Advanced BioFuels USA

by Sarita Reed and Vincius Fontana  (Future Fuel Strategies/China Dialogue) There are 332 million cars on the road in China, more than anywhere in the world. Most run on pure petrol, but from next year Chinese fuel companies will add 10% ethanol, a move that could have far reaching implications for the consumption of fossil fuels.

Brazil’s biofuel industry is the world’s second largest behind the US. In recent years it has suffered from fuel price shocks resulting from shifts in government policy, but it has been buoyed by the enormous potential of the Chinese market.

In May, China and Brazil resolved a Brazilian complaint to the World Trade Organisation (WTO) about Chinese tariffs on sugar, paving the way for greater imports. Brazilian farmers also expect the agreement to open the door for more Brazilian ethanol.

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“Adding it increases the degree of octane in the fuel, improving mileage. It avoids the use of heavy metals (especially lead), and reduces global carbon dioxide emissions,” said ldo Sauer of the University of São Paulo.

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Since 2009, Brazil has had a process of Agro-Ecological Sugarcane Zoning that blocks cane fields from encroaching onto indigenous lands or areas of native vegetation. It can only be planted on degraded pastures.

However, the ruralista agribusiness caucus in Brazil’s legislature has pushed to change the law.

In 2017, Senator Flexa Ribeiro proposed a bill to clear land in the Cerrado savannah and grassland areas within the Amazon region. Protests from environmentalists and even some farmers eventually led to the proposal being shelved last year.

The region earmarked for sugarcane expansion is not the Amazon but the area known as Matopiba that straddles the states of Maranhão, Tocantins, Piauí, and Bahia in the Cerrado, which is already impacted by the expansion of soy farming.

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China is expected to consume 15 million tonnes of biofuels in the coming year. The country currently has the capacity to produce approximately three million tonnes annually, a figure that could hit five million in 2020, according to market data provider IHS Markit.

This would leave a shortfall of around 10 million tonnes, which could allow Brazil, whose largest trading partner is China, to become a leading supplier. Brazil’s domestic ethanol production for the 2018/2019 season was around 33.1 million tonnes.

“The prospects are excellent,” said Artur Yabe Milanez, head of biofuels at Brazilian development bank BNDES. “For years, Brazil has tried to open the Chinese market to ethanol, and it appears that the efforts are now paying off.”

Brazil is also capable of producing diverse biofuel crops and is turning to maize as an alternative to sugarcane, which has traditionally been used for domestic production.

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“The addition of ethanol to petrol has been mandatory in Brazil since 1938, and since that time there has been bargaining with sugarcane producers,” Sauer said. “When sugar prices on the international market were bad, there was pressure to increase the level of ethanol in petrol, and this still happens today.”  READ MORE

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