Ethanol fuel in Brazil

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Six typical Brazilian flex-fuel models from several car makers, popularly called "flex" cars, that run on any blend of hydrous ethanol (E100) and gasoline (E20 to E25).

Brazil is the world's second largest producer of ethanol and the world's largest exporter. Together, Brazil and the United States lead the industrial world in global ethanol production, accounting together for 70% of the world's production;^[1] and nearly 90% of ethanol used for fuel. ^[2] In 2006 Brazil produced 16.3 billion litres (4.3 billion U.S. liquid gallons),^[3] which represents 33.3% of the world's total ethanol production and 42% of the world's ethanol used as fuel.^[2]

Brazil is considered to have the world's first sustainable biofuels economy and the biofuel industry leader,^[4][5][6][7] a policy model for other countries; and its sugarcane ethanol "the most successful alternative fuel to date."^[8] However, some authors consider that the successful Brazilian ethanol model is sustainable only in Brazil due to its advanced agri-industrial technology and its enormous amount of arable land available;^[8] while for other authors it is a solution only for some countries in the tropical zone of Latin America, the Caribbean, and Africa.^[9] Brazil’s 30-year-old ethanol fuel program is based on the most efficient agricultural technology for sugarcane cultivation in the world,^[10] uses modern equipment and cheap sugar cane as feedstock, the residual cane-waste (bagasse) is used to process heat and power, which results in a very competitive price and also in a high energy balance (output energy/input energy), which varies from 8.3 for average conditions to 10.2 for best practice production.^[6][11]

Brazil has ethanol fuel available throughout the country. Shown here a typical Petrobras gas station at São Paulo with dual fuel service, marked A for alcohol (ethanol) and G for gasoline.

There are no longer any light vehicles in Brazil running on pure gasoline. Since 1976 the government made it mandatory to blend anhydrous ethanol with gasoline, fluctuating between 10% to 22%.^[12] and requiring just a minor adjustment on regular gasoline motors. In 1993 the mandatory blend was fixed by law at 22% anhydrous ethanol (E22) by volume in the entire country, but with leeway to the Executive to set different percentages of ethanol within pre-established boundaries. In 2003 these limits were set at a minimum of 20% and a maximum of 25%.^[13] Since July 1st, 2007 the mandatory blend is 25% of anhydrous ethanol and 75% gasoline or E25 blend.^[14]

The Brazilian car manufacturing industry developed flexible-fuel vehicles that can run on any proportion of gasoline (E20-E25 blend) and hydrous ethanol (E100).^[15] Introduced in the market in 2003, flex vehicles became a commercial success,^[16] and by February 2009, the fleet of "flex" cars and light commercial vehicles reached 7,1 million vehicles,^[17][18][19] which represents around 21% of Brazil's registered light motor vehicle fleet.^[20] The success of "flex" vehicles, together with the mandatory E25 blend throughout the country, have allowed ethanol fuel consumption in the country to achieve a 50% market share of the gasoline-powered fleet by February 2008.^[21][22] Considering diesel-powered vehicles, sugarcane ethanol represented 16.7% of the country's total energy consumption by the automotive sector in 2007.^[23]

[edit] History

Sugarcane has been cultivated in Brazil since 1532 as sugar was one of the first commodities exported to Europe by the Portuguese settlers.^[24] The first use of sugarcane ethanol as a fuel in Brazil dates back to the late twenties and early thirties of the twentieth century, with the introduction of the automobile in the country.^[25] Ethanol fuel production peaked during World War II and, as German submarine attacks threatened oil supplies, the mandatory blend became as high as 50 percent in 1943.^[26]

After the end of the war cheap oil caused gasoline to prevail, and ethanol blends were only used sporadically, mostly to take advantage of sugar surpluses,^[26] until the seventies, when the first oil crisis resulted in gasoline shortages and awareness of the dangers of oil dependence.^[25][26] As a response to this crisis, the Brazilian government began promoting bioethanol as a fuel. The National Alcohol Program -Pró-Álcool- (Portuguese: 'Programa Nacional do Álcool'), launched in 1975, was a nation-wide program financed by the government to phase out automobile fuels derived from fossil fuels, such as gasoline, in favor of ethanol produced from sugar cane.^[27][28][29]

The 1979 Brazilian Fiat 147 was the first modern automobile launched to the market capable of running only on hydrous ethanol fuel (E100).

The first phase of the program concentrated on production of anhydrous ethanol for blending with gasoline.^[12] The Brazilian government made mandatory the blending of ethanol fuel with gasoline, fluctuating from 1976 until 1992 between 10% to 22%.^[12] Due to this mandatory minimum gasoline blend, pure gasoline (E0) is no longer sold in the country. A federal law was passed in October 1993 establishing a mandatory blend of 22% anhydrous ethanol (E22) in the entire country. This law also authorized the Executive to set different percentages of ethanol within pre-established boundaries; and since 2003 these limits were fixed at a maximum of 25% (E25) and a minimum of 20% (E20) by volume.^[12][13] Since then, the government has set the percentage of the ethanol blend according to the results of the sugarcane harvest and the levels of ethanol production from sugarcane, resulting in blend variations even within the same year.^[12] Since July 2007 the mandatory blend is 25% of anhydrous ethanol and 75% gasoline or E25 blend.^[14]

Historical trend of Brazilian total production of light vehicles, ethanol-only, flex fuel, and gasoline vehicles from 1979 to 2007.^[17]

After testing in government fleets with several prototypes developed by the local carmakers, and compelled by the second oil crisis, the Fiat 147, the first modern commercial ethanol-only powered car (E100 only) was launched to the market in July 1979.^[28] The Brazilian government provided three important initial drivers for the ethanol industry: guaranteed purchases by the state-owned oil company Petrobras, low-interest loans for agro-industrial ethanol firms, and fixed gasoline and ethanol prices where hydrous ethanol sold for 59% of the government-set gasoline price at the pump. These incentives made ethanol production competitive.^[30] After reaching more than 4 million cars and light trucks running on pure ethanol by the late 1980s,^[17] representing one third of the country's motor vehicle fleet,^[31] ethanol production and sales of ethanol-only cars tumbled due to several factors. First, gasoline prices fell sharply as a result of lower gasoline prices, but mainly because of a shortage of ethanol fuel supply in the local market left thousands of vehicles in line at gas stations or out of fuel in their garages by mid 1989.^[29][31] As supply could not keep pace with the increasing demand required by the now significant ethanol-only fleet, the Brazilian government began importing ethanol in 1991.^[10][15]

The 2003 Brazilian VW Gol 1.6 Total Flex was the first flexible-fuel car capable of running on any blend of gasoline and ethanol.

