1. BRAZILIAN SUGARCANE INDUSTRY ASSOCIATION Joel Velasco joel@unica.com.br +1 (202) 506-5299 Brazil’s Sugarcane Ethanol Industry

2. 2 OUTLINE Sustainable Solutions Today –Gasoline is the “alternative” –Ethanol uses 1% of arable land –+80% GHG emissions reduction Advanced Biomass Feedstock –Carbon absorbing machine –High and growing yields –Continuously improving technologies Food vs. Fuel debate? –Unsustainable oil –Abundant land –“Productivity stupid”

3. 3 Introduction: Who, What, Where

4. 4 UNICA The leading sugarcane industry association, representing 110 producers and mills in Brazil Responsible for 60% of all ethanol and sugar production in Brazil Emerging as a leader in the generation of bioelectricity International presence, now in Washington & Brussels, to engage in constructive dialogue

5. 5 LOCATION South-Central region represents 87% of sugarcane harvest Sources: NIPE-Unicamp, IBGE and CTC

6. 6 SUGARCANE HARVEST (2008/09) Source: CanaSat, INPE, CTC & UNICA

7. 7 PRODUCTS

8. 8 our sustainable solutions today

9. 9 Sugarcane is #1 source of renewable energy with 16% of total energy consumed RENEWABLE ENERGY RATIO 9 Source: Ministry of Mines and Energy’ BEN (2008 preliminary estimate)

10. Gasoline GASOLINE IS NOW THE ALTERNATIVE FUEL Ethanol 10 Source: ANP & UNICA

11. Accumulated Sales of Flex-Fuel Vehicles Domestic Ethanol Sales (E-100) DEMAND IS DRIVEN BY CONSUMER CHOICE 11 90% of new cars sold are FlexFuel, representing about 25% of fleet Source: ANP & ANFAVEA

12. 12 Note: Brazilian Gasoline has 25% ethanol content. There is no "pure" gasoline available in Brazil. ETHANOL VS. GASOLINE PRICES (2007) Sources: ANP, UNICA, Reuters Price at the Pump (R$/Liter)

13. Petroleum Gasoline (E-25) Ethanol (E-100) Producer’s Price GASOLINE NOT FOLLOWING OIL’S RISE 13 Sources: IMF, IPEA, CEPEA/ESALQ, ANP

14. 14 Millions of Hectares (2007) % total land % arable land BRAZIL 851 TOTAL ARABLE LAND354.8 1. Total Crop Land 76.7 9.0%21.6% Soybean20.6 2.4%5.8% Corn14.0 1.6%3.9% Sugarcane 7.8 0.9%2.2% Sugarcane for ethanol 3.4 0.4%1.0% Orange0.9 0.1%0.3% 2. Pastures 172.3 20%49% 3. Available area Total arable land – (crop land + pastures) 105.8 12%30% 1% OF ARABLE LAND DISPLACES 50% GASOLINE Sources: IBGE, UNICA

15. 15 an advanced biomass feedstock

16. Note: Reductions represent well-to-wheel CO 2 -equivalent GHG emissions avoided from unit of ethanol compared to gasoline, calculated on a life-cycle basis. AVOIDED GREENHOUSE GAS EMISSIONS 16 Source: IEA – International Energy Agency (May, 2004), based on a review of recent articles. RFS ADVANCED BIOFUEL

17.   U.S. RENEWABLE FUEL STANDARD 17 Source: SUGARCANE ETHANOL SUGARCANE ETHANOL

18. ENERGY BALANCE 18 Source: World Watch Institute, compilation of various sources.

19. Liters per hectare AVERAGE PRODUCTION YIELDS 19 Source: IEA – International Energy Agency (2005), USDA (2008), MTEC, MAPA, ICONE, UNICA

20. 20 A CARBON ABSORBING MACHINE? 2 METERS 3 METERS 2 METERS 3 METERS 1 METER 4 METERS 22-36 tons C/ha 3-5 tons C/ha 5-7 years Source: Polo de Biocombustivel (Weber Amaral) from various sources.

21. 21 Annual tons carbon per hectare 3-8 t C/ha 22-36 t C/ha CANE VS. PASTURES: CARBON UPTAKE Source: Polo de Biocombustivel (Weber Amaral) from various sources.

22. 22 BREAKDOWN OF SUGARCANE’S ENERGY Source: UNICA, CTC.

23. Assumptions based on the following values: 1 ton of sugar cane produces 250 kg of bagasse e 204 kg de straw, 1 ton of cane (only bagasse) generates 85,6 KWh for exporting, 1 ton of cane (bagasse + straw) generates 199,9 KWh for exporting, the straw inferior calorific value = 1,7 bagasse inferior calorific value, capacity factor = 0,5. Note: ave.MW = MW firm capacity. GROWING ROLE OF BIOELECTRICITY 23 Source: UNICA, COGEN. 10,000 MW

24. INSURANCE AGAINST SUBSIDIES… Exports Domestic SUGAR ETHANOL 32% 51% $20 Billion$45 Billion 24 Domestic SUGAR ETHANOL MW 16% Source: UNICA

25. 25 the food vs. fuel debate…

26. Petroleum Agricultural non-food raw materials Food Notes: Deflated values for March 2008 with CPI base 100 in January 1995; “Agricultural non-food raw materials” include cotton, wood.,wool, timber and leather. FOOD VS. OIL PRICES 26 Oil prices jumped +500% while food prices increased 36% Source: IMF, US Bureau of Labor Statistics, UNICA Percentage Increase

27. Note: “Others” include the harvested area for the remaining crops like fruits, fibers, nuts, pulses, roots and tubers, spices and other vegetables. WORLD LAND USE 27 The world’s total harvested agricultural area is 1.4 billion hectares. Only 15 million hectares are devoted to ethanol production. Source: FAO, F.O. Licht, Datagro, USDA, EC, UNICA

28. 28 Millions of Hectares (2007) % total land % arable land BRAZIL 851 TOTAL ARABLE LAND354.8 1. Total Crop Land 76.7 9.0%21.6% Soybean20.6 2.4%5.8% Corn14.0 1.6%3.9% Sugarcane 7.8 0.9%2.2% Sugarcane for ethanol 3.4 0.4%1.0% Orange0.9 0.1%0.3% 2. Pastures 172.3 20%49% 3. Available area Total arable land – (crop land + pastures) 105.8 12%30% 1% OF ARABLE LAND DISPLACES 50% GASOLINE Sources: IBGE, UNICA

29. 29 FOOD PRODUCTION INCREASING Area Sources: IBGE, UNICA Note: 1) 2008 is estimated data; 2) Grains include rice, corn, wheat, soybeans, etc. Brazil’s food production volumes doubled in the last decade mainly due to yield gains

30. Note: 1) 2007 * - estimated data ; 2) Sugarcane include cane destined for ethanol production, sugar production and other uses (animal feed, spirits, etc) PRODUCTIVITY FOR BRAZIL’S TOP THREE CROPS 30 Sources: IBGE, UNICA

31. Ethanol Sugar Area SUGAR & ETHANOL PRODUCTION INCREASING 31 Sources: IBGE, UNICA Brazil’s sugarcane ethanol volumes have increased 130% and sugar more than 350%

32. 100 countries could supply biofuels to 200 nations, while currently 20 oil producers provide fossil fuels today. WORLD SUGARCANE MAP 32 Sources: British Sugar

33. BRAZILIAN SUGARCANE INDUSTRY ASSOCIATION