Biofuels Production and Consumption in Brazil: Status, Advances and Challenges

June 03, 2019

Print This Article Share it With Friends

Glaucia Mendes Souza, Rubens Maciel Filho, Luís Cassinelli, Carlos Henrique de Brito Cruz and Renato D. Godinho (IEA Bioenergy Task 39) ... Brazil has an energy matrix with substantial renewable content, with renewables (including hydropower) accounting for 42.9% of the total domestic energy supply (Brazilian Energy Balance 2018).

...

Even with an energy matrix that favors renewable sources, Brazil is still dependent on fossil fuels, which account for 57.1% of the domestic supply; oil derivates alone represent 36.4% of all non-renewable sources (Figure 1). In order to promote the production of biofuels, the country has been investing in incentive policies since the 1930s. There are tax exemptions for biofuel producers, ethanol flex fuel vehicles and ethanol fuel, and also for biodiesel production, and in addition there is now a new law for biofuels, Renovabio. As a result of these policies, today Brazil has a biofuel mandatory blend level of 27% ethanol in gasoline and 10% biodiesel in diesel. Hydrous ethanol (comprising approximately 95% ethanol + 5% water) is also marketed in all gas stations in Brazil.

1.1.Ethanol
It all began with sugarcane ethanol. As a major producer of sugarcane, in 1931 the Brazilian government implemented a compulsory blend of at least 5% anhydrous ethanol in gasoline, aimed at reducing the country’s dependence on imported petroleum by utilizing excess production by the sugar industry to produce ethanol.

Some decades later, in 1976, in response to the impacts on the oil supply and price shocks during the 1970s, the Brazilian government created Proalcool, a program to incentivize fuel alcohol production. This program led to increasing the ethanol blending level in gasoline up to 25% (E25) and it also introduced the use of hydrated (also known as hydrous) ethanol (“E100”; actually about E95) for use in dedicated vehicles. The Proalcool program also established: lower consumer prices for hydrated ethanol than for ethanol-blended gasoline; competitive prices for ethanol producers; and favorable financing conditions for sugar-ethanol mills to increase their production capacity. It also reduced taxes on new cars and annual registration fees for vehicles capable of running on hydrated ethanol. Under the Proalcool program, all gas stations in Brazil became able to sell hydrated ethanol and the Brazilian government created ethanol storage reserves to ensure supply throughout the year.

Brazil’s policies related to fuel ethanol were revised in 1985, due to the decline in oil prices and the strengthening of international sugar prices, and this led to a temporary end to the Proálcool initiative. The sugarcane industry became focused on maximizing sugar production for export instead of ethanol.

In 2003, a new phase of expansion of sugarcane-based sugar and ethanol production took place motivated by the automotive industry launch of new flex-fuel cars (FFVs) capable of using either gasoline (with 20-25% anhydrous ethanol), hydrated ethanol or any blend of the two. These new FFVs were well accepted by consumers: as a result, the consumption of hydrated ethanol in the domestic market made a strong comeback. This also created opportunities for another expansion of the sugarcane industry in Brazil. During the period of 2003–2008, the Brazilian sugarcane industry grew rapidly, with many new and more efficient sugar-ethanol mills commissioned.

...

However, in 2008, the Brazilian ethanol agroindustry started to suffer due to its increasing lack of competitiveness in relation to gasoline and policies, with the use of petroleum-derived products economically favored. As the Brazilian automotive fleet was flex-fuel, gasoline demand increased and ethanol demand decreased such that by 2010 ethanol production was 30% less than in 2008.3 However, over the intervening years, ethanol production has slowly increased.

As of December 2017, 382 ethanol plants were producing anhydrous and hydrous ethanol.4 Total anhydrous and
hydrous ethanol production capacities were 128,000 m³/day and 237,000 m³/day, respectively.

In 2018, the share of ethanol in the fuel matrix used by light duty vehicles (Otto Cycle - in gasoline equivalent) reached
50.2%, the highest in history. This occurred despite a decrease in sugarcane production.

...

Besides sugarcane, Brazil now produces ethanol from corn grain and this is increasing.

...

Corn ethanol plants are feasible in corn producing areas in Brazil, especially when they are sited close to livestock operations because co-product distillers dried grain and solubles (DDGs), the major co-product from corn ethanol production, is valuable as a ruminant animal feed and can be sold to increase the profitability of the business. However, the center-west and northern areas in Brazil suitable for corn production are larger states with lower population densities and limited ethanol demand. An interesting benefit regarding corn-based ethanol production is that incorporating corn feedstock may help Brazil’s seasonal sugarcane based (sugar-) ethanol production plants by extending their annual production period beyond their, on average, 200 operating days/year (due to the difficulties of harvesting sugarcane during the rainy season). Moreover, corn ethanolbased plants may be a bridge to consolidate lignocellulosic sugarcane bagasse-based ethanol since units that operate with corn can share reactors for the hydrolysis step for both feedstocks (sugarcane bagasse and corn starch both need hydrolysis reactors).

...

Besides financing, another way Brazil is promoting biofuels is through excise duty reductions.

...