Confidence on ethanol-powered vehicles was restored only with the introduction in the Brazilian market of flexible-fuel vehicles. In March 2003 Volkswagen launched in the Brazilian market the Gol 1.6 Total Flex, the first commercial flexible fuel vehicle capable of running on any blend of gasoline and ethanol.^{[32][33] [34]}. By 2009, popular manufacturers that build flexible fuel vehicles are Chevrolet, Fiat, Ford, Peugeot, Renault ,Volkswagen, Honda, Mitsubishi, Toyota, Citröen, and Nissan.^[35][36] Flexible fuel cars were 22% of the car sales in 2004, 73% in 2005^[37], and reached 87.6% in July 2008.^[38] The rapid adoption and commercial success of "flex" vehicles, as they are popularly known, together with the mandatory blend of alcohol with gasoline as E25 fuel, have increased ethanol consumption up to the point that by February 2008 a landmark in ethanol consumption was achieved when ethanol retail sales surpassed the 50% market share of the gasoline-powered fleet.^[21][22] This level of ethanol fuel consumption had not been reached since the end of the 1980s, at the peak of the Pró-Álcool Program.^[21][22][39] Also, from 1979 until February 2009, Brazil has successfully reduced by 12.8 million the number of vehicles running just on gasoline (5.7 million ethanol-only and 7,1 million flex-fuel vehicles),^[17][18][19] thereby reducing the country's dependence on oil imports. The number of ethanol-only vehicles still in use is estimated between 2 to 3 million vehicles.^[15]

The Amazon AME is one of the flex-fuel motorcycles scheduled to be launched in 2009.^[40]

Under the auspices of the BioEthanol for Sustainable Transport (BEST) project, the first ethanol-powered (E95) bus began operations in São Paulo city on December 2007 as a one-year trial project.^[41][42][43] During the trial period performance and emissions will be monitored as significant reductions are expected in carbon monoxide and particulate matter emissions,^[42] and as previous tests have shown a reduction in fuel economy of around 60% when E95 is compared to regular diesel.^[41]

The latest innovation within the Brazilian flexible-fuel technology is the development of flex-fuel motorcycles.^[44][45] The first flex motorcycle was launched by Honda in March 2009. Produced by its Brazilian subsidiary Moto Honda da Amazônia, the CG 150 Titan Mix is sold for around US$2,700. In order to avoid cold start problems, the fuel tank must have at least 20% of gasoline at temperatures below 15°C (59°F).^[46][47][48]

[edit] Production

[edit] Economic and production indicators

Production by harvest year 1990/91 to 2007/08.^[50] Green is hydrated ethanol (E100) and yellow is anhydrous ethanol use for gasohol blending.

Ethanol production in Brazil uses sugarcane as feedstock and relies on first-generation technologies based on the use of the sucrose content of sugarcane. Ethanol yield has grown 3.77% per year since 1975 and productivity gains been based on improvements in the agricultural and industrial phases of the production process. Further improvements on best practices are expected to allow in the short to mid-term an average ethanol productivity of 9,000 liters per hectare.^[51]

There were 378 ethanol plants operating in Brazil by July 2008, 126 dedicated to ethanol production and 252 producing both sugar and ethanol. There are 15 additional plants dedicated exclusively to sugar production.^[52] These plants have an installed capacity of crushing 538 million metric tons of sugarcane per year, and there are 25 plants under construction expected to be on line by 2009 that will add an additional capacity of crushing 50 million tons of sugarcane per year.^[52] The typical plant cost approximately USD 150 million and requires a nearby sugarcane plantation of 30,000 hectares.^[51]

Ethanol production is concentrated in the Central and Southeast regions of the country, led by São Paulo state, with around 60% of the country's total ethanol production, followed by Paraná (8%), Minas Gerais (8%) and Goiás (5%).^[50] These two regions have been responsible for 90% of Brazil's ethanol production since 2005^[11][50] and the harvest season goes from April to November. The Northeast Region is responsible for the remaining 10% of ethanol production, lead by Alagoas with 2% of total production.^[50] The harvest season in the North-Northeast region goes from September to March, and the average productivity in this region is lower than the South-Central region.^[53] Due to the difference in the two main harvest seasons, Brazilian statistics for sugar and ethanol production are commonly reported on a harvest two-year basis rather than on a calendar year.

For the 2008/09 harvest it is expected that approximately 44 percent of the sugarcane will be used for sugar, 1% for alcoholic beverages, and 55% for ethanol production.^[49] An estimate of between 24.9 billion litres (6.58 billion U.S. liquid gallons)^[52] to 27.1 billion litres (7.16 billion gallons)^[53] of ethanol are expected to be produced in 2008/09 harvest year, with most of the production being destined for the internal market, and only 4.2 billion liters (1.1 billion gallons) for exports, with an estimated 2.5 billion liters (660 million gallons) destined for the US market.^[49] Sugarcane cultivated area grew from 7 million to 7.8 million hectares of land from 2007 to 2008, mainly using abandoned pasture lands.^[49] In 2008 Brazil has 276 million hectares of arable land, 72% use for pasture, 16.9% for grain crops, and 2.8% for sugarcane, meaning that ethanol is just requiring approximately 1.5% of all arable land available in the country.^[49]

As sugar and ethanol share the same feedstock and their industrial processing is fully integrated, formal employment statistics are usually presented together. In 2000 there were 642,848 workers employed by these industries, and as ethanol production expanded, by 2005 there were 982,604 workers employed in the sugarcane cultivation and industrialization, including 414,668 workers in the sugarcane fields, 439,573 workers in the sugar mills, and 128,363 workers in the ethanol distilleries.^[54] While employment in the ethanol distilleries grew 88.4% from 2000 to 2005, employment in the sugar fields just grew 16.2% as a direct result of expansion of mechanical harvest instead manual harvesting, which avoids burning the sugarcane fields before manual cutting and also increases productivity. The states with the most employment in 2005 were São Paulo (39.2%), Pernambuco (15%), Alagoas (14.1%), Paraná (7%), and Minas Gerais (5.6%).^[54]

[edit] Agricultural technology

Sugarcane (Saccharum officinarum) plantation ready for harvest, Ituverava, São Paulo State.

Evolution of the ethanol productivity per hectare of sugarcane planted in Brazil between 1975 and 2004. Source: Goldemberg (2008).^[51]

Typical ethanol distillery and dehydration facility, Piracicaba, São Paulo State.

Variation of ethanol prices to producers in 2007 reflecting the harvest season supply.^[55] Yellow is for anhydrous ethanol and green is for hydrated ethanol (R$ per liter).

Ethanol fuel ready for distribution, Piracicaba, São Paulo State.

A key aspect for the development of the ethanol industry in Brazil was the investment in agricultural research and development by both the public and private sector.^[10] The work of EMBRAPA, the state-owned company in charge for applied research on agriculture, together with research developed by state institutes and universities, especially in the State of São Paulo, have allowed Brazil to became a major innovator in the fields of biotechnology and agronomic practices,^[56] resulting in the most efficient agricultural technology for sugarcane cultivation in the world.^[10] Efforts have been concentrated in increasing the efficiency of inputs and processes to optimize output per hectare of feedstock, and the result has been a threefold increase of sugarcane yields in 29 years, as Brazilian average ethanol yields went from 2,024 liters per ha in 1975 to 5,917 liters per ha in 2004; allowing the efficiency of ethanol production to grow at a rate of 3.77% per year.^[51] Brazilian biotechnologies include the development of sugarcane varieties that have a larger sugar or energy content, one of the main drivers for high yields of ethanol per unit of planted area. The increase of the index total recoverable sugar (TRS) from sugarcane has been very significant, 1.5% per year in the period 1977 to 2004, resulting in an increase from 95 to 140 kg/ha.^[51] Innovations in the industrial process have allowed an increase in sugar extraction in the period 1977 to 2003. The average annual improvement was 0.3%; some mills have already reached extraction efficiencies of 98%.^[51]

Biotechnology research and genetic improvement have led to the development of strains which are more resistant to disease, bacteria, and pests, and also have the capacity to respond to different environments, thus allowing the expansion of sugarcane cultivation to areas previously considered inaqueate for such cultures.^[56][57][58] By 2008 more than 500 sugarcane varieties are cultivated in Brazil, and 51 of them were released just during the last ten years. Four research programs, two private and two public, are devoted to further genetic improvement.^[57][58] Since the mid nineties, Brazilian biotechnology laboratories have developed transgenic varieties, still non commerciallized. Identification of 40,000 cane genes was completed in 2003 and there are a couple dozen research groups working on the functional genome, still on the experimental phase, but commercial results are expected within five years.^[59]

