Market overview: Bioenergy in Brazil

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published on 13th February 2020

 

Bioenergy has played an important role in Brazil’s energy matrix and represents approximately 9% of its energy matrix with 15 GW of installed capacity. Brazil is the second largest ethanol producer in the world after the United States. The increase through last years is substantial, whereas ethanol production in 2007 reached around 18 billion liters, in 2019 it went up to 33,14 billion liters. It comes mainly from sugar cane which is considerably cheaper than for instance corn based produced in the US, measured in energy input per energy output, and also gives higher energy yields per planted hectare.

 

The increase in production’s volume of biofuel has also led to technical development in the automotive industry. Flexible-fuel engines for automobiles is already quite developed in Brazil having the world’s largest fleet of biofuel’s cars.

 

One of the several pro-renewables government policies in the country is the requirement of fossil based gasoline to contain at least around 27 percent ethanol as fuel additive which increases octane and reduces harmful emissions. Biodiesel’s production has also been very stimulated in Brazil. Starting in March-2020 it’ll be required that 12 percent  of fuel-diesel shall be composed by Biodiesel (1 p.p. higher than today). According to the Energy Minister Mr. Bento Albuquerque, the plan is to reach up to 15 percent by 2023.

 

Moreover, Brazil’s energy matrix is highly predominated by big hydroelectric plants, which is seasonal and during drought seasons, demand rises for alternative energy sources including burning of different fuels to power thermoelectric plants. The production of bioethanol produces bagasse which is effectively used to power these electrical plants and is today one of the main renewables used in Brazil.

 

 

 

Brazil as a positive benchmark

Brazil is definitely a successful benchmarking case for other countries (e.g. India that has an excessive production of sugar cane) regarding Bioenergy exploitation. Having a great potential due to its abundant natural resources and extensive territory, Brazil is literally a land for opportunities in the area. Having noticed that, the authorities have supported and stimulated renewable’s development.

 

Historically, Brazilian politicians have been very committed with the increase of renewable energy’ sources in the country. Some examples are: i) Brazil is part of Paris agreement which has been systematically ratified; ii) Government has provided several fiscal incentives for renewables; iii) The national program “proalcool” that incentives the blend of biofuel into fossil-based fuels, among other incentives; iv) the brand new Government program that will start in 2020 “RenovaBio”; v) among others.


The new government led by right-wing President Jair Bolsonaro (in charge since 2019) has shown several signals that it’ll keep its compromise to develop clean energy sources. President Jair Bolsonaro optimistically pledged shortly after his election victory in 2018 that Brazil would once again take the lead in the ethanol production industry, a lead they lost to the US years ago.

 

In Sep-2019, President Jair Bolsonaro and Bioenergy’s Director of Mines and Energy Ministry Mr. Miguel Lacerda reinforced that the beginning of one of the largest stimulus program for biofuel in the world i.e. “RenovaBio”, will take place in 2020, which clearly backs up his initial declarations. The program’s focus is in reducing carbon’s emission by forcing energy-distribution companies  to acquire carbon credits from biofuel producers. According to the Government, this program will result in approximately 700 million tons of carbon dioxide being taken out from atmosphere.

 

The program is the third wave of the Brazilian biofuel program. The first was the “Proalcool” program established in 1975 when as a result of the 70s oil crisis, the Brazilian government launched the program which includes effective measures to stimulate the domestic ethanol industry and make it competitive with gasoline. The second phase was established in 2003 with the development of new technology for flex-fuel engines, which resulted in the largest automobile fleet for this type of engines in the world.

 

Latest years have been characterized by a wide global requests to halt global warming and has as a consequence increased demand for cleaner fuels, and biofuels are much cleaner than fossil based ones.

 

Therefore, what are future perspectives for biofuel industry in Brazil?

On one hand it is clear that the new program RenovaBio will considerably increase biofuel production and demand. On the other hand corruption, excessive bureaucracy, poor infrastructure and structural problems make Brazilian industry comparatively ineffective in general. Despite this, Brazil still holds a competitive advantage in the production of ethanol and has knowledge and experience for further development. Focus on solving structural problems would improve the economy and most probably increase the industry and could make Brazil world leader again, as it once was in the past.

 

 

Also read „Market overview: Bioenergy in India” and „How does this affect the Indo-Brazilian relationship?”.

 

 

 

 

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