World Economic Forum roundtable in São Paolo, Brazil, on the role of Latin America in the global economy focused in part on the role of biofuels and energy security in Latin America—and more specifically, on the role of Brazilian ethanol.
Brazilian Ethanol in the Spotlight of WEF Roundtable on Latin America
April 11, 2006
A two-day World Economic Forum roundtable in São Paolo, Brazil, on the role of Latin America in the global economy focused in part on the role of biofuels and energy security in Latin America—and more specifically, on the role of Brazilian ethanol.
Jose Goldemberg, Secretary for the Environment, Government of the State of São Paulo, Brazil, kicked off the session by providing an overview of the global ethanol market. The biofuel currently accounts for 3% of the world’s fuel output, according to his data.
As a raw material, sugarcane, which is used in Brazil, is both more efficient in terms of energy produced per unit of input and less polluting, according to Secretary Goldemberg. Given current petroleum prices, ethanol is competitive.
Over the years, the price paid to producers for ethanol has dropped from US$ 100 a barrel to US$ 30 a barrel without subsidies. It has become competitive with gasoline.
—Secretary Goldemberg
Goldemberg believes that if the Brazilian model is more widely applied, ethanol can represent up to 10% of the global energy mix within a few years.
Henry Joseph Jr, President, Commission for Energy and Environment, Associação Nacional dos Fabricantes de Veiculos Automotores (Anfavea), Brazil, outlined his industry’s challenge to develop an alternative to the internal combustion engine and shift to sources of energy other than gasoline.
Blending ethanol with gasoline, as we do here in Brazil, may be a good way to introduce ethanol into the mix and reduce oil dependence.
—Henry Joseph
Brazilian gasoline includes a 20-25% mix of ethanol. Petrobras, the state-owned oil firm, is the country’s biggest user of the sugarcane-derived fuel, according to Mozart Schmitt de Queiroz, Executive Manager, Energy Development, Petroleo Brasileiro SA Petrobras, Brazil. Things are looking up on the export side for Brazil. (Earlier post.)
Some of the large consumer countries have to reduce their barriers to entry. Our sugarcane-based ethanol is more competitive than that produced from other inputs in the United States and Europe.
Along with the country’s Ministry of Agriculture, the Brazilian futures market is creating instruments designed to finance projects in the development of ethanol from sugarcane, said Manoel F. Cintra Neto, President, Bolsa de Mercadorias & Futuros (BM&F), Brazil.
We need to disseminate our technology to the rest of Latin America. Then we won’t have to stand alone in the effort to change as we try to reduce protectionist barriers in the United States and encourage the production of ethanol-fueled cars.
—Manoel F. Cintra Neto
The US plans to diversify both its sources of petroleum and its mix of energy sources, said E. Anthony Wayne, US Assistant Secretary of State for Economic and Business Affairs.
We can and need to learn from others. That would include both ethanol production in Brazil and the use of compressed natural gas to fuel automobiles in Argentina. We’re going to be looking at a lot of different areas. There is a lot of room for cooperation with Brazil.
—Anthony Wayne
While the US federal government is talking about learning and cooperation, at least two US states are keen to ramp up purchases of Brazilian ethanol in coming months. Brazil’s Ambassador to the US, Roberto Abdenur, met with California governor Arnold Schwarzenegger and Minnesota governor Tim Pawlenty, and said both were interested in buying Brazilian ethanol according to a report in Cattle Network.
Furthermore, California state senators arrived in Brazil on Friday on week-long visit to meet with Anfavea and others, one of the main objectives of the visit being to visit ethanol production facilities and strengthen ties between California and Brazil.
In California, ethanol represents about 5.6% of the gasoline pool, generating consumption of around 900 million gallons per year. The legislators are studying the possibility of increasing the ethanol percentage to 10% (E10). |