Also, there is ongoing research regarding sugarcane biological nitrogen fixation, with the most promising plant varieties showing yields three times the national average in soils of very low fertility, thus avoiding nitrogenous fertilization.^[60] There is also research for the development of second-generation or cellulosic ethanol.^[10] In São Paulo state an increase of 12% in sugar cane yield and 6.4% in sugar content is expected over the next decade. This advance combined with an expected 6.2% improvement in fermentation efficiency and 2% in sugar extraction, may increase ethanol yields by 29%, raising average ethanol productivity to 9,000 liters/ha.^[51] Approximately US$50 million has recently been allocated for research and projects focused on advancing the obtention of ethanol from sugarcane in São Paulo state.^[61]

[edit] Production process

Sucrose extracted from sugarcane accounts for little more than 30% of the chemical energy stored in the mature plant; 35% is in the leaves and stem tips, which are left in the fields during harvest, and 35% are in the fibrous material (bagasse) left over from pressing. Most of the industrial processing of sugarcane in Brazil is done through a very integrated production chain, allowing sugar production, industrial ethanol processing, and electricity generation from byproducts.^[51][62] The typical steps for large scale production of sugar and ethanol include milling, electricity generation, fermentation, distillation of ethanol, and dehydration.

[edit] Milling and refining

Once harvested, sugarcane is usually transported to the plant by semi-trailer trucks. After quality control sugarcane is washed, chopped, and shredded by revolving knives. The feedstock is fed to and extracted by a set of mill combinations to collect a juice, called garapa in Brazil, that contain 10–15 percent sucrose, and bagasse, the fiber residue. The main objective of the milling process is to extract the largest possible amount of sucrose from the cane, and a secondary but important objective is the production of bagasse with a low moisture content as boiler fuel, as bagasse is burned for electricity generation (see below), allowing the plant to be self-sufficient in energy and to generate electricity for the local power grid.^[62] The cane juice or garapa is then filtered and treated by chemicals and pasteurized. Before evaporation, the juice is filtered once again, producing vinasse, a fluid rich in organic compounds. The syrup resulting from evaporation is then precipitated by crystallization producing a mixture of clear crystals surrounded by molasses. A centrifuge is used to separate the sugar from molasses, and the crystals are washed by addition of steam, after which the crystals are dried by an airflow. Upon cooling, sugar crystallizes out of the syrup.^[62] From this point, the sugar refining process continues to produced different types of sugar, and the molasses continue a separate process to produce ethanol.

[edit] Fermentation, destillation and dehydration

The resulting molasses are treated to become a sterilized molasse free of impurities, ready to be fermented. In the fermentation process sugars are transformed into ethanol by addition of yeast. Fermentation time varies from four to twelve hours resulting in an alcohol content of 7 to 10 percent by total volume (°GL), called fermented wine. The yeast is recovered from this wine through a centrifuge. Making use of the different boiling points the alcohol in the fermented wine is separated from the main resting solid components. The remaining product is hydrated ethanol with a concentration of 96°GL,^[62] the highest concentration of ethanol that can be achieved via azeotropicdistillation, and by national specification can contain up to 4.9% of water by volume.^[63] This hydrous ethanol is the fuel used by ethanol-only and flex vehicles in the country. Further dehydration is normally done by addition of chemicals, up to the specified 99.7°GL in order to produce anhydrous ethanol,^[62] which is used for blending with pure gasoline to obtain the country's E25 mandatory blend.^[14] The additional processing required to convert hydrated into anhydrous ethanol increases the cost of the fuel, as in 2007 the average producer price difference between the two was around 14% for São Paulo State.^[55] This production price difference, though small, contributes to the competitiveness of the hydrated ethanol (E100) used in Brazil, not only with regard to local gasoline prices but also as compared to other countries such as the US and Sweden, that only use anhydrous ethanol for their flex fuel fleet.^[64]

[edit] Electricity generation from bagasse

Since the early days bagasse was burnt in the plant to provide the energy required for the industrial part of the process. Today, the Brazilian best practice uses high-pressure boilers that increases energy recovery, allowing most sugar-ethanol plants to be energetically self-sufficient and even sell surplus electricity to utilities.^[51] By 2000, the total amount of sugarcane bagasse produced per year was 50 million tons/dry basis out of more than 300 million tons of harvested sugarcane. Several authors estimated a potential power generation from the use of sugarcane bagasse ranging from 1,000 to 9,000 MW, depending on the technology used and the use of harvest trash. One utility in São Paulo is buying more than 1% of its electricity from sugar mills, with a production capacity of 600 MW for self-use and 100 MW for sale.^[65] According to analysis from Frost & Sullivan, Brazil's sugarcane bagasse used for power generation has reached 3.0 GW in 2007, and it is expected to reach 12.2 GW in 2014. The analysis also found tha sugarcane bagasse cogeneration accounts for 3% of the total Brazilian energy matrix.^[66] The energy is especially valuable to utilities because it is produced mainly in the dry season when hydroelectric dams are running low.

According to a study commissioned by the Dutch government in 2006 to evaluate the sustainability of Brazilian bioethanol "...there are also substantial gains possible in the efficiency of electricity use and generation: The electricity used for distillery operations has been estimated at 12.9 kWh/tonne cane, with a best available technology rate of 9.6 kWh/tonne cane . For electricity generation the efficiency could be increased from 18 kWh/tonne cane presently, to 29.1 kWh/tonne cane maximum. The production of surplus electricity could in theory be increased from 5.3 kWh/tonne cane to 19 kWh/tonne cane".^[62]

There are several improvements to the industrial processes, such as adopting a hydrolysis process to produce ethanol instead of surplus electricity, or the use of advanced boiler and turbine technology to increase the electricity yield, or a higher use of excess bagasse and harvest trash currently left behind in the fields, that together with various other efficiency improvements in sugarcane farming and the distribution chain have the potential to allow further efficiency increases, translating into higher yields, lower production costs, and also further improvements in the energy balance and the reduction of greenhouse gas emissions.^[62]

[edit] Exports

Brazilian ethanol exports by selected country and region (2005-2007)[67][68][69][70] (Millions of liters)
Country/Region(1)	2007	%	2006	%	2005	%
United States(2)	932.75	26.4	1,777.43	51.9	270.97	10.5
CBI countries(3)	910.29	25.8	530.55	15.5	554.15	21.4
Jamaica	308.97		131.54		133.39
El Salvador	224.40		181.14		157.85
Costa Rica	170.37		91.26		126.69
Trinidad and Tobago	158.87		71.58		36.12
Mexico	42.21		50.24		100.10
European Union	1,004.17	28.4	587.31	17.1	530.73	20.5
Netherlands	808.56		346.61		259.40
Sweden	116.47		204.61		245.89
Japan	364.00	10.3	225.40	6.6	315.39	12.2
Niger	122.88		42.68		118.44
Republic of Korea	66.69		92.27		216.36
India	0		10.07		410.76	15.8
Total world exports	3,532.67	100	3,426.86	100	2,592.29	100
Notes: (1)Only countries with more than 100,000 liters imports on a given year are shown. (2)It includes exports to Puerto Rico and U.S.Virgin Islands. (3) Including Mexico that trades with the U.S. under the North American Free Trade Agreement (NAFTA).

