1. Overwiew of the sugar and ethanol industries in Brazil Prof. Dr. Edgar G. F. de Beauclair - egfbeauc@esalq.usp.br Dra. Raffaella Rossetto - raffaella@apta.sp.gov.bregfbeauc@esalq.usp.br

2. 6 MILLIONS HECTARES 6 MILLIONS HECTARES 470 MILLIONS TONS OF CANE 470 MILLIONS TONS OF CANE 83 TON. SUGARCANE/ha 83 TON. SUGARCANE/ha Fonte: ORPLANA 2006 Fonte: ORPLANA 2006 29 MILLIONS TONS OF SUGAR 29 MILLIONS TONS OF SUGAR 17 BILLIONS LITERS OF ETHANOL 17 BILLIONS LITERS OF ETHANOL Fonte: Estimativas Nastari, 2007 Fonte: Estimativas Nastari, 2007 Sugarcane in Brazil 2007

3. 3 MILLIONS HECTARES 3 MILLIONS HECTARES 265 MILLIONS TONS OF CANE 265 MILLIONS TONS OF CANE 90 TON. SUGARCANE/ha 90 TON. SUGARCANE/ha Source: IEA, 2008 Source: IEA, 2008 19,5 MILLIONS TONS OF SUGAR 19,5 MILLIONS TONS OF SUGAR 11 BILLIONS LITERS OF ETHANOL 11 BILLIONS LITERS OF ETHANOL Source:UNICA. 2007 Source:UNICA. 2007 Sugarcane in São Paulo state, 2007

4. Renewable sources 44.5 % Fonte: MME, BEN 2006 Renewable No Renewable Brazil 0 20 40 60 80 100 World 14 86 45 55 % BRAZILIAN ENERGY BASE Gilberto Ribeiro de Carvalho - PETROBRAS

5. Brazilian plants Brazil has 357 plants that produces sugar, ethanol and some of them also produce electric energy using bagasse Untill 2010 will be installed more 88 mills: 19 in 2007/08; 36 in 2008/09; 33 in 2009/10 Total investment = US$ 17 billions

6. Bioediesel Plant Barralcool Mill – Barra do Bugres, MT – has 30,000 ha of sugarcane, capacity of 14,000 t/day of sugarcane. The first in Brazil to produce: sugar, ethanol, energy and biodiesel

7. Sugarcane areas in Brazil Amazon forest Pantanal wetlands Atlantic coast forest

8. Sugar and Ethanol Industries in Brazil, 2007

9. Sugarcane production and needs of irrigation High Medium Low Unproperly Fonte: Ministério da Agricultura

10. South Center Brazil´s sugarcane mills South Center Brazil´s sugarcane mills Moagem 2009 Moagem 2005 Moagem 2006 Moagem 2007 Moagem 2008 Fonte: CTC/UNICA

11. Sugar Cane Estimative Area in the State of São Paulo (2005 – 2015)

12. Areas for agriculture expansion in Brazil 106 millions hectares for agriculture

13. Source: Glencore

14. 205 51% 198 49% 227 53% 200 47% 252 55% 203 45% 277 57% 210 43% 304 58% 217 42% 334 60% 225 40% 0 100 200 300 400 500 600 Milions of ton. 2005/062006/072007/082008/092009/102010/11 For Ethanoll For sugar 403 559 521 487 455 427 Estimate increase in Brazilian sugarcane production Increase of 30 millions t/year

16. Brazil´s sugar exportation Fonte: Ministério da Agricultura

17. RESULTS - Between 1975 and 1979, ethanol production increased more than 500%. BRAZILIAN ETHANOL PROGRAM 1975 – high oil import costs + low world sugar prices Federal government promoted Ethanol production for blending-E20 Credit guarantees and low interest loans for new distilleries State trading enterprise began purchasing ethanol at high prices A marketing program Petrobras – ethanol distribution throughtout the country

18. 1979 – Brazilian Government signed agreements with car companies for 100% ethanol powered cars 1985 – Troublesome period World oil prices dropped - reducing the benefit of replacing oil imports with ethanol. Brazil faced serious inflation problems and began a series of economic reforms. Differential price between ethanol and gasoline was eliminated. Differenciated loans for the construction of new distilleries were cut. BRAZILIAN ETHANOL PROGRAM RESULTS – Fiat, VW, MB,GM and Toyota produced 250,000 ethanol powered cars in 1980 350,000 in 1982

19. End of 1990´s – agreementes among Brazilian government and auto manufacturers for development of flex fuel vehicles. 2001 – Government proposed a preferential tax for flex or ethanol fueled vehicles, a 14% sales tax, as compared to a 16% sales tax on non-ethanol fueled cars. BRAZILIAN ETHANOL PROGRAM 1990 – Low profile for Brazil´s ethanol program – Government required that all gasoline sold in Brazil contained E20% RESULT - Ford launched the first flex fuel prototype in 2002, with VW following in 2003.

