As the world’s largest ethanol producers and exporters, the United States and Brazil enjoy the benefits of trading renewable fuels,” Phillips says. “Together, our countries have created a global biofuels market providing clean, affordable and sustainable solutions to our planet’s growing energy needs. Both countries need strong domestic markets, and we also intend to continue working collaboratively to remove trade barriers in international markets.” READ MORE