Ethanol in Brasil: a model to follow or to avoid? (Latin America mini-series 3 of 4)
Dario Gaeta
Objectives
 Understand the Ethanol economic environment in Brazil: past, present and future
 Know how a Sugarcane mill works
 Evaluate the recent milestones of the Ethanol Program  Keep asking…
AGENDA
Milestones of the Ethanol in Brazil
Basics about Sugarcane Ethanol
Comparison between Ethanol and Gasoline
Feasibility of the Ethanol as biofuel
Future of the Bio feedstock – end of Oil era?
Futurology
Q&A
Milestones for Sugarcane Ethanol in Brazil
Early 70’s ‐ launched the Ethanol Program by Military Government
Late 70’s –Ethanol car developed, production grew 6 fold
80’s ‐ second oil crisis, ethanol supply crisis
Late 90’s – blend increased to 22% 2003 – FFC launched
2005‐2007 – ethanol booming
2008 – 2014 – ethanol blowing
2016 – ethanol Phoenix program 
Source: UNICA
SUGARCANE MILL and BASICS
UNICA PRESENTATION
http://english.unica.com.br/virtual‐mill/video‐new/virtual‐mill.htm
KEY NUMBERS – Sugarcane mill
• 5MM t of sugarcane p.y.
• 3.000 employees
• 24/7 – 260 days
• > 800 vehicles
• 40 MM USD maintenance cost every year
• 10.000 ha replant every year
• 300 MM l Ethanol
• 250 Th t Sugar SUGARCANE PRODUCTS: STEP BY STEP
Source: UNICA
Sugar
Current
technology
Technology under
development
Cane juice
(Sucrose)
Drop‐in fuels
(Diesel, jet fuel, gasoline)
Detergents &
solvents
Cane stalks
Ethanol
Sugarcane
Cosmetics
Bagasse
Lubricants
Biopolymers
(bioplastics,
isoprene, etc)
Flavors and
Fragrances
Straw (Leaves)
Bioelectricity
Food
KEY NUMBERS ‐ BRAZILIAN SUGARCANE SECTOR
•
•
•
•
•
Number of mills: ~ 400
Sugarcane growers: 70,000
Direct employment: 1.2 million
Sector annual revenue: US$ 48 billion
Foreign Revenue (Exports): US$ 15 billion
1st SUGAR PRODUCER IN THE WORLD (2011)
22% of world production
45% of world exports (50% in 2010)
2nd ETHANOL PRODUCER IN THE WORLD (2011)
22% of world production
22% of world exports (2012 estimate: 38%)
Sources: LMC, F.O.Licht’s, Secex, UNICA and Rais.
SUGARCANE PRODUCTION IN BRAZIL:
AN OVERVIEW OF THE LAST DECADE
Sources: UNICA and MAPA. Note: * – forecast
1.World financial crisis
acquisitions involving affected companies
2. Weather problems in three consecutive harvests
3. Loss of domestic competitiveness for ethanol compared to gasoline
Stagnation
700
500
400
300
200
100
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
0
00/01
Sugarcane Million Tonnes of
600
MORE EFFICIENT PRODUCTION PROCESSES
Expansion of mechanized harvesting in South‐Central Brazil
(in thousands of hectares)
1
Mechanized harvesting
Source: CTC and Conab. Elaboration: CTC.
Manual harvesting
Manual Harvesting
Mechanized Harvesting
Brazilian fleet by fuel
(Otto cicle)
Number of vehicles
Year
Total fleet
Flex fuel
Gasoline
Ethanol
Electric
2006
20.177.701
2.603.914
15.541.077
2.032.710
2007
21.517.698
4.586.512
15.085.856
1.845.330
2008
23.104.220
6.878.189
14.555.523
1.670.508
2009
24.967.140
9.467.825
13.991.052
1.508.263
2010
27.058.723
12.244.937
13.455.428
1.358.358
2011
29.160.425
14.944.734
12.995.272
1.220.419
2012
31.410.752
17.895.425
12.421.215
1.093.995
117
2013
33.513.236
20.772.995
11.761.194
978,439
608
Jan/2014 33.687.794
21.010.115
11.707.695
969.283
701
Nota: Ciclo Otto não inclui os veículos movidos a diesel. Veículos elétricos abrangem as versões elétrico/fonte externa, elétrico/fonte interna e híbrido (combustível líquido/elétrico).
WHAT COMES NEXT?
ETHANOL: ACCELERATED GROWTH OF THE FLEX FLEET
Fleet of motorcycles: 53% of bikes sold, in the
first half of this year, were flex
81%
Flex fuel
Gasoline
Ethanol (only)
Flex fuel
Gasoline
Brazil will need to double the supply of fuels (ethanol and gasoline)
to attend the demand in 2020
Source: Estimate of UNICA.
