Brazil's Biofuel Push Is Threatened by Too Much Cheap Oil

by Vanessa Dezem and Fabiana Batista (Bloomberg Technology) Brazil leading international effort to expand industry; Biofuel investments worldwide are down 25% this year ... Brazil is positioning itself as a global biofuels ambassador, fighting climate change by spurring demand for ethanol. It will be a tough sell in a world awash with cheap oil.

Brazil is one of the leaders of the Biofuture Platform, a group of 20 nations that also includes the U.S., China and France. The organization was formed at the annual United Nations climate meeting in Morocco last year and plans to present a global strategy to advance the development and use of low-carbon fuels at this year’s meeting in Bonn next month.

“Brazil doesn’t want to be the world’s only producer and supplier,” Jose Antonio Marcondes de Carvalho, undersecretary for environment, energy, science and technology at Brazil’s Ministry of Foreign Affairs, said in an interview. “We want to lead the international market for the bioeconomy, which will have big diversity of supply and demand.”

These goals will be tough to achieve, since global spending on renewable fuels has slumped along with the price of petroleum.

Biofuel consumption worldwide will need to increase 10-fold by 2050 to meet climate targets laid out in the Paris Accord, according to the group.

Transportation accounts for about 23 percent of the world’s energy-related greenhouse gases, and shifting to green fuels will go a long way toward reducing emissions. Representatives from the Biofuture nations will arrive in Bonn with pledges and non-binding targets to boost domestic investment, aimed at spurring both supply and demand. They also expect to announce policies they will implement to reach those goals.

As fossil fuel prices remain low, the unsubsidized cost of producing first and next-generation biofuel will overwhelmingly remain uneconomic.

“We need to reinforce internationally the value of low-carbon biofuels,” Carvalho said. “Investments are not occurring in the required speed, and they simply are not following the world’s targets for climate change.”

Shifting to electric cars may not have an immediate impact on total emissions in countries where the local power grid still depends on fossil fuels, Carvalho said.

“Biofuels lead to an immediate emissions reduction,” he said. “Electric cars must thrive. But their real impact in the global emissions depends also on how the electricity is generated.” READ MORE

Excerpt from Biofuels International: Reuters cites an anonymous government source, who was apparently present at a recent meeting between biofuel producers, the president and others involved in the programme. According to the source, the programme (RenovaBio) is unlikely to be approved by the Brazilian Congress this year.

Apparently, impact studies still need to be completed before the plan can be put into action. A concern held by Brazil’s Finance Ministry, according to Reuters’ source, is that higher fuel prices as a result of increased biofuel blending could lead to inflation.

To boost the chances of biofuel producers competing with the petroleum industry, the new legislation would mandate increasing minimum volumes of biodiesel and ethanol for fuel distributors to sell. These volumes would be tracked by emissions reductions certificates that can be traded to meet quotas.

RenovaBio is supported by environmental groups in Brazil, but the country’s fuel distribution industry and state-controlled oil company Petrobras have criticised the plan. READ MORE