BRAZILIAN PERSPECTIVES ON BIOENERGY TRADE AND SUSTAINABLE DEVELOPMENT

Transcription

1 BRAZILIAN PERSPECTIVES ON BIOENERGY TRADE AND SUSTAINABLE DEVELOPMENT market access issues, implications of certification on exports and production, social and environmental issues. Sergio C. Trindade SE 2 T International, Ltd. strindade@alum.mit.edu ICTSD Side Event to the Session of the UNCSD, Bioenergy, Agriculture, Trade and Sustainable Development United Nations, New York, Conference Room 2, 14 May 2008

2 CURRENT TOP BIOFUELS PLAYERS IN THE WORLD Biodiesel Corn Ethanol Biodiesel? Sugarcane Ethanol

3 GLOBAL ETHANOL PAST AND FUTURE MILLION M 3 /YR Growth Efficiency 2G

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5 ETHANOL: USA (CORN) VS BRAZIL (SUGAR CANE) Feedstock Harvested Area (Million ha) Million ton of Feedstock % for EtOH Productivity (t/ha) Ethanol output (Million Liters) Liters Ethanol/ha % Ethanol gasoline market penetration Electricity, 2007 No. of Distilleries Kw /ton Feedstock USA 97 Corn % 9 19,000 3,000 3% Imports 70 BRAZIL 350 Sugarcane % 80 18,000 7,000 50% Exports 90

6 BRAZIL BACKGROUND - I Population: 190 million. Growth ~ 1 %. Median age: 28.6 yrs Large and well-developed agricultural, mining, manufacturing, and service sectors Self-sufficient in oil and a net biofuels exporter Since 2004, Brazil has enjoyed continued growth that yielded increases in employment and real wages Three pillars of the economic program: floating exchange rate, inflation-targeting regime, and tight fiscal policy

7 BRAZIL BACKGROUND - II Increasing awareness of environmental issues Economic vulnerability: government's largely domestic debt increased steadily straining government finances Challenge: maintain sufficient growth to generate employment and reduce government debt burden Highly unequal income distribution remains a pressing problem

8 SNAPSHOT OF THE BRAZILIAN SUGARCANE INDUSTRY 50% plus of gasoline replaced by ethanol (in volume) derived from 1% of Brazilian arable land (3.4 million ha) About 90% of sugarcane output in Brazil comes from Center-South Brazil This is some 2,500 km (1,600 miles) from the Amazon rainforest The balance of the output is made NE Brazil, some 2,000 km (1,250 miles) from the rainforest About 25 million ha of degraded pastures available for expansion sugarcane Sugar prices down by 20% in 2007, while sugarcane ethanol output expanded significantly Brazil s 2007 emissions reduced by 25.8 million tons of CO2 eq, thanks to ethanol

9 Proposed Ethanol Pipelines

10 THE SUSTAINABILITY OF BIOFUELS DEPENDS ON INTERNATIONAL TRADE - I Led by the US and Brazil, biofuels are produced in a growing number of countries at large scales. jobs created in rural areas air quality improves in urban areas global warming mitigated, oil imports decrease, foreign exchange saved But, the large scale expansion of biofuels raises concerns: environmental impacts at the production sites land use change and competition with food supplies. Some analysts of Food vs Fuel issues have bundled together all pathways towards fuel ethanol and biodiesel, holding them all responsible for food price hikes and its consequences.

11 THE SUSTAINABILITY OF BIOFUELS DEPENDS ON INTERNATIONAL TRADE - II Not every country in the world should be producing biofuels Only a discrete number of countries should engage in biofuels production, mainly in the developing world But, all countries can benefit from consuming biofuels All energy commodities today are traded internationally, without restrictions, except biofuels Interested countries must discuss and agree on a Global BioPact, to promote sustainable international trade of biofuels

12 MILESTONES April 2007: EU, US and Brazil agree on a 'Biofuels Standards Roadmap' Steps to achieve greater compatibility among their biofuel standards May 2008: Ad hoc working group on "core criteria" for sustainable biofuels to present conclusions to national experts before going to ministers. Summer 2008: Target date for conclusion of the WTO's Doha Round negotiations, Could include a pact on removing tariffs on green goods. EU and the US locking horns with Brazil on whether to include biofuels.

13 MAIN ISSUES Protectionist trends Lack of global classification (WTO) Sustainability criteria: 'Green imperialism'? Internal struggles: EU and USA A potential for trade spats Stakeholders positions