Ministério de
Minas e Energia
G-15 TRAINING WORKSHOP:
BEST PRACTICES ON RENEWABLE ENERGIES
BRAZILIAN EXPERIENCE ON BIOFUELS
Marlon Arraes Jardim
General Coordinator - Renewable Fuels Department
marlon.arraes@mme.gov.br
Dakar, November 5th, 2012
Ministério de
Minas e Energia
Brazilian Energy Mix – 2010/2020 (%)
Ministério de
Minas e Energia
Brazilian Energy Mix Evolution
Renewable Energy (2010): 45.5%
14.0% Hydro
17.8% Sugarcane Products
9.7% Firewood and Charcoal
4.0% Others
Ministério de
Minas e Energia
Brazilian Electricity Supply by Source
Ministério de
Minas e Energia
Fuel Mix - 2011 and Recent Evolution

Highlights:
1.
Biodiesel growth;
2.
Ethanol shortening.
Source: MME (2012)
Ministério de
Minas e Energia
Let’s Take a Look in History…
2
0
1
T0 = First Oil Shock
T1 = Proalcool is launched
T2 = Second Oil Shock; E100 begins in Brazil
T3 = Ethanol Crisis
T4 = End of Ethanol Subsidies
T5 = Government begins to study biodiesel policies
T6 = Biodiesel Program is launched
3
4
5
6
Ministério de
Minas e Energia
1975
1979
1993
The Deregulation of Fuel Market and the Ethanol Fuel
National Alcohol Program (Proalcool) goals:
1. To introduce in the market the mixture gasoline-ethanol
2. To stimulate the development of pure ethanol motors
Two types of ethanol used, produced and tested in Brazil:
anhydrous
Mixed with pure gasoline (20 to 25%)
hydrated
Directly used in Otto-cycle motors (100%)
Mandatory blending of ethanol and gasoline introduced by Law
1995
Constitutional Amendment Nº 09: petroleum monopoly made flexible (Nov/05)
1999
Liberalization of Hydrated Alcohol prices at the producer with the
subsidy reduction (Feb/99)
End of subsidies for Hydrated Alcohol (Nov/99)
2002
Complete Liberalization of Fuel Prices (Jan/02)
Free prices in the whole chain of production and commercialization
Ministério de
Minas e Energia
Biofuels x Fossil Fuels
3.1%
0,11 x 1012 liters/year
Fossil Fuels
Fósseis
Biocombustíveis
Biofuels
3,5 x 1012 liters/year
World
97.5%
Fossil Fuels
Fósseis
Biocombustíveis
Biofuels
23%
... Brazil
2011 Data (Source: BP / MME)
Middle and Light Destilates:
Diesel, Gasoline e Jet Kerosene
77%
24 x 109 liters/year
79 x 109 liters/year
Ministério de
Minas e Energia
Share of Renewables in Different Countries
% Renewables
Brazil: 2011 Data (Source: MME)
Other Countries: 2010 Data (Source: multiple)
Obs: Size of the country is total energy demand
Ministério de
Minas e Energia
Market Players
Retailers
Final
Diesel
E&P
Consumers
Biodiesel
Gasoline C
Refineries (13)
Distribution (207)
Importers (216)
Ethanol
Querosene
Oil Fuels.
Distribution Bases (570)
Ethanol Producers (427)
TRR (471)
QAV
Petrochemicals(4)
Agriculture Producers
Gas Stations (37.243)
Airports and Aviation Gas
Stations (90)
LPG
Lubricant distributers
Asphalt
Biodiesel Producers (64)
Source: MME–ANP–MAPA June/2012
Aviation
Companies
Industries
Lubricants
Solvents
Freight and
Passengers
Transport
Companies
Retailers of LPG (31.800)
General
Consumers
Ministério de
Minas e Energia
Commercialization of Ethanol for Blending
Anhydrous Taxation
GASOLINE “A”:
TAXATION
CIDE
OIL
REFINERY
-
PIS &
COFINS
R$ 0,26/ liter.
IVA
GASOLINE “A”
(*)
ANHYDROUS ETHANOL
25% a 31%
Mixture
Anhydrous Taxation
CIDE
PIS & COFINS
IVA
SUGAR MILL
--
RETAILER
GASOLINE “C” (GAS “A” + Anhydrous)
R$ 39,43 +
R$ 59,14
Differed to
GASOLINE
“A”
No Taxation
Here
GAS STATION
GASOLINE “C” (GAS “A” + Anhydrous)
Consumer
Observation:
GASOLINE “A” = Pure Gasoline, without ethanol, not commercialized to final consumer
GASOLINE “C” = With ethanol, commercialized in the whole country.
CIDE
--
PIS &
COFINS
R$ 8,57 +
R$ 12,86
IVA
Differed to
GAS “A”
Ministério de
Minas e Energia
Ethanol Governance includes:
Government and Private Associations

CNPE (Energy Policy National Council)

CIMA (Interministerial Council):
1.
Ministry of Agriculture, Livestock and Food Supply;
2.
Ministry of Mines and Energy
3.
Ministry of Finance
4.
Ministry of Development, Industry and Foreign Trade.