Brazil is the world's largest exporter of ethanol. In 2007 it exported 933.4 million gallons (3,532.7 million liters),^[67][68] representing almost 20% of its production, and accounting for almost 50% of the global exports. ^[42] Since 2004 Brazilian exporters have as their main customers the United States, Netherlands, Japan, Sweden, Jamaica, El Salvador, Costa Rica, Trinidad & Tobago, Nigeria, Mexico, India, and South Korea.^[42]

The countries in the Caribbean Basin import relative high quantities of Brazilian ethanol, but not much is destined for domestic consumption. These countries reprocess the product, usually converting Brazilian hydrated ethanol into anhydrous ethanol, and then re-export it to the United States, gaining value-added and avoiding the 2.5 percent duty and the USD 0,54 per gallon tariff, thanks to the trade agreements and benefits granted by Caribbean Basin Initiative (CBI). This process is limited by a quota, set at 7% of U.S. ethanol consumption.^[71] Although direct U.S. exports fell in 2007, imports from four CBI countries almost doubled, increasing from 15.5% in 2006 to 25.8% in 2007, reflecting increasing re-exports to the U.S., thus partially compensating the loss of Brazilian direct exports to the U.S. This situation has caused some concerns in the United States, as it and Brazil are trying to build a partnership to increase ethanol production in Latin American and the Caribbean. As the U.S. is encouraging "new ethanol production in other countries, production that could directly compete with U.S.-produced ethanol".^[72]

The U.S., potentially the largest market for the Brazilian ethanol, currently imposes trade restrictions on Brazilian ethanol of $USD 0.54 per gallon, in order to encourage domestic ethanol production, most of which has so far been based on processing corn instead of sugar cane or soybeans, which is much less efficient. There is concern that allowing the Brazilian ethanol to enter the U.S. market without taxation will undercut the budding ethanol industry in the United States.^[73] One of the arguments for that is that Brazil currently subsidises its ethanol production, which is false, as the subsidies program finished in the 1990s.^[74] Others argue that rather than impose trade restrictions on the import of the Brazilian product, that the U.S. should make subsidies of its own available to support its fledgling domestic producers. Exports of Brazilian ethanol to the U.S. reached a total of US$ 1 billion in 2006, an increase of 1,020% over 2005 (US$ 98 millions),^[75] but fell significantly in 2007 due to sharp increases in American ethanol production from maize.^[76][77]

As shown in the table, together, the United States, the European Union, the CBI countries with Mexico, and Japan, were the destination of 91% of Brazilian ethanol exports, both in 2007 and 2006. As of 2007, the European Union region, led by the Netherlands, is the main importer of Brazilian ethanol, with 265.3 million gallons (1,004.2 million liters)^[67]. However, and despite of reduced direct imports, the United States continues to be the single one country where Brazilian ethanol is exported, reaching 228.96 million gallons (866.6 million liters) to the continental U.S., 13.78 million gallons (52.1 million liters) shipped to the U.S. Virgin Islands, and 3.68 million gallons (14.0 million litters) shipped to Puerto Rico, for a total export for the U.S. in 2007 of 246.4 million gallons (932.75 million liters),^[67] down from 469.6 million gallons (1.77 billion liters) in 2006.^[69]

[edit] Prices and effect on oil consumption

Alcohol and gasoline prices per liter at Rio de Janeiro (left) and São Paulo (right), corresponding to a price ratio of E100 ethanol to E25 gasoline of 0.64 and 0.56.

Historical variation of ethanol production by region from 1990/91 to 2006/07 (harvest year).^[50] Light green is the production for the State of São Paulo.

Most automobiles in Brazil run either on hydrous alcohol (E100) or on gasohol (E25 blend), as the mixture of 25% anhydrous ethanol with gasoline is mandatory in the entire country.^[14] Since 2003, dual-fuel ethanol flex vehicles that run on any proportion of hydrous ethanol and gasoline have been gaining popularity, surpassing 6 million new cars and light commercial vehicles sold by August 2008,^[78] and as the same month, 75% of light vehicle manufacturing production is flexible fuel without additional cost for buyers.^[18] Customers have 49 models available to chose from. Brazilian full flex-fuel vehicles have electronic sensors that automatically detect the type of fuel and the blend mix, and accordingly adjust the engine combustion. Users have the freedom to choose depending on the free market prices of each fuel.^[4]

Due to the lower energy content of ethanol fuel, full flex-fuel vehicles get fewer miles per gallon. Ethanol price has to be between 25-30% cheaper per gallon to reach the break even point.^[5] As a rule of thumb, Brazilian consumers are frequently advised by the media to use more alcohol than gasoline in their mix only when ethanol prices are 30% lower or more than gasoline, as ethanol price fluctuates heavily depending on the harvest yields and seasonal fluctuation of sugarcane harvest.^[79][80]Since 2005, ethanol prices have been very competitive without any subsidies,^[4] even with gasoline prices kept constant in local currency since mid-2005,^[81] at a time when oil was just approaching USD 60 a barrel. The price ratio between gasoline and ethanol fuel has been well above 30% during this period for most states, except during low sugar cane supply between harvests and for states located far away from the ethanol production centers. According to Brazilian producers, ethanol can remain competitive if the price of oil does not fall below USD 30 a barrel.^[6]

By 2008 consumption of ethanol fuel by the Brazilian fleet of light vehicles, as pure ethanol and in gasohol, is replacing gasoline at the rate of about 27,000 cubic metres per day, and by February 2008 the combined consumption of anhydrous and hydrated ethanol fuel surpassed 50% of the fuel that would be needed to run the light vehicle fleet on pure gasoline alone. Consumption of anhydrous ethanol for the mandatory E25 blend, together with hydrous ethanol used by flex vehicles, reached 1.432 billion liters, while pure gasoline consumption was 1.411 billion liters.^[21][22]

However, the effect on the country's overall petroleum consumption was smaller than that, as domestic oil consumption still far outweighs ethanol consumption. In 2005, Brazil consumed 2 million barrels (320,000 m³) of oil per day, versus 280,000 barrels (45,000 m³) of ethanol.^[82] Although Brazil is a major oil producer and now exports gasoline (19,000 m³/day), it still must import oil because of internal demand for other oil byproducts, chiefly diesel fuel, which cannot be easily replaced by ethanol. When trucks and other diesel-powered vehicles are considered ethanol represented 16.9% of total energy consumption by the road transport sector in terms of energy equivalent to crude oil, and 14.9% of the entire transport sector.^[23]

Consumer price spread between E25 gasoline and E100 by state. Red and orange show states with average prices below the break even range. Ethanol price should be between 25 to 30% cheaper than gasoline to compensate its lower fuel economy.	State	Average retail price (R$/liter)		Price spread E25 - E100	State	Average retail price (R$/liter)		Price spread E25 - E100	State	Average retail price (R$/liter)		Price spread E25 - E100
		E100	E25	(%)		E100	E25	(%)		E100	E25	(%)
	Acre (AC)	2.080	2.943	29.32	Maranhão (MA)	1.709	2.628	34.97	Rio de Janeiro (RJ)	1.676	2.531	33.78
	Alagoas (AL)	1.844	2.766	33.33	Mato Grosso (MT)	1.452	2.677	45.76	Rio Grande do Norte (RN)	1.940	2.669	27.31
	Amapá (AP)	2.246	2.686	16.38	Mato Grosso do Sul (MS)	1.683	2.676	37.11	Rio Grande do Sul (RS)	1.779	2.574	30.89
	Amazonas (AM)	2.773	2.452	27.69	Minas Gerais (MG)	1.610	2.377	32.27	Rondônia (RR)	1.839	2.669	31.10
	Bahia (BA)	1.630	2.522	35.37	Pará (PA)	2.120	2.772	23.52	Roraima (RO)	2.154	2.710	20.52
	Brasília (DF)	1.884	2.586	27.15	Paraíba (PB)	1.883	2.553	26.24	Santa Catarina (SC)	1.697	2.556	33.61
	Ceará (CE)	1.768	2.510	29.56	Paraná (PR)	1.445	2.429	40.51	São Paulo (SP)	1.306	2.398	45.54
	Espírito Santo (ES)	1.795	2.662	32.57	Pernambuco (PE)	1.700	2.573	33.93	Sergipe (SE)	1.888	2.518	25.02
	Goiás (GO)	1.581	2.565	38.36	Piauí (PI)	1.927	2.655	27.42	Tocantins (TO)	1.708	2.748	37.85
	Country average	1.513	2.511	39.75	Source: Agência Nacional do Petróleo (ANP). Average retail prices for week of 26/10/2008 to 01/11/2008.[83][84] Note: Data is presented in local currency because the exchange rate for the Brazilian real has been fluctuating heavily due to the ongoing global financial crisis. Exchange rate for 2008-10-31 was USD 1 = R$ 2.16.[85]

