Brazilian Association of Vegetable Oil Industries Biofuels - Global Situation, Concerns and the Future International Oilseed Producers Dialogue - IOPD Daniel Furlan Amaral Rio de Janeiro RJ Brazil June 14, 2010
Index Incentive policies for biodiesel Market size of biodiesel Sustainability initiatives Other concerns Conclusions
Incentive policies for biodiesel Global warming Three main targets Rural development Energy security
Incentive policies for biodiesel Some examples o Mandatory blends for: o o Transport Energy production o Technological developments o o Investments in research and development (R&D) Mandates for second and third generation of biofuels (RFS, RED, etc)
Incentive policies for biodiesel Some examples o Tax relieves: o o Brazil: federal taxes (PIS and COFINS) Argentina: export taxes (Differential Export Tax) o France: General Tax on Polluting Activities (TGAP) and Domestic Tax on Consumption (TIC) o Germany: reduced energy tax for B100 o Tax credits: o USA: US$ 1 / gallon
Market size of biodiesel Main world producers in 2009 Germany France USA Brazil 2,5 2,0 1,8 1,4 A few countries concentrate most of the world production Brazil may become the 3 rd world producer with B5 Argentina 1,2 Italy 0,8 Others 6,3 0 1 2 3 4 5 6 7 Million tons There s a huge growth potential in other oilseed producers Sources: EBB, NBB, ANP, Cámara Argentina de Energías Renovables and Oilworld. 6
Milion tons Market size of biodiesel Biodiesel demand is growing fast 140 120 Human consumption Biodiesel Vegetable oil use for biodiesel already represents 100 14% (2008) 80 60 40 Growth rate is bigger than for other uses 20 Veg oil supply must increase 0 to meet future demand Sources: USDA, Oil World, ANP, MME, EBB and NBB. 7
Thousand tons Market size of biodiesel There s a huge market potential, but trade is still a small portion 45.000 40.000 35.000 Production Exports 41.307 30.000 25.000 20.000 15.000 15.738 10.000 5.000 0 16 3.805 6.711 Sources: USDA, Oil World, ANP, MME, EBB, NBB and OECD. 8
Market size of biodiesel 70% 60% The target must be the trade openness of the soy complex (vol. traded / produced) Soy complex Biodiesel 50% 40% 30% 20% 10% 0% Sources: USDA, Oil World, ANP, MME, EBB, NBB and OECD. 9
Several initiatives propose methods to evaluate the sustainability degree of biofuels GBEP is policy-oriented (in progress) Creates a guidance for national policies of biofuels Voluntary and cannot result in trade restrictions ISO PC 248 (in progress) Seeks the development of criteria for sustainable biofuels Voluntary and private
Renewable Fuel Standard (concluded) Creates a market of 1 billion gallons for biodiesel Developed an extensive public consultation process to evaluate environmental sustainability Renewable Energies Directive (end stage) Creates rules for the implementation of the national programs of biofuels Some topics are still under discussion and regulamentation
EPA s Renewable Fuel Standard EPA is the U.S. environmental agency charged with preparing a proposal for implementing the Renewable Fuel Standard 2 (RFS 2) RFS 2 was created by the Energy Independence and Security Act in 2007, which defines the goals for using renewable energy in the US matrix This alternative energy should promote the reduction of GHG emissions, as compared with the source being replaced
EPA s Renewable Fuel Standard Pressured by the U.S. Congress, EPA included in its analysis estimates of direct and indirect GHG emissions that come from the use of the land In addition, the stages of the biodiesel production, distribution and consumption process were taken into account Other elements were also analyzed, elements such as emissions of other gases and the impacts on air quality and prices
The calculations used a set of economic and geoprocessing tools, as well as consultations with specialists FAPRI-CARD and FASOM partial balance models were used, which created acreage and production scenarios for 2022 Brazil used specific data EPA s Renewable Fuel Standard Calculation Methodology Computable general balance models, such as GTAP, were considered for refining and comparison purposes The Winrock model based on MODIS V5 images (2001-2009)
The model was refined by using national and international data bases, where available The results are calculated taking into consideration: Comparison with the replaced fossil fuel Comparison with a standard long-term scenario The model underwent an extensive public consultation process, in which Brazil received an exclusive visit in 2009 ABIOVE participated in the process with comments and suggestions EPA s Renewable Fuel Standard Calculation Methodology
EPA s Renewable Fuel Standard Results Biodiesel emits 57% less GHG, when compared to diesel In the preliminary report, this amount was 22% Given the requirement of a 50% minimum reduction, biodiesel is now considered to be an advanced biofuel
57% average reduction 50% reduction required by law 85% maximum reduction 22% minimum reduction
EPA s Renewable Fuel Standard Results
EU s Renewable Energy Directive (RED) Sets guidance for the implementation of the national biofuel programs of EU 27 Member-States For 2020, renewable energy must account for 20% of EU s energy matrix Fuel for transport must have 10% of sustainable biofuels For 2010, this addition must be of 10% RED is part of EU s effort to accomplish the target of GHG emissions reduction at COP
EU s Renewable Energy Directive (RED) 2010 European Blending Mandates Source: UFOP.
EU s Renewable Energy Directive (RED) Standard GHG emissions for biofuels
EU s Renewable Energy Directive (RED) Methodology Soy biodiesel won t benefit from RED by the standard calculation (only 32% reduction) Indirect Land Use Change (iluc) will be incorporated in the GHG calculation through certification Cut-off date (January 2008) and world land use map will determine how environmentally sustainable is the imported biofuel
The recently released map of lands with high biodiversity and carbon stocks must be in accordance with existing national tools to protect them: bilateral agreements should be done Compliance to WTO is a concern: RED must not create unnecessary burdensome requirements that may become barriers to trade EU s Renewable Energy Directive (RED) Methodology There s a long way to increase biofuels production and utilization: cooperation through governments and private sector must be a common objective for mutual benefit
Other concerns Biodiesel specification must be harmonized among the main producers White Paper (2007) developed by ABNT (Brazil), ASTM (USA) and Europe (CEN) is a reference for cooperation Technological cooperation in all stages of biodiesel production (agriculture, processing and distribution) is fundamental All players must work to create an international market of biodiesel and other biofuels
Conclusions Biodiesel in the fight against global warming The governments and private sectors must seal alliances to increase biofuels trade as it already happens in soy complex: we need to increase cooperation and avoid trade conflicts Every sustainability initiative for biofuels is welcome, but they must not result in trade barriers: compliance to WTO ought to be a rule Biodiesel won t be a complete substitute for diesel, but may be an important product to reduce GHG emissions, improve energy security and result in social development
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