Conference on Biofuels: an option for a less carbon-intensive economy 4-5 December 2007 Bioenergy for the future by: Mauricio T. Tolmasquim President Empresa de Pesquisa Energética EPE The views expressed are those of the author and do not necessarily reflect the views of UNCTAD
Bioenergy for the Future Mauricio T. Tolmasquim President of Empresa de Pesquisa Energética EPE
Summary World Biofuel Market Motivation for Biofuels Biofuel Market Growth Brazilian Outlook World Biofuel Challenges 3
Summary World Biofuel Market Motivation for Biofuels Biofuel Market Growth Brazilian Outlook World Biofuel Challenges 4
60 50 40 30 20 World Ethanol Market 2006 World Total Market (Billion Liter per Year) Production 46.6 Consumption 45.7 International Trade 3.7 Billion Liter per Year 20,3 18,4 18,0 14,6 2006 Production Consumption International Trade Ethanol Source 2006 USA From Corn 97% From Other Feedstocks 3% Brazil From Sugarcane 100% EU-25 Wheat 70% Corn 10% Barley 15% Rye 5% 10 0-10 3,5 3,3 3,5 4,1 3,9 0,2 1,8 2,3 1,0 1,0-0,3-0,4 USA -2,6 Brazil EU 25 China India Others Others: includes Russia, South Africa, Saudi Arabia, Thailand, Ukraine, Canada, Poland, Indonesia, Argentina, Australia, Japan, Pakistan, Philippines, South Korea, Guatemala, Cuba, Ecuador, Mexico, Nicaragua, Mauritius, Zimbabwe, Kenya and Swaziland Source: FAPRI Agricultural Outlook 2007 Renewable Fuels Association 2007 5
60 50 40 30 20 10 0-10 World Ethanol Market 2016 World Total Market (Billion Liter per Year) Production 88.4 Consumption 87.3 International Trade 4.7 Billion Liter per Year 47,7 48,9-1,2 28,5 23,7 5,5 6,4 4,6 2,2 2016 Production Consumption International Trade 4,8 5,1 2,9-0,5-0,7 USA Brazil EU 25 China India -0,9 Ethanol Source 2016 USA From Corn 92% From Other Feedstocks 2% Cellulosic 6% Brazil From Sugarcane 100% EU-25 Wheat 70% Corn 10% Barley 15% Rye 5% Source: FAPRI Agricultural Outlook 2007 Renewable Fuels Association 2007 6
World Total Market World Biodiesel Market (Billion Liter per Year) 2006 2016 Production/ Consumption 22.4 32.8 60 50 Billion Liter per Year 2006 2016 40 30 27,8 20 20,8 10 0 1,5 3,3 1,7 0,1 USA Brazil EU 25 Brazil's projections in accordance with federal law 11.097/05 Sources: PDE-EPE (2007) FAPRI Agricultural Outlook 2007 7
Summary World Biofuel Market Motivation for Biofuels Biofuel Market Growth Brazilian Outlook World Biofuel Challenges 8
Energy Security Motivations for Biofuels (reducing dependence on oil) Sustainable Social Inclusion Promote renewable energy production reducing GHG emissions 9
Greenhouse gas emission by sector - World Agriculture; 13,5 Greenhouse Gas Emission by Sector (percentage) Waste; 3,6 Transportation; 13,6 Land Use Change; 18,2 Eletricity and Heat; 24,6 Industrial Processes; 3,4 Fugitive Em issions; 3,9 Industry; 10,4 Other fuel combustion; 9 10
Sugar-cane Potential to Avoided Gas Emissions (ton COequiv/Ha.year) Abatement of 640 million ton of CO 2 equivalent as result of Brazilian Ethanol Program 11
Summary World Biofuel Market Motivation for Biofuels Biofuel Market Growth Brazilian Outlook World Biofuel Challenges 12
Outlook of Biofuels in the USA 90 EIA 2007, EIA 2006, EPAct 2005 and H.R.6 80 79,5 70 68,1 Billion liters 60 50 40 30 20 20,9 26,5 32,2 39,7 45,4 47,7 50,0 28,4 52,2 54,5 56,8 49,5 42,6 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year EIA 2007 EIA 2006 EPAct 2005 H.R.6i This Bill (H.R.6) is on the Congress and probably will be the new standard for biofuels on the USA. 13
Outlook of Biofuels in the EU Europe Union - 10% of Biofuel on 2020 35 Billion Liters 30 25 20 15 10 13,35 15,25 17,15 19,04 20,94 22,84 24,74 26,63 28,53 30,43 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year 14