[edit] Comparison with the United States

Brazil's sugar cane-based industry is more efficient than the U.S. corn-based industry. Sugar cane ethanol has an energy balance seven times greater than ethanol produced from corn.^[4] Brazilian distillers are able to produce ethanol for 22 cents per liter, compared with the 30 cents per liter for corn-based ethanol.^[86] U.S. corn-derived ethanol costs 30% more because the corn starch must first be converted to sugar before being distilled into alcohol.^[64] Despite this cost differential in production, the U.S. does not import more Brazilian ethanol because of U.S. trade barriers corresponding to a tariff of 54-cent per gallon – a levy designed to offset the 51-cent per gallon blender's federal tax credit that is applied to ethanol no matter its country of origin.^[87]

Sugarcane cultivation requires a tropical or subtropical climate, with a minimum of 600 mm (24 in) of annual rainfall. Sugarcane is one of the most efficient photosynthesizers in the plant kingdom, able to convert up to 2% of incident solar energy into biomass. Sugarcane production in the United States occurs in Florida, Louisiana, Hawaii, and Texas. The first three plants to produce sugarcane-based ethanol are expected to go online in Louisiana by mid 2009. Sugar mill plants in Lacassine, St. James and Bunkie were converted to sugar cane-based ethanol production using Colombian technology in order to make possible a profitable ethanol production. These three plants will produce 100 million gallons of ethanol within five years.^[88] By 2009 two other sugarcane ethanol production projects are being developed in Kauai, Hawaii and Imperial Valley, California.^[89]

Comparison of key characteristics between the ethanol industries in the United States and Brazil
Characteristic	Brazil	U.S.	Units/comments
Feedstock	Sugar cane	Maize	Main cash crop for ethanol production, the US has less than 2% from other crops.
Total ethanol production (2007) [3]	5,019.2	6,498.6	Million U.S. liquid gallons
Total arable land [90]	355	270(1)	Million hectares.
Total area used for ethanol crop (2006)[64]	3.6 (1%)	10 (3.7%)	Million hectares (% total arable)[90]
Productivity per hectare [4][64][90][91]	6,800-8,000	3,800-4,000	Liters of ethanol per hectare. Brazil is 727 to 870 gal/acre (2006), US is 321 to 424 gal/acre (2003-05)
Energy balance (input energy productivity) [6][11][64]	8.3 to 10.2 times	1.3 to 1.6 times	Ratio of the energy obtained from ethanol/energy expended in its production
Estimated greenhouse gas emission reduction [2][64][92]	86-90%(2)	10-30%(2)	% GHGs avoided by using ethanol instead of gasoline, using existing crop land.
Estimated payback time for greenhouse gas emission[93]	17 years(3)	93 years(3)	Brazilian cerrado for sugar cane and US grassland for corn. Land use change scenarios by Fargione et al. [94]
Flexible-fuel vehicle fleet (autos and light trucks)[17][18][19][95]	7.1 million	8.0 million	Brazil as of Feb 2009 (FFVs use any blend up to E100); and the US as of early 2009 (FFVs use E85 only).
Ethanol fueling stations in the country	35,000 (100%)	1,868 (1%)	As % of total fueling gas stations in the country. Brazil as of Oct 2008,[96] U.S. as Nov 2008[97] (170,000 total[5])
Ethanol's share within the gasoline market[21][39][98]	50%(4)	4%	As % of total consumption on a volumetric basis. Brazil as of April 2008. US as of December 2006.
Cost of production (USD/gallon) [4]	0.83	1.14	2006/2007 for Brazil (22¢/liter), 2004 for U.S. (35¢/liter)
Government subsidy (in USD)[5][90]	0 (5)	0.51/gallon	U.S. as of 2008-04-30. Brazilian ethanol production is no longer subsidized.(5)
Import tariffs (in USD)[4][6]	0	0.54/gallon	As of April 2008, Brazil does not import ethanol, the U.S. does
Notes: (1) Only contiguous U.S., excludes Alaska. (2) Assuming no land use change.[92] (3) Assuming direct land use change.[94] (4) Including diesel-powered vehicles and due to ethanol's lower energy content by volume, bioethanol represented 16.9% of the road sector energy consumption in 2007.[23] (5) Brazilian ethanol production is no longer subsidized, but gasoline is heavily taxed favoring ethanol fuel consumption (~54% tax). By the end of July 2008, when oil prices were close to its latest peak and the Brazilian Real exchange rate to the US dollar was close to its most recent minimum, the average gasoline retail price at the pump in Brazil was USD 6.00 per gallon, while the average US price was USD 3.98 per gallon.[99] The latest gas retail price increase in Brazil occurred in late 2005, when oil price was at USD 60 per barrel.[100]

[edit] Ethanol diplomacy

Presidents Luiz Inácio Lula da Silva and George W. Bush during Bush's visit to Brazil, March 2007.

Prsident Luiz Inácio Lula da Silva and King Carl XVI Gustaf of Sweden inspecting one of the 400 buses running on E95 on Stockholm.

In March 2007, "ethanol diplomacy" was the focus of President George W. Bush's Latin American tour, in which he and Brazil's president, Luiz Inácio Lula da Silva, were seeking to promote the production and use of sugar cane based ethanol throughout Latin America and the Caribbean. The two countries also agreed to share technology and set international standards for biofuels.^[1] The Brazilian sugar cane technology transfer will permit various Central American, such as Honduras, Nicaragua, Costa Rica and Panama, several Caribbean countries, and various Andean Countries tariff-free trade with the U.S. thanks to existing concessionary trade agreements.

Even though the U.S. imposes a USD 0.54 tariff on every gallon of imported ethanol, the Caribbean nations and Central American countries are exempt from such duties based on the benefits granted by the Caribbean Basin Initiative (CBI).^[71] CBI provisions allow tariff-free access to the US market from ethanol produced from foreign feedstock (outside CBI countries) up to 7% of the previous year US consumption. Also additional quotas are allowed if the beneficiary countries produce at least 30 percent of the ethanol from local feedstocks up to an additional 35 million gallons.^[101] Thus, several countries have been importing hydrated ethanol from Brazil, processing it at local distilleries to dehydrate it, and then re-exporting it as anhydrous ethanol.^[102] American farmers have complained about this loophole to legally bypass the tariff.^[103][104] The 2005 Dominican Republic – Central America Free Trade Agreement(CAFTA) maintained the benefits granted by the CBI, and CAFTA provisions established country-specific shares for Costa Rica and El Salvador within the overall quota. An initial annual allowance was established for each country, with gradually-increasing annual levels of access to the US market.^[101] The expectation is that using Brazilian technology for refining sugar cane based ethanol, such countries could become net exporters to the United States in the short-term.^[105] In August 2007, Brazil's President toured Mexico and several countries in Central America and the Caribbean to promote Brazilian ethanol technology.^[106]

The Memorandum of Understanding (MOU) that the American and Brazilian presidents signed in March 2007 has been described as a success for foreign policy, bringing Brazil and the United States closer especially on energy policy. Nevertheless, policy makers have cited a lack of "substantive progress" implementing the three pillars found in that agreement and have called for an expansion of international engagement beyond the executive branches.^[107]

EMBRAPA's African Regional Office in Ghana.

