January 13, 2009

A National Energy Vision

Met today, for five hours, with representatives of Brazil's Ministry of Mines and Energy, the federal agency that oversees the nation's biofuels program. Also in the meeting were representatives from Petrobras, the private/public company that is leading the way in Brazil's biofuels (ethanol and biodiesel) industry.

Pictured here is Ricardo Borges Gomide (left), deputy director of the Renewable Fuels Department; and Marlon Arreas Leal, deputy administrator.

A few highlights from today's fact-finding mission:
  • Total fuels use in Brazil is roughly equivalent to that of California. The Brazilian fleet includes some 25 million "light vehicles" and 3 million diesel vehicles. Total annual fuel use is 40 billion litres of diesel; 20 billion litres of 100% ethanol; and 20 billion litres of "gasoline C", which is the 25% ethanol blend.
  • Brazil expects ethanol production and consumption to grow at an average rate of 11% per year. In fact, this rate of growth is in the Ministry's 10-year plan (imagine that...a 10-year plan for ethanol growth!)
  • Brazil has done an analysis of available land for agricultural use (land that does not encroach on critical habitat, etc.) and has determined that they have nearly 100 million hectares available for expansion of agriculture. Cattle production is big, but inefficient. Still, they believe they have 17 million hectares available for livestock expansion (pasture, etc.)
  • 85% of the electrical power in Brazil is hydroelectric...and some sugar cane is used for electrical generation.
  • Since 2003, about 7 million flex-fuel vehicles have been sold in Brazil—about 27% of the fleet. These FFVs aren't like ours in the U.S. The Brazilian versions can run on up to 100% ethanol, and most gas stations have a pump that dispenses 100% ethanol and another that dispenses Gasoline C (25% ethanol). In fact, of the 37,000 independent gas stations in the nation, 94% offer the 100% ethanol option to their customers.
  • There are 427 ethanol plants in Brazil. Again, expanding at an 11% annual rate. Brazil is the world's 2nd largest ethanol producer (6.6 billion gallons/year)...and they use 6.4 million hectares to support the industry through sugar cane production.
  • Engines in Brazil are optimized for performance on ethanol. Note that the emphasis is on performance (power) and not on mileage.
  • Brazil has been shipping ethanol in pipelines since the 1970s and is able to do so with multiple products in the pipelines. In other words, they don't rely on dedicated pipelines for ethanol distribution. One Ministry official said: "You should. You can. You must build pipelines for ethanol."
  • Brazil is a huge biodiesel maker/user as well. Currently, the mandate is a 3% blend. In 2013, that will be 5% by law, but the Ministry expects to reach 10% by that time.
  • 10% of Brazil's soybean production goes to make biodiesel...and 75% of the biodiesel on the market is soy-based.
More to come, but suffice it to say that Brazil clearly has a long-term, strategic approach to their domestic energy production and consumption. While the U.S. fell off the renewables wagon after the panic of oil embargo of the 1970s passed, Brazil kept its eye on the ball...and continues to do so. Get this: Brazil's federal environmental agency supports biofuels! And the entire nation has been "agro-zoned" to identify the best areas for biofuels production.

Brazil sees biofuels from not only an energy security standpoint, but they have an integrated strategy that includes economic factors, environmental impacts and—here's the really interesting part—the social aspects of biofuels: How biofuels can provide jobs and improve lives. This strategy extends beyond the borders of Brazil. They see biofuels as an economic and social driver for the entire world. "Renewables are the best way to minimize the effects of fossil fuels," said Marlon Arraes Leal, deputy administrator. And as Brazil sees it, those effects are far-reaching.

Stay tuned.

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