Summary World Biofuel Market Motivation for Biofuels Biofuel Market Growth Brazilian Outlook World Biofuel Challenges 15
Brazilian Energy Matrix 2006 Domestic Energy Supply Structure Total: 230 millions of toe Sugar-cane and by-products Other renewables 15.9% Oil and by-products 13.7% 38.6% 14.9% 6.4% 9.4% Hydraulic and Electricity 1.2% Uranium Coal Natural Gas Source: Brazilian Energy Balance, EPE, 2007 16
Renewable Matrix Comparison Domestic Energy Supply Structure OECD Countries (2004) 6,0 94,0 World (2004) 13,3 86,7 Brazil (2006) 44,5 55,5 Renewables Non-renewables 0% 20% 40% 60% 80% 100% Source: Brazilian Energy Balance, EPE, 2007 Key World Energy Statistics, IEA, 2005 17
Two main issues affecting Brazil Ethanol Market FLEX FUEL Exports 18
Light Vehicles Domestic Fleet Forecasts for Light Vehicles Fleet in Brazil Light Vehicles Domestic Sales Percentage Gasoline Ethanol Flex fuel Diesel 1980 71% 27% 2% 1985 4% 92% 4% 1990 82% 12% 6% 1995 94% 2% 3% 2000 93% 1% 6% 2006 20% 76% 4% 2010 11% 85% 4% 2015 11% 85% 4% Source: EPE, 2007; ANFAVEA, 2007 Forecasts indicate more than 19 millions of flex fuel vehicles in Brazilian fleet in 2015 19
Brazil's Long Term Study 2030 Ethanol on 2030 Matrix (million m³/year) 2006 2030 Ethanol Production 17.8 66.7 Ethanol Consumption 14.4 54.7 Ethanol Exportation 3.4 12.0 20
The Brazilian Biodiesel Production and Use Program Stages of Brazilian Biodiesel Program Law n º 11,097/05 Set the mandatory blending of biodiesel with mineral diesel and regulate the insertion of the new fuel in the market. 2005 to 2007 2008 to 2012 2013 Forward (Government may bring the aim forward to 2010) 2% Authorized Potencial Market 840 millions liters/year 2% Mandatory Firm Market 1 billion liters/year 5% Mandatory Firm Market 2.4 billion liters/year 21
Summary World Biofuel Market Motivation for Biofuels Biofuel Market Growth Brazilian Outlook World Biofuel Challenges 22
World Biofuel Challenges Expand production protecting the Environment Expand production avoiding intersection on Food sector Reduce production costs 23
Reduce production costs Area Productivity Source: IEA (2005) and MTEC Source: O. Henniges and J. Zeddies, Economics of Bioethanol in the Asia-Pacific: Australia-Thailand-China, in F.O.Licht s. World Ethanol and Biofuels, vol. 3, n. 11, 2005 24
8,000 7,000 6,000 5,000 4,000 3,000 2,000 Stages of Brazilian Ethanol Program Productivity, Actual production area and Saved area Productivity Saved area Actual area 25 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Crop-year 80 70 60 50 40 30 20 Total area cultivated (thousand ha) Productivity (tcana/ha) Technological Progress First Steps Consolidation Stagnation Redefinition Current Phase
Expand production avoiding intersection on Food sector Sugar-cane Land use on 2030 Matrix 2006 2030 Land Use (million ha) 6.2 13.9 Sugar-cane Production (million tone/year) 458 1,140 26
Land Use in Brazil (Dimensions and Soil Occupation) 10 6 ha 2.4% 7.1% Amazon Forest Rain and Protected Areas 405 24.7% Cities, Roads, Bodies of Water and Others Farming Production Areas 20 366 Pasturelands 210 Temporary and Permanent Cultures 61 47.6% 43.0% 7.2% 0.6% 10.6% Cultivated Forests 5 Agro-frontier 90 Other Uses 60 BRAZIL 851 Source: SPAE/MAPA, 2006 million ha 2006 2030 Total Sugar-cane 6,2 13,9 Sugar-cane for Ethanol 3,1 8,3 27
Thanks EMPRESA DE PESQUISA ENERGÉTICA - EPE www.epe.gov.br Av. Rio Branco, 1 11 o andar 20090-003 Rio de Janeiro RJ Tel.: + 55 (21) 3512-3100 Fax: + 55 (21) 3512-3199 28