2020
2017
2016
2015
2014
2013
2012
2019
2020
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
0
2005
‐
2006
5
2004
10
2011
10
2010
20
15
2009
30
20
2008
Flex/total
2003
Millions of vehicles
51%
40
25
2007
motorcycles (million) Fleet
70%
Flex/total
Flex/total
2006
50
61%
30
2018
Flex/total
2005
60
2019
Estimate of the Brazilian fleet of light
vehicles (Otto cycle)
AUTOMOTIVE FUEL IN SHORT SUPPLY IN BRAZIL
In billion liters of gasoline equivalent
Otto Cycle consumption
Productive capacity of gasoline and VNG consumption
75
Ethanol supply
29,5
48
gasoline
Fuel deficit
6,0
20,0
16,5
25,5
2012
Source: UNICA.
Gasoline production
and VNG
consumption: stable
Need to expand
production of
ethanol and / or
25,5
2021
Ethanol productive
capacity
(> 30 billion liters)
Ethanol trade offs
There is a historical 70% Ethanol/gasoline price ratio
Mills have flexibility but not that much:
60 / 40 – 40 / 60
Since 2009 Gasoline did not have its price adjust by inflation
Since 2009 Ethanol has a 7%p.a. avg cost increase
Petrobras case Lack of long term Policy
BRAZILIAN ENERGY MATRIX INPUT
2012
Other
Coal and Renewables Uranium
Derivatives 4.1%
1.5%
5.6%
Natural Gas
10.1%
Wood and
Other
Biomass
9.7%
Hydro
14.7%
Oil
and
Derivatives
38.6%
Sugarcane
15.7%
#1 Source of Renewable Energy in BR
(but decreasing)
47.3%
45.5%
44.1%
52.7%
54.5%
55.9%
2009
2010
2011
Non‐renewable
Renewable
WORLD (%)
12.9
7.6
87.1
92.4
44,1
55,9
World OCDE Brazil
(2008) (2009) (2011)
Non‐renewable Renewable
Source: Balanço Energético Nacional BEN (2011) and International Energy Agency. Key World Statistics 2010. Elaboration: UNICA
Sugar, Ethanol and Gasoline production volume and prices
Ethanol Project (Pro‐álcool program between 1975 and 2009
Ethanol
Fas Productio Ethanol
Price
Ano
n
e
(m3) (R$/m3)
1975
1976
1ª
1977
1978
1979
tGc (%)*
1980
1981
1982
2ª
1983
1984
1985
1986
tGc (%)*
1987
1988
1989
1990
3ª
1991
1992
1993
1994
1995
tGc (%)*
580
642
1.388
2.248
2.854
5.589
3.676
4.207
5.618
7.951
9.201
11.563
9.983
2.176
12.340
11.523
11.809
11.518
12.862
11.766
11.395
12.513
12.745
55
2.052
2.402
2.450
2.297
2.348
227
3.063
3.327
2.798
2.814
2.833
2.561
2.452
‐412
3.004
2.672
2.027
1.909
1.694
2.014
1.933
2.394
1.445
‐535
Gasoline
Price
Sugar Price
(R$/m3)
(Kgm3)
3.638
4.257
4.342
4.071
4.161
227
5.908
5.832
5.167
4.787
4.526
3.945
3.775
‐775
4.610
3.929
2.703
2.543
2.262
2.566
2.452
2.964
1.791
‐771
2,74
3,18
3,36
3,23
3,09
254
3,10
3,23
3,47
3,26
3,23
3,27
2,59
‐207
3,09
3,24
3,22
2,34
2,40
3,05
2,44
2,99
2,22
‐304
Produção Preço do Preço da Preço do Açúcar
Ano Fase de Etanol Etanol Gasolina
(m3) (R$/m3) (R$/m3)
(Kgm3)
1996
1997
4ª
1998
1999
2000
tGc (%)*
2001
2002
2003
2004
2005
2006
5ª
2007
2008
2009
2010
2011
2012
2013
tGc (%)*
tGc (%)*
fonte: * Elaboração Própria a partir dos Dados Oriundos do Ipea, Mapa, Conab, ANP, IEA e Unica.
14.134
15.494
14.121
12.981
10.700
‐707
11.466
12.588
14.470
14.648
16.039
17.764
22.556
26.683
25.866
27.604
22.736
23.473
27.365
637
691
1.551
1.813
1.984
1.653
2.132
559
2.016
1.788
1.890
1.553
1.666
1.994
1.955
1.783
1.752
1.886,
2.117
2.359
2.921
3.268
1.527
3.246
2.988
2.908
2.670
2.815
3.023
2.770
2.430
2.383
2,15
1,71
1,63
1,27
1,64
‐804
1,62
1,56
1,81
1,30
1,43
1,81
1,37
1,12
1,56
‐8
‐126
‐152
‐181
‐116
‐275
Gasoline Prices in Brazil
Ethanol / Gasoline price comparison
DIVERSOS PAISES
Ethanol / Gasoline price comparison by State in BR
DIVERSOS PAISES
Ethanol demand trend
Bndes setorial
Gasoline Volume
Due to this “policy” gasoline demand is increasing and Ethanol...
Hydrous Ethanol volume
... Is crashing.
ETHANOL: Sugar cane prices
Etanol: Preços
O preço médio do etanol hidratado no produtor em fevereiro, sem tributos, teve uma média de R$ 1,389/litro
do combustível. O preço médio do etanol anidro ficou em R$ 1,522 por litro do combustível. O que representa
uma variação mensal positiva em relação ao mês de janeiro de 8,1% e 4,3%, respectivamente, nos preços do
etanol hidratado e anidro.