Brazil has also extended its technical expertise to several African countries, including Ghana,^[108]Mozambique,^[109] Angola,^[110] and Kenya.^[111] This effort is led by EMBRAPA, the state-owned company in charge for applied research on agriculture, and responsible for most of the achievements in increasing sugarcane productivity during the last thirty years. Another 15 African countries have shown interest in receiving Brazilian technical aid to improve sugarcane productivity and to produced ethanol efficiently.^[108] Brazil also has bilateral cooperation agreements with several other countries in Europe and Asia.^[112]

As President Lula wrote for The Economist^[113] regarding Brazil's global agenda: "Brazil’s ethanol and biodiesel programmes are a benchmark for alternative and renewable fuel sources. Partnerships are being established with developing countries seeking to follow Brazil’s achievements—a 675m-tonne reduction of greenhouse-gas emissions, a million new jobs and a drastic reduction in dependence on imported fossil fuels coming from a dangerously small number of producer countries. All of this has been accomplished without compromising food security, which, on the contrary, has benefited from rising agricultural output...We are setting up offices in developing countries interested in benefiting from Brazilian know-how in this field.".

[edit] Environmental and social impacts

[edit] Environmental effects

[edit] Benefits

Ethanol produced from sugarcane provides energy that is renewable and less carbon intensive than oil. Bioethanol reduces air pollution thanks to its cleaner emissions, and also contributes to mitigate climate change by reducing greenhouse gas emissions. However, several environmental and social issues and concerns have been raised regarding the Brazilian ethanol program.^[114] Among the most controversial are the risks associated with the expansion of agricultural land and its direct or indirect impact on natural habitats, and the carbon footprint associated to future land use changes as ethanol production expands beyond the existing arable lands.^{[114][115][116]}

[edit] Energy Balance

One of the main concerns about bioethanol production is the energy balance, the total amount of energy input into the process compared to the energy released by burning the resulting ethanol fuel. This balance considers the full cycle of producing the fuel, as cultivation, transportation and production require energy, including the use of oil and fertilizers. A comprehensive life cycle assessment commissioned by the State of São Paulo found that Brazilian sugarcane based ethanol has a favorable energy balance, varying from 8.3 for average conditions to 10.2 for best practice production.^[11] This means that for average conditions one unit of fossil-fuel energy is required to create 8.3 energy units from the resulting ethanol. These findings have been confirmed by other studies.^{[62][64][116]}

UK estimates for the carbon intensity of bioethanol and fossil fuels.^[117] As shown, Brazilian ethanol from sugarcane is the most efficient biofuel currently under commercial production in terms of GHG emission reduction.^[62]

[edit] Greenhouse gas emissions

Another benefit of bioethanol is the reduction of greenhouse gas emissions as compared to gasoline, because as much carbon dioxide is taken up by the growing plants as is produced when the bioethanol is burnt, with a zero theoretical net contribution.^[118] Several studies have shown that sugarcane based ethanol reduces greenhouse gases by 86 to 90% if there is no significant land use change,^{[11][64][117]} and ethanol from sugarcane is regarded the most efficient biofuel currently under commercial production in terms of GHG emission reduction.^[62][116] However, a study published in 2008^[94] is critical of previous assessments of greenhouse gas emissions, as the authors considered that these studies did not take into account the effect of land use changes.^[114] (see below "Effects of land use change")

[edit] Air pollution

The widespread use of ethanol brought several environmental benefits to urban centers regarding air pollution. Lead additives to gasoline were reduced through the 1980s as the amount of ethanol blended in the fuel was increased, and these additives were completely eliminated by 1991. The addition of ethanol blends instead of lead to gasoline lowered the total carbon monoxide (CO), hydrocarbons, sulfur emissions, and particulate matter significantly.^[119] The use of ethanol-only vehicles has also reduced CO emissions drastically. Before the Pró-Álcool Program started, when gasoline was the only fuel in use, CO emissions were higher than 50 g/km driven; they had been reduced to less than 5.8 g/km in 1995.^[51] Several studies have also shown that São Paulo has benefit with significantly less air pollution thanks to ethanol's cleaner emissions.^[119] Furthermore, Brazilian flex-fuel engines are being designed with higher compression ratios, taking advantage of the higher ethanol blends and maximizing the benefits of the higher oxygen content of ethanol, resulting in lower emissions and improving fuel efficiency.^[120]

Even though all automotive fossil fuels emit aldehydes, one of the drawbacks of the use of hydrated ethanol in ethanol-only engines is the increase in aldehyde emissions as compared with gasoline or gasohol.^[119] However, the present ambient concentrations of aldehyde, in São Paulo city are below the reference levels recommended as adequate to human health found in the literature.^[51] Other concern is that because formaldehyde and acetaldehyde emissions are significantly higher, and although both aldehydes occur naturally and are frequently found in the open environment, additional emissions may be important because of their role in smog formation. However, more research is required to establish the extent and direct consequences, if any, on health.^[120]

[edit] Issues

Sugar cane harvest loading operation for transport to the sugar/ethanol processing plant, without previous burning of the plantation, São Paulo state.

Typical vehicle used for harvest transport to the sugar/ethanol processing plant at São Paulo state.

Typical sugarcane harvester equipment used in level terrain. Mechanization avoids the need for burning the plantation before harvesting, Piracicaba, São Paulo state.

[edit] Water use and fertilizers

Ethanol production has also raised concerns regarding water overuse and pollution, soil erosion and possible contamination by excessive use of fertilizers.^{[115][116][121]} A study commissioned by the Dutch government in 2006 to evaluate the sustainability of Brazilian bioethanol concluded that there is sufficient water to supply all foreseeable long-term water requirements for sugarcane and ethanol production. Also, and as a result of legislation and technological progress, the amount of water collected for ethanol production has decreased considerably during the previous years. The overuse of water resources seems a limited problem in general in São Paulo, particularly because of the relatively high rainfall, yet, some local problems may occur. Regarding water pollution due to sugarcane production, Embrapa classifies the industry as level 1, which means “no impact” on water quality.^[58][62]

This evaluation also found that consumption of agrochemicals for sugar cane production is lower than in citric, corn, coffee and soybean cropping. Disease and pest control, including the use of agrochemicals, is a crucial element in all cane production. The study found that development of resistant sugar cane varieties is a crucial aspect of disease and pest control and is one of the primary objectives of Brazil’s cane genetic improvement programs. Disease control is one of the main reasons for the replacement of a commercial variety of sugar cane.^[62]

