Cane To Keep Brazil in Vanguard of Global Biofuels
Date: 28-Nov-06
Country: BRAZIL
"We could double, even triple, the land planted with cane," Luis Guedes said during an international biofuels conference in Brasilia.
Brazil has become a leader in the ethanol boom in recent years after developing cars that run on the fuel, a plant-derived gasoline substitute that can be made most efficiently -- in terms of production costs -- from sugar cane.
Ethanol is renewable and cleaner than gasoline from crude, which emits heat-trapping carbon gases into the atmosphere. Ethanol releases carbon gas when burned, but this is offset by each new cane crop which consumes atmospheric CO2 to grow.
As the world's largest sugar producer, Brazil has used ethanol to power cars for decades but the fuel became popular when gasoline prices spiked a few years ago.
In 2003, the local auto industry developed cars that run on ethanol, gasoline, or both. Today, flex-fuel vehicles make up 80 percent of new car sales.
Ethanol production neared 17 billion liters and exports more than tripled in two years, hitting 2.6 billion liters in 2005, as other countries saw the appeal.
Today Brazil sells ethanol to Asia, Europe and North America, but prices are volatile because demand is still erratic and a proper futures market has not yet developed for hedging.
"Our proposal is that other countries start producing ethanol," said Guedes. "To become a commodity, we have to have several suppliers in the global market."
In fact, the United States is now the world's biggest ethanol producer but it is not expected to export and will likely continue to import the fuel. The United States is the leading destination for Brazilian ethanol exports.
US ethanol is almost entirely from corn, which is costlier because it demands more water, area, fertilizer and energy to grow.
Critics of the US renewable fuels program point out that corn ethanol produces only about 1.5 times the energy it takes to grow versus about 8.3 times for cane ethanol.
Cane mills say that Brazilian ethanol, which is subsidy-free, is competitive with gasoline prices as long as world oil remains above about $30 to $35 a barrel, whereas US ethanol production from corn is even now heavily dependent on a 51 cents-a-gallon federal tax credit.
Currently, the agriculture ministry estimates Brazil needs to plant 3 million more hectares with sugar cane -- far below Guedes' estimate -- to meet foreign and domestic demand in 2013. At present, Brazil produces 450 million tonnes of cane on 6 million hectares.
Some environmentalists have criticized Brazil's fast growing ethanol program, saying cane crop expansion could threaten rainforest.
But Guedes said Brazil could double the area planted without cutting down any trees if it used only degraded pastureland and already deforested areas.