20. Ethanol First Brazilian car fuelled by a blend of ethanol and gasoline - 1925

21. 10³ L Brazilian Ethanol Production (1993 – 2007)

22. Productivity gains

23. Ethanol uses in Brazil 17 billions L / year 77% as fuel 5% in food and perfume industries, and ethanol derived chemicals, 18 % exported Anhydrous ethanol - to blend with gasoline (20 -25%) Gasoline C Hydrous ethanol - directly as fuel. – Flex Fueled vehicles 40% of the fuel used in light vehicles

24. Flex fuel vehicles in Brazil 88% on July/2007 Source: Anfavea

25. Market Projection Fuel Ethanol - Brazil

26. Source: Glencore

27. Ethanol exported from Brazil Fonte: Ministério da Agricultura

28. Brazilian ethanol exports 2006/07 countries Ethanol (m 3 ) South Africa2,006 Angola3,178 Canada18,855 Colombia10,320 South Coreia92,273 Costa Rica91,265 El Salvador181,143 United States1,767,060 France8,900 Ghana6,075 India10,074 Jamaica131,643 Japan225,403 Mexico50,241 Nigeria42,680 Holand346,616 Sweden204,614 Venezuela104,606 Other countries129,905 TOTAL3,426,857 Source:

29. Fermentation gains 75 - 80%90 - 92% 19772007Parameters Wine Contamination (n. bacteries) 10 8 -10 9 /mL Fermentation time 18 - 22 h6 - 10 h Yeast Recirculation ~70%>90% 10 5 -10 6 /mL Destilation gains 95%>99% Yeast in the wine 4-6%8-17% Industrial Fermentation Process Evolution

30. Ethanol production costs and energy balance Ethanol corn USA – 4,9 billion galllons US production costs $ 1.09 per gallon Gasoline $ 3.03 Ethanol $2.62 $ 3.71 energy equivalent Ethanol sugarcane BRAZIL – 4 billion galllons BR production costs $ 0.87 per gallon Gasoline (E25) $ 4.91 Ethanol $ 2.92 $ 3.88 energy equivalent Retail Prices US$/gallon Energy balance 1:1.3 Energy balance 1: 8 Energy balance is the fossil fuel energy used to make fuel (input) compared with the energy in the fuel (output) Source: R. Covey, National Geographic, 2007

31. Hydrolisis process Chemical hydrolisis Enzimatic hydrolisis Pre-treatment Organic solvent Concentrated acid Diluted acid TECNOLOGIA DHR Dedini´s prototype 5000L/day

32. ETHANOL PRODUCTION USING BAGASSE Potencial for conversion of Bagasse in ethanol

33. New technologies for ethanol production Bagasse hidrolysis 200720152025 Technologyl/tcl/hal/tcl/hal/tcl/ha Conventional856,5001008,20010910,400 Hydrolise--141,100373,500 Total 856,5001149,30014613,900

34. mil m3 Ethanol demands Fuel Industry Internal market (*) ExportsTotal 200412,43481813,2522,40015,652 200513,08484713,9312,50016,431 200614,12288115,0032,70017,703 200715,51290716,4203,23019,650 200816,97993417,9133,78021,693 200918,52196219,4834,33023,813 201020,21099121,2015,00026,201 (*) do not include estimates for biodiesel production and ethanol byproducts Estimates for total ethanol consumption

35. Sugarcane energy x oil energy 150 kg of sugar ------ 2,400 MJ 140 kg of bagasse ------ 2,500 MJ 140 kg of straw ------ 2,500 MJ 1 barrel oil 6,000 MJ 1 ton sugarcane stalks 7,400 MJ 1 ton of sugarcane = 1,25 barrel of oil 470 millions tons sugarcane = 587 millions barrel of oil 85 tons sugarcane/ha = 630GJ / ha or 105 barrel of oil

37. Electric and Mechanical Energy generation Mills and distilleries also generated 11.3 TWh of electric and mechanical power, most of it for self consumption. That is equivalent to 3% of the electric power consumed in the country. The use of bagasse as a fuel is equivalent to 20.2 M tons of oil

38. New technologies and increasing areas of sugarcane (5-10 years) Energy potencial – with actual technologies Energy excess, actually sold as electric energy ENERGY from sugarcane biomass (MW/year) Energy used to produce sugar and ethanol Fonte: Aneel/Unica

39. Usina Santa Cândida / SP 32MW Fotos: Koblitz

40. GHG emissions avoided by the sector in 2003 were as follows: - for ethanol replacing gasoline: 27.5 million tons of CO 2 equivalent -for cane bagasse replacing fossil fuel in sugar production: 5.7 million tons of CO 2 equivalent. GHG EMISSIONS BY THE SECTOR For every additional 100 million tons of sugar-cane, 12.6 million tons of CO 2 equivalent worth of emissions could be avoided over the next few years using ethanol, the bagasse and the additional electric power surplus.

41. Conclusions Since 1975, when Brazilian Ethanol Program was launched, it remains the largest commercial application of biomass for energy production and use in the world Over the last 22 years, savings amounted to 1,8 billion US$/year with the replacement of ~ 200,000 barrels of gasoline/day Social Impacts - More than 720,000 direct jobs and 200,000 indirect jobs in rural areas – decreasing social and environmental disruption in big cities

42. Conclusions With high oil prices (> US$40/barrel) With low oil prices (< US$40/barrel) Economic incentive for Ethanol Program Ethanol Program depend upon its contri- bution to curb the greenhouse effect New sugar mill and distilleries plants will produce: sugar, ethanol, eletric energy, Biodiesel, sucrose byproducts and ethanol from sugarcane biomass. Future - new technologies : bagasse and trash gasification and hydrolisis, Industrial automation, fermentation process – yeast breeding, precision agriculture, genetically modified sugarcane. Brazil is interested in establishing a global market for ethanol as a traded commodity.