Staff Office of the Presidency and the MFA (Ministry of Foreign Affairs)

ANP (Regulatory Agency for Oil, Natural Gas and Biofuels)

National Sucroenergetic Forum (Association of Producers)

UNICA (Center-South region Association of Producers)

Agriculture Sector Chamber

SINDICOM (Union of Distributors and Fuel Retailers)

BNDES (National Development Bank)
Biodiesel Governance also includes:

Staff Office of the Presidency - CEIB (Interministerial Council)

Ministry of Mines and Energy – Grupo Gestor (Program Manager)

Brazilian Biodiesel Union (UBRABIO), Brazilian Association of Vegetable Oil Industries
(ABIOVE) and Brazilian Biodiesel Producers Association (APROBIO)
Ministério de
Minas e Energia
The General Policies for Biofuels
The law of Brazilian energy policy includes as one of the objectives: to
increase the share of biofuels in the national energy mix. The main general
instruments include:
 Mandatory mix: ethanol (E18-25) and biodiesel (B5).
 Tax differentiation regime in federal level.
 Line of credit for ethanol strategic buffer stocks (conceived to improve
off-season supply conditions).
 Public auctions for biodiesel market supply.
 Research funding (CT-Petro, created in 1999 and CT-Energ, created in
2000).
 Agro-ecological zoning that orients and guarantees that raw-material
production will take place only in suitable areas. The Brazilian
government managed to conclude the sugarcane (2009) and palm oil
(2010).
Ministério de
Minas e Energia
Recent Modifications on Biofuels Regulation
 Biofuels are now treated as fuels and not only as an agriculture product
inserted in the Brazilian energy mix. This understanding is boosted by the
growing ethanol utilization of ethanol and biodiesel, both in Brazil and
abroad, that demonstrates the extraordinary role and potential of biofuels.
 Biofuels have an uniform treatment regarding their role in National Energy
Policy. That includes both ethanol and biodiesel, as well as any other new
biofuel that eventually will be produced in commercial scale in the future.
 The National Energy Policy Council (CNPE) has, from now on, authority to
establish the directions for biofuels imports and exports in the same way
that it already has for all oil derivatives such as gasoline, diesel and jet
fuel.
Ministério de
Minas e Energia
Ethanol Savings and Benefits for Brazil
1.5 billion barrels of
oil displaced
Ministério de
Minas e Energia
Light-Vehicles Fuel Demand in Brazil: Trends
million m³ (Gasoline Equivalent)
+53% [Jan-Jun(12)]/[Jan-Jun(06)]
(E25)
(E100)
Ministério de
Minas e Energia
Why Ethanol Decreased Its Share in 2011?
 Conjunction of different but interconnected factors:
1.
International financial crisis in 2008;
2.
Climate event (excess of rainfalls) in 2009/2010 season;
3.
Climate event (lack of rainfalls) in 2010/2011 season;
4.
Higher sugar prices, since 2009;
5.
Fuel demand (internal market) skyrocketed!
Why Biodiesel Increased Its Share in 2011?
 Main factors:
1.
Mandatory mixture was raised from B3 (1st half 2009) and B4
(2nd half of 2009) to B5 (since Jan/2010);
2.
Brazilian economy growth.
Ministério de
Minas e Energia
What the Government is Doing for Ethanol?
 Highlights:
1. Finishing the necessary regulatory instruments by ANP
after the recent Biofuels’ Law (Law 12.490/2011) approved;
2. Public policy design is being conducted by Government
officials considering next ten years scenarios for ethanol
demand;
3. Incentives package for production expansion investments;
4. The strengthening of future market contracts as a tool for
ethanol commercialization;
5. Permanent dialogue with the private sector representatives
of the whole chain of production and commercialization.
Ministério de
Minas e Energia
million m³
Ethanol: What the Government plan is showing?
PDE 2021 is under public
consultancy
until Oct. 31st
Contribution must be sent
to pde2021@mme.gov.br
1. Internal Market will remain as main driver (flex-fuel car sales)
2. Neverending quest between sugar prices and ethanol prices
Ethanol for Internal Fuel Market
3.Source:Not
to
mention
the
new
products
from sugarcane...
PDE 2021 (Public Consultancy Version)
Ministério de
Minas e Energia
Biodiesel Main Policies
 Mandatory mix (5%)
 Social Fuel Certificate (SFC)
 Granted to biodiesel producer who stimulates feedstock supply
from household agriculture
 SFC ensures preferential biodiesel market access
 Lower taxation
 Public Auctions promoted by ANP