[edit] Field burning

Advancements in fertilizers and natural pesticides have all but eliminated the need to burn fields.^[115] Sugarcane fields are traditionally burned just before harvest to avoid harm to the workers, by removing the sharp leaves and killing snakes and other harmful animals, and also to fertilize the fields with ash.^[122] There has been less burning due to pressure from the public and health authorities, and as a result of the recent development of effective harvesting machines. A 2001 state law banned burning in sugarcane fields in São Paulo state by 2021,^[123] and machines will gradually replace human labor as the means of harvesting cane, except where the abrupt terrain does not allow for mechanical harvesting. However, 150 out of 170 of São Paulo's sugar cane processing plants signed in 2007 a voluntary agreement with the state government to comply by 2014.^[123][124] Independent growers signed in 2008 the voluntary agreement to comply, and the deadline was extended to 2017 for sugar cane fields located in more abrupt terrain.^[122] By the 2008 harvest season, around 47% of the cane was collected with harvesting machines.^[122][124] Mechanization will reduce pollution from burning fields and has higher productivity than people, but also will create unemployment for these seasonal workers, many of them coming from the poorest regions of Brazil. Due to mechanization the number of temporary workers in the sugarcane plantations has already declined.^[62]

[edit] Effects of land use change

A study published in 2008 questioned the benefits estimated in previous assessments regarding the reduction of greenhouse gas emissions from sugarcane based ethanol, as the authors consider that these studies did not take into account the effect of land use changes.^[94][114] The authors found a "biofuel carbon debt" is created when Brazil and other developing countries convert land in undisturbed ecosystems, such as rainforests, savannas, or grasslands, to biofuel production, and to crop production when agricultural land is diverted to biofuel production. This land use change releases more CO₂ than the annual greenhouse gas (GHG) reductions that these biofuels would provide by displacing fossil fuels. Among others, the study analyzed the case of Brazilian Cerrado being converted for sugarcane ethanol production. The biofuel carbon debt on converted Cerrado is estimated to be repaid in 17 years, the least amount of time of the scenarios that were analyzed, as for example, ethanol from US corn was estimated to have a 93 year payback time. The study conclusion is that the net effect of biofuel production via clearing of carbon-rich habitats is to increase CO₂ emissions for decades or centuries relative to fossil fuel use.^[94]

Regarding this concern, previous studies conducted in Brazil have shown there are 355 million ha of arable land in Brazil, of which only 72 million ha are in use.^[90] Sugarcane is only taking 2% of arable land available,^[57] of which ethanol production represented 55% in 2008.^[49] Embrapa estimates that there is enough agricultural land available to increase at least 30 times the existing sugarcane plantation without endangering sensible ecosystems or taking land destined for food crops.^[57] Most future growth is expected to take place on abandoned pasture lands, as it has been the historical trend in São Paulo state.^{[6][51][57][58]} Also, productivity is expected to improve even further based on current biotechnology research, genetic improvement, and better agronomic practices, thus contributing to reduce land demand for future sugarcane cultures.^[57][58] This trend is demonstrated by the increases in agricultural production that took place in São Paulo state between 1990 and 2004, where coffee, orange, sugarcane and other food crops were grown in an almost constant area.^[125]

Also regarding the potential negative impacts of land use changes on carbon emissions, a study commissioned by the Dutch government concluded that "it is very difficult to determine the indirect effects of further land use for sugar cane production (i.e. sugar cane replacing another crop like soy or citrus crops, which in turn causes additional soy plantations replacing pastures, which in turn may cause deforestation), and also not logical to attribute all these soil carbon losses to sugar cane".^[62] Other authors have also questioned these indirect effects, as cattle pastures are displaced to the cheaper land near the Amazon.^[6][114] Studies rebutting this concern claim tha land devoted to free grazing cattle is shrinking, as density of cattle on pasture land increased from 1.28 heads of cattle/ha to 1.41 from 2001 to 2005,^[51] and further improvements are expected in cattle feeding practices.^[126]

[edit] Deforestation

Location of environmentally valuable areas with respect to sugarcane plantations. São Paulo, located in the Southeast Region of Brazil, concentrates two-thirds of sugarcane cultures.^[51]

Other criticism have focused on the potential for clearing rain forests and other environmentally valuable land for sugarcane production, such as the Amazonia, the Pantanal or the Cerrado.^{[92][93][94][114][121]} Embrapa has rebutted this concern explaining that 99.7% of sugarcane plantations are located at least 2,000 km from the Amazonia, and expansion during the last 25 years took place in the Center-South region, also far away from the Amazonia, the Pantanal or the Atlantic forest. In São Paulo state growth took place in abandoned pasture lands.^[57][58]

The impact assessment regarding future changes in land use, forest protection and risks on biodiversity conducted as part of the study commissioned by the Dutch government^[62] concluded that "the direct impact of cane production on biodiversity is limited, because cane production replaces mainly pastures and/or food crop and sugar cane production takes place far from the major biomes in Brazil (Amazon Rain Forest, Cerrado, Atlantic Forest, Caatinga, Campos Sulinos and Pantanal)". However, "...the indirect impacts from an increase of the area under sugar cane production are likely more severe. The most important indirect impact would be an expansion of the area agricultural land at the expense of cerrados. The cerrados are an important biodiversity reserve. These indirect impacts are difficult to quantify and there is a lack of practically applicable criteria and indicators."^[62]

Brazil's president, Luiz Inácio Lula da Silva has also claimed this concern is not valid. According to him "The Portuguese discovered a long time ago that the Amazon isn't a place to plant cane."^[127] In order to guarantee a sustainable development of ethanol production, the government is working on a countrywide zoning plan to restrict sugarcane growth in or near environmentally sensitive areas, allowing only the eight existing plants to remain operating in these sensitive areas, but without further extension of their sugarcane fields.^[128] The proposed restricted area has 4.6 million square kilometers, almost half of the Brazilian territory.

[edit] Social implications

Typical sugarcane worker during the harvest season, São Paulo state.

Sugarcane has had an important social contribution to the some of the poorest people in Brazil by providing income usually above the minimum wage, and a formal job with fringe benefits.^[62][129] Formal employment in Brazil accounts an average 45% across all sectors, while the sugarcane sector has a share of 72.9% formal jobs in 2007, up from 53.6% in 1992, and in the more developed sugarcane ethanol industry in São Paulo state formal employment reached 93.8% in 2005.^[129] Average wages in sugar cane and ethanol production are above the official minimum wage, but minimum wages may be insufficient to avoid poverty.^[62] The North-Northeast regions stands out for having much lower levels of education among workers and lower monthly income. The average number workers with 3 or less school years in Brazil is 58.8%, while in the Southeast this percentage is 46.2%, in the Northeast region is 76,4%.^[129] Therefore, earnings in the Center-South are not surprisingly higher than those in the North-Northeast for comparable levels of education.^[62] In 2005 sugarcane harvesting workers in the Center-South region received an average wage 58.7% higher than the average wage in the North-Northeast region.^[129] The main social problems are related to cane cutters which do most of the low-paid work related to ethanol production.^[62]

The total number of permanent employees in the sector fell by one-third between 1992 and 2003, in part due to the increasing reliance on mechanical harvesting, especially in the richest and more mature sugarcane producers of São Paulo state. During the same period, the share of temporary or seasonal workers has fluctuated, first declining and then increasing in recent years to about one-half of the total jobs in the sector, but in absolute terms the number of temporary workers has declined also.^[62] The sugarcane sector in the poorer Northeast region is more labor intensive as production in this region represents only 18.6% of the country's total production but employs 44.3% of worker force in the sugarcane sector.^[129]

