United Press International
10-24-06
Analysis: Brazil could up ethanol levels
By CARMEN J. GENTILE
UPI Energy Correspondent
MIAMI, Oct. 24 (UPI) -- Bolstered by record ethanol exports, Brazil is considering
raising the current 20 percent mixture of ethanol in gasoline to 25 percent,
Surging global demand for sugar-based ethanol from Brazil -- the world's largest
producer -- prompted energy officials to lower the domestic fuel level to 20
percent in March.
However, Brazil is expected to produce a record 819 million gallons of ethanol for
export as a result of the 2006-2007 harvest, making it possible for domestic use
to return to previous levels.
Total production for the season is projected to exceed 4.2 billion gallons. Though
that's a record, stocks of ethanol would still be stretched thin if the level in fuel
was increased to 25 percent in the coming weeks or months.
Energy analysts predicted that the new 25 percent level could go into effect Nov.
1, or at latest, by the start of 2007.
Others predicted that Brazil will likely be able to meet both its domestic and
export demand with the level raised to 25 percent.
"The reduction in the percentage was mandated as a way to alleviate the
shortage problem, but now the market it back to where it can handle the
demand," ethanol specialist Amani Elobeid at the Food and Agricultural
Policy Research Institute at Iowa State University told United Press
International.
Brazil is leaps and bounds ahead of the rest of the world when it comes to using
organic-petroleum fuel blends such as sugar-based ethanol, making its use a
matter of law. All Brazilian gasoline must contain a percentage of ethanol and
most vehicles produced in the country can run on any mixture of the two fuels.
In the 1970s, Brazil's Pro-Ethanol Program subsidized sugar mills to produce
extra product specifically for the production of the bio-fuel in the wake of the oil
price spike experienced worldwide.
Three decades later, the sector is not only self-sufficient, but profitable and
looking to expand its exports.
Alternative fuels such as ethanol have experienced their own price increase in
recent months due to the increasing demand for them. That's good news for
Brazil's burgeoning sugarcane industry, whose small farmers and agrobusinesses are rushing to plant more fields.
Earlier this year, Brazil's federal energy company Petrobras signed an agreement
to carry out a feasibility study for a new $225 million pipeline to carry ethanol
from the center-west state of Goia to the coastal state of Sao Paulo.
The pipeline would have a capacity to transport about 1 billion gallons of the fuel
annually to Petrobras' refinery where it would be mixed with gasoline. It would
also create new opportunities for ethanol exports through the state's ports,
Petrobras said in a statement.
Brazil's development and expanded output has caught the attention of U.S.
officials, who noted during an April World Economic Forum meeting on Latin
America that Washington was searching for ways to "diversify" its fuel options
and looking to Brazil as an example of how to do it.
"We are embarking on a program to diversify our energy sources and change the
mix," E. Anthony Wayne, U.S. assistant secretary of state for economic and
business affairs, said in a statement. "And Brazil is a leader in ethanol
production."
Amid Brazil's success with traditional sugar-based ethanol, engineers there have
designed and developed a new type of diesel fuel that is mixed with various
vegetable oils, an innovation energy officials say will save the country millions on
imported diesel in the coming years.
According to Petrobras and President Luiz Inacio Lula da Silva, the new biodiesel mixture would put Brazil on the map among those nations leading the
alternative fuel revolution.
"Brazil can become the most important nation in the world for renewable energy,"
da Silva said during the new fuel's introduction in June.
Unlike other forms of bio-diesel, H-Bio is mixed by the fuel distributor and not at
the refinery, adding to the proposed savings, which Pertrobras said could total as
much as $145 million a year once the new mixture hits the market.
Fuel experts like Al Mannato, the fuels issues manager at American Petroleum
Institute in Washington, says bio-diesels like the one created by Brazil certainly
have their advantages. "The pro is that it's [the vegetable-based portion of the
fuel] a renewable energy source," said Mannto.
He also noted that bio-diesels "have great lubricity characteristics," meaning they
aid in lubricating an engine while it's running, prolonging the engine's life.
There are drawbacks, however, he notes, in that bio-diesels are typically
expensive to produce and have a tendency to gel in cold weather, which would
make them difficult to use in winter in the colder climes of North America and
parts of northern Europe.