Marcos Fava Neves

The queen of green energy

By Marcos Fava Neves (chinadaily.com.cn)
Updated: 2010-09-25 15:10

Several factors motivated Governments to start policies towards biofuels. Oil prices, energy dependence, global warming, environment and economics, among others. The basic idea is that when biofuels started to be added to fossil fuels in our cars, part of the money flow moved from the oil business towards the agro-business. If someone in New York fills up the car tank and the gasoline has 10% of ethanol (E10) added, around 10% of the money spent by the car owner will not move to oil business chain, but to corn business chain.

And this revolution is happening in several parts of the world, empowering agriculture and land owners. The future opportunities are great, since biofuels today occupy only around 2-3% of total fuel consumption in the globe and there are plenty of areas available in the planet for this development.

This article has an objective to show how Brazil has been successful in adopting a sugar cane policy in the last 40 years, taking advantage of the capacity of this plant, probably the best source in the world for receiving energy from the sun and transforming in economic benefits (this reason is why I call it "the queen"). In 2010, sugar cane chain in Brazil is responsible for a GDP of US$ 30 billion, a financial movement of US$ 90 billion, generating almost 4,5 million jobs (direct and indirect). The chain is also responsible for US$ 7 billion in tax generation for Governments (Federal and State) and its major products, sugar and ethanol will be responsible for US$ 12 billion in exports.

This chain gives to Brazil a position of supplying all the large internal market with sugar (self sufficient) and with its surplus, to reach 53% of market share in world sugar exports. Cane generates not only sugar, but ethanol and bioelectricity. Of the total fuel consumed in the country, ethanol already accounted to 52%, against 48% of gasoline. Since Brazil is selling more that 3 million new cars per year, and of these, 90% are flex fuel vehicles (can use either gasoline of ethanol), it is expected that in 2015, this ratio of consumption will be 80% of ethanol and 20% of gasoline. This cane production is done by using only 9 million hectares, from the available 350 million hectares for agriculture development in Brazil (less than 3% of the area).

After crushing the sugar cane, about 1/3 of its weight is bagasse. This bagasse is burned in boilers inside the industrial units, cogenerating electricity, partially used to run the mill, and part sold to the consumer's network, representing a third source of income. Brazil estimates to have by 2020, 15% of its electricity supply coming from sugar cane (in 2010 is 3%).

Ethanol allows consumers to benefit economically of its efficiency. Most mills have a production cost that is about US$ 0,40/liter, and retail prices as an average are around US$ 0,80/liter (55-60% of the price of gasoline). At gas stations, consumers in Brazil have access to what is called the E100 (100% hydrated ethanol) and at the other pump, normal gasoline, which for more than 10 years is added with 25% of anhydrous ethanol, with no damages to gasoline engines.

From sugar cane companies are extracting several other products and probably the most promising markets are bio-plastic and diesel. Coca Cola recently launched its "plant based plastic bottle" that has 30% of plastic coming from cane. Another promise is to produce diesel directly from sugar, with an engineered yeast based technology developed by a company called Amyris in the USA, and already in production in Brazil. This cane diesel was approved by Mercedes Benz in normal diesel engines. There is a lot to come from sugar cane in the near future. The first GMO's are expected only for 2014, and can increase sugar content by 40%. Hydrolysis will allow production to go from 8 thousand liters of ethanol per hectare to 12-15 thousand.

Sugar cane is the plant of the 6 E's. Energy (1), was already discussed. Environment (2), due to its capacity of bringing environmental benefits (ethanol is almost a zero emission fuel). It also gives benefits to exports (3) of the country. Helping exports, naturally this chain helps the economy (4), since these resources are flowing to several sectors of the economy. It also generates employment (5), since millions depend on this chain for their monthly income. Finally, since sugar cane is not a concentrated business and it is produced in more than 430 industrial units in most states of Brazil, it generates empowerment (6), helping to develop the country, and moving people from the shores towards inlands.

Why not this example of cane green energy producing in other tropical countries where we have the combination of sun, water and land? I will come back to this subject in my next article.

The author is professor of strategic planning and food chains at the School of Economics and Business, University of Sao Paulo, Brazil (www.favaneves.org) and international speaker.