Comparando os preços de fevereiro de 2014 com os preços do mesmo período ano anterior, o do anidro está
13,3% maior e o do hidratado está 12,1% mais caro. Destaca‐se que o acompanhamento dos preços semanais
realizados pela ESALQ refere‐se aos preços praticados no mercado spot, ou seja, não captura os preços
praticados nos contratos.
ETHANOL: Sugar cane prices
ETHANOL: margins
ETHANOL: Prices comparison – monthly average
Etanol: Paridade de Preço – Semana de 16.03.2014 a 22.03.2014
A paridade de preços no varejo, em nível nacional, no meado de março de 2014, esteve acima dos 70% (valor que torna o consumo de hidratado mais vantajoso do ponto de vista econômico em relação à gasolina) em todas as capitais do país. As cidades de Macapá, Belém, Teresina e Boa Vista tiveram as maiores paridades, próximas ou iguais a 90%. Na média das capitais a paridade está acima dos 70%. Os preços desfavoráveis ao etanol demonstram o período de entressafra na região centro‐sul.
ETHANOL: Sugar and Oil prices compared to Ethanol
Oil Price Evolution
The future price evolution will show the ethanol advantages
Oil Price Evolution
World Oil Consumption by country
GEEs in a 100 km travel by different fuels in the same type of car:
GEEs
Avoided
emissions emission
kgCO2
(%)
Model
Motor
Fuel
Km/L
Engine max HP
S10cabine
simples
2.8turbo
Diesel
13,5
140HP
29,69
‐‐
S10cabine
simples
2.4
flexpower
Gasoline A
10,4
141HP
35,10
0
S10cabine
simples
2.4
flexpower
Gasoline C
(24%ethanol)
9,5
141HP
28,34
19
S10cabine
simples
2.4
flexpower
Ethanol
(sugar cane)
7,2
147HP
6,92
80
O veículo a álcool emitiria somente 20 % dos GEEs do que se rodasse a gasolina pura!
Ou
O uso do bio‐etanol proporciona uma mitigação de 80 % das GEEs emitidas em comparação com o
uso de gasolina pura.
Futurolgy
Ethanol will be an additive to gasoline worldwide
Biomass residue will have cost (waste also)
Algae may be the biggest source of CH
Nanotech will open new frontiers
Dario Costa Gaeta
Oil participation in energy history
100 500 1000 1800 1850 1900 1950 1980 2000 2050 2060 2070 2080 2090 2100
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Before WW2
Post war
Near future
– Coal
– Oil
- Renewables
Agrícola
Carvão
Petróleo
“When we look back, we will notice that we have had an short fossile raw
material period fasis...”
Christian Kohlpaintner – Board of Directors of Clariant
Thank you!!!
Back up
SUGARCANE AGROECOLOGICAL ZONING IN BRAZIL
1. It excludes sugarcane
expansion in the most
sensitive biomes – e.g.
Amazonia and Pantanal.
2. It excludes sugarcane
expansion on any type of
native vegetation (Cerrados,
Campos, etc.)
3. Authorized areas for sugarcane
expansion: 64.7 ml hectares,
equivalent to 7.5% of the
Brazilian territory (Currently 1%
of the area is used for
sugarcane)
Prices by product evolution
AVERAGE PRICE IN SÃO PAULO STATE
R$ / Kg of Sugar Content ( ATR)
Produto
White Sugar – local market
White Sugar – export
VHP Sugar – export
Anhydrous Ethanol fuel
Hydrous Ethanol fuel
Anhydrous Ethanol industrial
Hydrous Ethanol industrial
Anhydrous Ethanol export
Hydrous Ethanol ‐ export
Average Price per harvest year
Average Price ‐ Sugar Cane
Average Price – Sugar for Ethanol
Source: UNICA 2014
Consecana Model/SP
2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014¹
0,2399
0,2484
0,2149
0,2727
0,2510
0,2794
0,2551
0,2504
0,2575
0,2443
0,2284
0,3011
0,2958
0,2615
0,2982
0,2652
0,3063
0,2730
0,2841
0,2870
0,2782
0,2785
0,5136
0,4085
0,3433
0,3422
0,3019
0,3360
0,3085
0,2987
0,2414
0,3492
0,3982
0,5667
0,4386
0,3934
0,4007
0,3536
0,3697
0,3684
0,3600
0,3096
0,4022
0,4408
0,5892
0,5752
0,4927
0,5276
0,4389
0,5144
0,4462
0,4553
0,3985
0,5018
0,5280
0,4879
0,5361
0,5013
0,4472
0,4165
0,4693
0,4206
0,4741
0,4294
0,4728
0,5027
0,4941
0,4834
0,4292
0,4734
0,4377
0,4871
0,4476
0,4711
0,4443
0,4524
0,4517
0,2582
0,2781
0,3070
0,3663
0,4698
0,4371
0,4823
Ethanol demand trend
Bndes setorial