 Trade rule between biodiesel producers (suppliers) and diesel
producers (buyers)
Ministério de
Minas e Energia
Social Fuel Certificate
1. Minimum feedstock's purchase from household agriculture
•
•
•
15% at Mid West or North
30% at Southeast or Northeast
35% at South (40% from 2013/14 season on)
2. Diversifying, regionalization and cooperatives
The multipliers concept:
• 2x for non-soya oilseeds
• 2x for Northeast and Semiarid
• 1.2x for Household Cooperatives
• Cumulative Situations -> (2 x 2 x 1.2 = 4.8)
Ministério de
Minas e Energia
Biodiesel Production in Brazil
Key to Symbols:
WITHOUT SFC*
1,000 m³/Year
(*) Social Fuel Certificate
Thousands of m³
WITH SFC*
1,000 m³/Year
Biodiesel Production
3,000
2,500
2,000
1,500
1,000
500
0
Source: ANP
Elaboration: MME
2,673
2,386
1,608
1,167
0.7
69
404
2005
2006
2007
2008
2009
2010
2011
Ministério de
Minas e Energia
Biodiesel
Families
US$ / Family per Year
Source: MDA, MME (2011)
m³
Total
Biodiesel Production
Higher levels of
income since the
mandate period
confirms the policy
Total Income
of the Families
due to Biodiesel
Ministério de
Minas e Energia
Biodiesel: Positive Impacts
Already obtained with B5…
 Brazil is one of the top3 world biodiesel consumers (USA and Germany)
 GDP: US$ 3,6 billions/year
 Investments: US$ 2 billion on biodiesel plants (B5)
 International trade: US$ 6.5 billion savings of diesel imports
 Employment: 86 thousand new jobs
 Household agriculture: 104,000 small farm’s units
 Estimated environmental and health benefits:
- 57% CO2 emissions
- 13,000 hospitals’ admissions
- 1,800 deaths due to emissions
Ministério de
Minas e Energia
Land Use in Brazil *
Total Area
Native Vegetation
Arable Land
Others 15
2%
Available
Pasture
Agriculture
Sugarcane
* 2009 Data
Source: ICONE, ESALQ and IBGE. Elaboration: COSAN and UNICA
Ministério de
Minas e Energia
Agricultural zoning as a guarantee for public and private investments and a
recommendation of suitable areas for harvest
Sugarcane Expansion with
Agroecological Requirements
Agrozoning for Soy, Sunflower, Castor,
Palm, Cotton Seed etc.
North Region
Focus = arc of deforestation
Maximum allowed: 65 million ha
or 7,5% (green areas)
Northeast Region
Focus = coast areas
Ministério de
Minas e Energia
New Uses in Other Sectors (P&D)
 The BNDES launched PAISS (Joint Programme of Technological and
Innovation Support for Sugarcane Sector), were selected from 25
companies that submitted 35 business plans, which will generate
investments of about R$ 3 billion.
 The PAISS fosters research and development of cellulosic ethanol. If
made viable economically, the cellulosic ethanol could increase the
productivity of the sector in more than 40%.
Among the entities who study the processes of production of ethanol
from lignocellulose in Brazil, stand out:
CENPES-Petrobras
CTBE;
Centro de Tecnologia Canavieira – CTC
Dow & DSM
Embrapa Agroenergia
ETH Bioenergy
Dedini S/A Indústrias de Base
Graal Bio
Amyris
LS9
Ministério de
Minas e Energia
Bioenergy International Cooperation
Map of International Agreements on Bioenergy sign by Brazilian Representatives
77 countries
Nearly 1/3 of the
whole nations
* Includes MoUs, partnerships and other agreements signed directly by any Federal Government Department or Agency
or Public Enterprise. It was considered bilateral agreements, cooperation in third countries and agreements signed
with economic or regional blocks.
Ministério de
Minas e Energia
Some Bioenergy Externalities…
 Renewable energy source
 Energy security
 Better CO2 and pollutants emissions
 Income improvement at rural areas
 Bioenergy industry helps to deconcentrate energy markets
 It is much lower capital intensive than oil industry
 Bioenergy can be produced in a sustainable way worldwide while oil is
concentrated in a few countries (many of them with political instability)
Ministério de
Minas e Energia
The Government Role (as we see)
 Maintain the best environment for investments with a clear
regulatory framework
 Articulate the different interests involved
 Assure the proper incentives to best practices
 Pursue the most sustainable path to expand the industry
and promote development
 Give ways to assure and respect contracts
 Induce and facilitate the international trade
 Correct market distortions that might lead in long term to imbalances in
economic activity
Ministério de
Minas e Energia
Thank You!
Marlon Arraes Jardim
marlon.arraes@mme.gov.br