1.2. Biodiesel
Brazil has a mandatory blend of 10% biodiesel in diesel. The biodiesel program started in the 1980s, with the PRO-OLEO (Plan for the Production of Vegetable Oils for Energy Purposes) program, which established a mixture of 30% vegetable oils or derivatives in diesel and, in the long run, aimed for a total substitution. The proposed technological alternative was to produce biofuels by transesterification of vegetable oils. The main motivation was the oil crisis and sharp increase in fuel prices. After the fall in international oil prices in 1986, the PRO-OLEO program was abandoned.
In the early 2000s, the Brazilian government began another program to replace petroleum diesel with biodiesel.

...

In 2002, ethanolysis of vegetable oils was chosen as the main production route, with the fatty acid ester product named
PROBIODIESEL.

...

In this program, a blend/substitution level of 5% (B5) was mandated by 2005, and it was suggested that in
15 years this mandated level would increase to 20% (B20). In 2018, the blending mandate for biodiesel was 10% (B10).

...

2. Biofuel Policies: RenovaBio, Brazilian new biofuels legislation
Brazil’s Proalcool and the Biodiesel programs were started mostly for economic and energy security reasons. More recent governmental programs consider sustainability concerns, with a focus on social and environmental aspects. One example is RenovaBio, the new legislation established for the biofuel sector in 2017.

...

The new RenovaBio program is not expected to include the creation of carbon taxes or any kind of subsidy for biofuels. However, one of its provisions is to provide a market-based incentive by issuing GHG emissions reduction certificates to biofuels producers that can be traded in the stock market and purchased by fuel distributers.

...

The Resolution ANP nº 758, passed November 23, 2018, regulates the certification of efficient production or imports of biofuels and the accreditation of inspector firms.

...

3. Advances in biofuels production technologies
... In addition to encouraging increased production and use of conventional biofuels, greatly increased production of advanced (lignocellulosic) biofuels will also be critical to achieving future emission reduction goals. Accordingly, Brazil is investing in substantial research and development to tackle the technoeconomic challenges of producing lower carbon intensity advanced biofuels cost competitively.

When it comes to production of advanced biofuels, Brazil has two commercial cellulosic ethanol plants.

...

GranBio’s main early challenge was improving the biomass (sugarcane residues) pre-treatment and enzymatic hydrolysis yields for producing lignocellulosic (“or “2G”) ethanol. Its entire production of cellulosic ethanol is exported, especially to the United States and Europe where there are more mature carbon pricing markets in which lower carbon fuels command a premium. Surprisingly, the Brazilian market still does not recognize (value) the low carbon footprint of Brazil’s cellulosic (and sugarcane) ethanol. It is expected that the RenovaBio program will lead to Brazil establishing carbon pricing mechanisms in the coming years.

GranBio is also developing partnerships for licensing its technology and constructing new cellulosic ethanol plants based
on its design outside of Brazil.

...

Raízen started operations at its first commercial cellulosic ethanol plant in November 2014. Its enzymatic hydrolysis technology allows the annual production of ethanol to be increased without increasing the area under cultivation. Located in Piracicaba, São Paulo, it has the annual capability to produce 42 million liters of cellulosic ethanol from sugarcane straw and bagasse derived from conventional (1G) ethanol/sugar production. In the 2017/2018 harvest, 12 million liters of cellulosic ethanol was produced. By 2024, Raízen plans to build seven more cellulosic ethanol plants located next to conventional sugar-ethanol plants which once operating at full capacity will be able to produce one billion liters of cellulosic ethanol per year.

In the field of bioproducts, Braskem is one of Brazil’s leading companies continuously investing in R&D.9

...

4. Support for innovation
Due to Brazil’s competitive advantages in producing renewable energy and biofuels, and growing biofuels feedstocks, there are already several science and technology funds that support technology innovation in these areas. The National Bank for Social and Economic Development (BNDES) provides specific credit lines for the sugar, ethanol and bioenergy industries to fund investments in sugarcane production, expansion of industrial capacity for sugar and ethanol production, power cogeneration, logistics and multimodal transportation.

...

In addition to national institutions like BNDES, CNPq and FINEP, the state of São Paulo’s funding agency, FAPESP, plays an important role in supporting innovative companies in the bioenergy sector.

...

5. Biofuture Platform
The growing consensus around the world about the need to transition to a low carbon economy has resulted in a new wave of international collaboration, dialogue and activity around clean and sustainable energy.

...

This awareness led the government of Brazil to establish the Biofuture Platform, an intergovernmental, multistakeholder alliance of countries dedicated to promote collaboration, dialogue and awareness raising in the low carbon bioenergy and bioeconomy fields.12 READ MORE

The use of sugarcane straw for bioenergy is an opportunity, but there are pros and cons (Phys.org/São Paulo Research Foundation (FAPESP))

Sugarcane Straw Removal: Implications to Soil Fertility and Fertilizer Demand in Brazil (BioEnergy Research)

Tags

Brazil history economic policy energy policy environmental policy Transportation Fuels Policy sugarcane ethanol/bioethanol corn/maize corn ethanol E100 E95 E25 flex-fuel vehicles (FFV) anhydrous ethanol hydrous ethanol ethanol production co-products DDGS (distiller’s dried grains with solubles) animal feed BioRefineries/Renewable Fuel Production biodiesel B10 soybeans castor bean tallow animal fat B5 B20 Investing Financing markets/sales market forces market share Sustainability RenovaBio

Comments are closed.