The manual harvesting of sugarcane has been associated with hardship and poor working conditions.^[6][62][121] In this regard, the study commissioned by the Dutch government^[62] confirmed that the main problem is indeed related to manual cane harvesting. A key problem in working conditions is the high work load. As a result of mechanization the workload per worker has increased from 4 to 6 ton per day in the eighties to 8 to 10 ton per day in the nineties, up to 12 to 15 ton per day in 2007, and if the quota is not fulfill workers can be fired.^[6][62] Producers say this problem will disappear with greater mechanization in the next decade.^[6] Also, as mechanization of the harvesting is increasing and only feasible in flat terrain, more workers are being used in areas where conditions are not suitable for mechanized harvesting equipment, such as rough areas where the crops are planted irregularly, making working conditions harder and more hazardous.^[62]

Also unhealthy working conditions and even cases of slavery and deaths from overwork (cane cutting) have been reported,^[121] but these are likely worst-case examples.^[62] Even though sufficiently strict labor laws are present in Brazil, enforcement is weak.^[62] Displacement and seasonal labor also implies physical and cultural disruption of multifunctional family farms and traditional communities.^[121]

Regarding social responsibility the ethanol production sector maintains more than 600 schools, 200 nursery centers and 300 day care units, as legislation requires that 1% of the net sugar cane price and 2% of the net ethanol price must be devoted to medical, dental, pharmaceutical, sanitary, and educational services for sugar cane workers. In practice more than 90% of the mills provide health and dental care, transportation and collective life insurance, and over 80% provide meals and pharmaceutical care. However, for the temporary low wage workers in cane cutting these services may not be available. ^[62]

[edit] Effect on food prices

Some environmentalists, such as George Monbiot, have expressed fears that the marketplace will convert crops to fuel for the rich, while the poor starve and biofuels cause environmental problems.^[130] Environmental groups have raised concerns about this trade-off for several years.^{[114][131][132][133]} The food vs fuel debate reached a global scale in 2008 as a result of the international community's concerns regarding the steep increase in food prices. On April 2008, Jean Ziegler, back then United Nations Special Rapporteur on the Right to Food, called biofuels a "crime against humanity",^[134][135] a claim he had previously made in October 2007, when he called for a 5-year ban for the conversion of land for the production of biofuels.^[136][137] Also on April 2008, the World Bank's President, Robert Zoellick, stated that "While many worry about filling their gas tanks, many others around the world are struggling to fill their stomachs. And it's getting more and more difficult every day."^{[138][139][140]}

Luiz Inácio Lula da Silva gave a strong rebuttal, calling these claims "fallacies resulting from commercial interests", and putting the blame instead on U.S. and European agricultural subsidies, and a problem restricted to U.S. ethanol produced from maize. The Brazilian President has also claimed on several occasions that his country's sugar cane based ethanol industry has not contributed to the food price crises.^[7][90][141]

A report released by Oxfam in June 2008^[142] criticized biofuel policies of rich countries as neither a solution to the climate crisis nor the oil crisis, while contributing to the food price crisis. The report concluded that from all biofuels available in the market, Brazilian sugarcane ethanol is "far from perfect" but it is the most favorable biofuel in the world in term of cost and greenhouse gas balance. The report discusses some existing problems and potential risks, and asks the Brazilian government for caution to avoid jeopardizing its environmental and social sustainability. The report also says that: “Rich countries spent up to $15 billion last year supporting biofuels while blocking cheaper Brazilian ethanol, which is far less damaging for global food security."^[143][144]

A World Bank research report published on July 2008^[145] found that from June 2002 to June 2008 "biofuels and the related consequences of low grain stocks, large land use shifts, speculative activity and export bans" accounted for 70 percent to 75 percent of total price rises. The study found that higher oil prices and a weak dollar explain 25-30% of total price rise. The study said that "...large increases in biofuels production in the United States and Europe are the main reason behind the steep rise in global food prices" and also stated that "Brazil's sugar-based ethanol did not push food prices appreciably higher".^[146][147] The report argues that increased production of biofuels in these developed regions were supported by subsidies and tariffs on imports, and considers that without such policies, price increases worldwide would have been smaller. This research paper also concluded that Brazil's sugar cane based ethanol has not raised sugar prices significantly, and recommends removing tariffs on ethanol imports by both the U.S. and E.U., to allow more efficient producers such as Brazil and other developing countries, including many African countries, to produce ethanol profitably for export to meet the mandates in the E.U. and U.S.^[145]

An economic assessment report also published in July 2008 by the OECD^[148] agrees with the World Bank report regarding the negative effects of subsidies and trade restrictions, but found that the impact of biofuels on food prices are much smaller. The OECD study is also critical of the limited reduction of GHG emissions achieved from biofuels produced in Europe and North America, concluding that the current biofuel support policies would reduce greenhouse gas emissions from transport fuel by no more than 0.8 percent by 2015, while Brazilian ethanol from sugar cane reduces greenhouse gas emissions by at least 80 percent compared to fossil fuels. The assessment calls on governments for more open markets in biofuels and feedstocks in order to improve efficiency and lower costs.^[149]

A study by the Brazilian research unit of the Fundação Getúlio Vargas regarding the effects of biofuels on grain prices.^[150] concluded that the major driver behind the 2007-2008 rise in food prices was speculative activity on futures markets under conditions of increased demand in a market with low grain stocks. The study also concluded that expansion of biofuel production was not a relevant factor and also that there is no correlation between Brazilian sugarcane cultivated area and average grain prices, as on the contrary, the spread of sugarcane was accompanied by rapid growth of grain crops in the country.^[150]

Panoramic view of the Costa Pinto Production Plant located in Piracicaba, São Paulo state. This industrial plan is set up to produce sugar, ethanol fuel (both anhydrous and hydrous), industrial grade ethanol, and alcohol for beverages. The foreground shows the receiving operation of the sugarcane harvest, immediately followed by the mill process, and in the right side of the background is located the destilation facility where ethanol is produced. This plant produces the electricity it needs from baggasse residuals from sugar cane left over by the milling process, and it sells the surplus electricity to public utilities.

[edit] See also

Sustainable development portal

• Ethanol fuel in the United States
• Ethanol fuel in Australia
• Ethanol fuel in Sweden
• Ethanol fuel in the Philippines
• Common ethanol fuel mixtures
• Flexible-fuel vehicle
• List of renewable energy topics by country

[edit] Bibliography

• Macedo, Isaias de Carvalho, editor (2007) (in Portuguese) (Available in PDF), A Energia da Cana-de-Açúcar – Doze estudos sobre a agroindústria da cana-de-açúcar no Brasil e a sua sustentabilidade (Second ed.), Berlendis & Vertecchia, São Paulo: UNICA – União da Agroindústria Canavieira do Estado de São Paulo, CDD-338.173610981 

• Rothkopf, Garten (2007) (Available in PDF), A Blueprint for Green Energy in the Americas, Inter-American Development Bank, Washington, D.C. 

[edit] References

[edit] External links

• BBC News video segment on ethanol in Brazil
• Biofuels: The Promise and the Risks. The World Bank's World Development Report 2008: Agriculture for Development
• Biofuelwatch on Ethanol in Brazil
• Brazil Institute: Biofuels Central.WWICS
• Brazil priming ethanol initiative to supply fuel-thirsty Japan
• The Brazilian biofuels industry (2008 status)
• CDM Potential in Brazil, by S. Meyers, J. Sathaye et al.
• CNBC's Yergin: What the U.S. Can Learn From Brazil About Ethanol By CNBC.com|07 Jun 2007|12:33 PM ET
• Cogeneration in Ethanol Plants by P. M. Nastari
• Future of Brazil Ethanol, BioFuel Industry
• Structure, Players in Brazil Ethanol and BioFuels
• Brazilian Ethanol Policy: Lessons for the United States
• Surveys of Brazil Ethanol and BioFuels
• UNICA - Brazilian Sugarcane growers assoc. (in Portuguese) and its machine translation

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