Chinese Demand Heats up Brazil’s Ethanol Industry
by Sarita Reed and Vinicius Fontana (China Dialogue) Adding ethanol to Chinese petrol will decrease emissions but could worsen Brazil’s deforestation — 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.
Environmentalists are optimistic that adding ethanol to Chinese petrol will cut greenhouse gas emissions but they are wary of unintended consequences because the biofuel industry requires large maize and sugarcane plantations that can encroach on forests.
“There is the risk of trading one problem – fossil fuels – for one that is much worse: deforestation,” said Ricardo Junqueira Fujii, a conservation analyst at NGO WWF-Brazil.
He added that the country’s potential to produce low-carbon fuel could double without compromising food production.
Brazil has a responsibility to define adequate public policies for land use and conservation of the Amazon, Cerrado, and other Brazilian biomes, Fujii said.
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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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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.
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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.”
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“We need to move from the food versus fuel debate to a food and fuel debate. There is no question: food comes first,” Graziano (UN Food and Agriculture Organization chief José Graziano da Silva) said in 2015. “But biofuels should not be simply seen as a threat or as a magical solution. Like anything else, they can do good or bad.” READ MORE
Report: China to fall short of E10 by 2020 goal (Ethanol Producer Magazine)
