ETHANOLETHANOL

Alexandre Betinardi Strapasson

Director of the Department of Sugar Cane and Agroenergy

Ministry of Agriculture, Livestock and Food Supply

VISÕES SOBRE COMBUSTÍVEIS VEICULARESVISÕES SOBRE COMBUSTÍVEIS VEICULARES

- World preponderance of Otto and Diesel cycles engines, developed for liquid fuels

- The fleet renewal is a gradual process and not immediate

- New technologies such as hybrid vehicles and electric engines constitute a promise for the future, but their costs are still elevated in the short term.

- Large scale hydrogen or electricity use as vehicle fuels will still take time and requires an energy source for its production, not always renewable.

- Fuel production by the thermochemical process from biomass, hydrocellulosic hydrolysis and diesel from sugarcane may become competitive in the future.

- Birth of a new agricultural and energy paradigm: Agroenergy

FORECASTS ON VEHICLES FUELS

POTENTIAL FOR BIOMASS PRODUCTIONPOTENTIAL FOR BIOMASS PRODUCTION

30O

30O

0O

30O

30O

0O

ETHANOLETHANOL

1532: Martim Afonso de Sousa 1532: Martim Afonso de Sousa introduces sugar cane in Brazil introduces sugar cane in Brazil

1925: First ethanol powered vehicle 1925: First ethanol powered vehicle tested in Braziltested in Brazil

1979: First commercial ethanol moved 1979: First commercial ethanol moved vehicle in Brazilvehicle in Brazil

2003:2003:Flex fuelFlex fuel motors are motors are

launchedlaunched

MAKING A NEW MARKET FOR SUGAR CANEMAKING A NEW MARKET FOR SUGAR CANE

BLENDING ETHANOL TO GASOLINE:

Current mix in Brazil (B25): 25% ethanol + 75% gasoline.

USING FLEX FUEL CARS

Flex-Fuel Engine allows the use of ethanol or gasoline in any concentration of these fuels.

- Current manufacturers: VW,GM, Ford, Fiat, Renault, Peugeot, Citroen, Honda and

Toyota.

-Current fleet: 5.6 million vehicles.

The consumption of ethanol is already

higher than gasoline in Brazil.

SUGAR AND ETHANOL FORECASTS IN BRAZIL

CROP SEASON: April 2008 to March 2009

SUGAR AND ETHANOL FORECASTS IN BRAZIL

CROP SEASON: April 2008 to March 2009

Sugar cane production for sugar and ethanol: Min. 558.1 million tonnes (11.3%).Max. 579.8 million tonnes (15.6%).

Sugar cane destination: 42.8% for sugar. 57.2% for ethanol.

Sugar production: Min. 33.9 million tonnes (+8.3%).Max. 35.2 million tonnes (+12.4%).

Ethanol production: Min. 26.5 billion liters (+15%).Max. 27.5 billion liters (+19.5%).

Source: MAPA/CONAB – May 2008

MAIN REASONS RELATED TO THE RECENT GLOBAL INCREASES IN FOOD PRICES:

- Increase in the global demand for food, mainly because of the increase in the per capita income and the rural exodus in some developing countries

- Record oil prices

- US Dollar devaluation

- Increase in prices of fertilizers

- Migration of investments to the agricultural commodities market

- Constraints in distribution logistics and food exporting barriers in some countries

- Weather problems, probably aggravated by global warming

BIOFUELS AND FOOD PRODUCTIONBIOFUELS AND FOOD PRODUCTION

OTHER ASPECTS:

- There is no relation between ethanol production in Brazil and the international increase in food prices

- Ethanol form corn in the US might have caused a limited impact in some products

- High prices of food incentive the food production because of better income for the farmers

CHALLENGES TO INCREASE THE GLOBAL SUPPLY OF FOOD:

- Reduce urgently both agricultural subsidies and trade barriers for the food products (Doha Round), the main causes of agricultural harm in developing countries.

- Give incentives to technology transfer and better agricultural practices to developing countries, supported by international agencies, organizations and banks.

- Implementation of the Agenda of the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol

BIOFUELS AND FOOD PRODUCTIONBIOFUELS AND FOOD PRODUCTION

Source: Conab / MAPA - * Estimates (May, 2008)

GRAINS: Cotton, peanuts, rice, oat, barley, beans, sunflower, castor beans, corn, soybean and sorghum.

4746474944

383737393638

68,3

81,1 78,4 82,4

100,3

142,1

120,8131,7

113,9123,2

57,9

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

EVOLUTION OF GRAIN PRODUCTION IN BRAZIL

Planted Area (million tons per ha) + 24% = 1,3% per year

Production (million tons)

+ 145,5% = 8,5% per year

Productivity: + 98% = 5,4% per year

POTENTIAL AREAS FOR SUGAR CANE EXPANSIONPOTENTIAL AREAS FOR SUGAR CANE EXPANSION

Million ha %

Pasture 172,3 20,2%Crops (yearly and perennial), except sugar cane

68,9 8,1%

Sugar cane* 7,8 0,9%

Woods and Forests 99,8 11,7%Others areas (Amazon Forest, cities, protected areas etc)

502,2 59,0%

Total 851 100,0%Source: IBGE, Census 2006* CONAB, 2008

CURRENT USEArea

Plant in construction or in project

Current plant

AMAZON

PANTANAL

Sugar Cane Fields

WHERE DOES BRAZIL PRODUCE SUGAR CANE?WHERE DOES BRAZIL PRODUCE SUGAR CANE?

Source: EMBRAPA / MAPA

Sugar Cane Agroecological Zoning

-24 .8720 -24.8700 -24.8680 -24 .8660 -24 .8640 -24 .8620

-50.2660

-50.2650

-50.2640

-50.2630

1000.00

1400.00

1800.00

2200.00

2600.00

3000.00

3400.00

3800.00

4200.00

4600.00

5000.00

5400.00

Project underdevelopment by the Brazilian Government that will be published in July 2008.

It will permit the establishment of more effective public policies in order to assure sugar cane sustainability in a long term scenario.

Main considered maps in the zoning: soil, climate, topography, land use and preserved areas.

THANK YOU!THANK YOU!

OBRIGADO!OBRIGADO!

Alexandre Betinardi Strapasson

alexandre.strapasson@agricultura.gov.br Telephone: +55 61 32182147

Fax: +55 61 33220337