Domestic Fuel

University researchers from California, Iowa and Chile have found that sugarcane ethanol production creates up to seven times more air pollutants than previously estimated, according to news from the University of Iowa.

The research team used agricultural survey data from Brazil to calculate emissions of air pollutants and greenhouse gases from the entire production, distribution, and lifecycle of sugarcane ethanol from 2000 to 2008.

The estimated pollutants were 1.5 to 7.3 times higher than those from satellite-based methods, according to lead author Elliott Campbell of the University of California, Merced.

Greg Carmichael, Karl Kammermeyer Professor of Chemical and Biochemical Engineering in the UI College of Engineering and co-director of the Center for Global and Regional Environmental Research (CGRER), and UI assistant professor Scott Spak note that the findings reflect continued practices and trends that are a part of the production of sugarcane ethanol. These include the practice of burning sugarcane fields before harvest, as well as the fact that sugarcane production in Brazil continues to grow.

“We found that the vast majority of emissions come from burning the sugarcane fields prior to harvesting, a practice the Brazilian government has been moving to end,” says Spak. “However, the sugarcane industry has been expanding rapidly and moving into more remote areas, which makes it much more difficult to enforce new regulations over this growing source of air pollution and greenhouse gases.

“As people try to determine how to integrate biofuels into the global economy, Brazilian sugarcane ethanol has often been considered a more environmentally friendly fuel source than U.S. corn ethanol. In fact, the U.S. Environmental Protection Agency considers sugarcane ethanol an ‘advanced biofuel’ with fewer greenhouse gas emissions than conventional biofuels like corn ethanol. These new findings help us refine those estimates and move closer to making more informed comparisons between different fuel sources, and ultimately make better decisions about how to grow and use biofuels,” Spak says.

The study, titled “Increased estimates of air-pollution emissions from Brazilian sugarcane ethanol,” is featured in the Nature Highlights section and published in the Dec. 11 Advance Online Publication of the journal Nature Climate Change.

There’s a hot new craze called the “Ethanol Shuffle” that’s sweeping seaports from Sao Paulo to Los Angeles. No, it’s not a new dance, this shuffle is all about the “confounded realignment of the global ethanol trade.”

Renewable Fuels Association (RFA) Vice President of Research and Analysis Geoff Cooper wrote about the “Ethanol Shuffle” this week on the RFA E-xchange Blog. Basically, it’s about the shuffling of sugarcane ethanol from Brazil to California to meet that state’s Low Carbon Fuels Standard (LCFS) – at the same time, Brazil is importing lower priced corn ethanol from the United States to make up for not only the ethanol it is exporting to California, but the shortfall that country has experienced in ethanol production recently.

So, that’s how the “Ethanol Shuffle” works. California imports sugarcane ethanol from Brazil rather than corn ethanol from Nebraska or Kansas; and in turn, corn ethanol from the Midwest travels to Houston or Galveston via rail, then is shipped to Brazil via tanker to “backfill” the volumes they sent to the U.S. Picture the irony of a tanker full of U.S. corn ethanol bound for Brazil passing a tanker full of cane ethanol bound for Los Angeles or Miami along a Caribbean shipping route.

Cooper explains the sweet irony of it all in this edition of “The Ethanol Report.” Geoff Cooper on the Ethanol Shuffle

Brazilian and U.S. ethanol interests are challenging each other over ethanol trade policy.

The U.S./Brazil Council and the U.S. Chamber of Commerce wrote a joint letter to Congress last week asking that the U.S. secondary tariff on imported ethanol be allowed to expire as scheduled at the end of the year, together with the Volumetric Ethanol Excise Tax Credit (VEETC).

Meanwhile, Congressman Charles Rangel (D-NY) introduced legislation last Friday that would extend the 54-cent per gallon ethanol import tariff until the end of 2014. “My legislation would preserve duty-free ethanol for the U.S. as well as ensuring that the gains achieved for the Caribbean remain intact,” stated Rangel.

The legislation, which is not backed by the U.S. ethanol industry, was immediately condemned by the Brazilian Sugarcane Industry Association (UNICA), saying that “certain parties who benefit from the current, anti-competitive arrangement and their allies in Congress are trying to change the rules by making the tariff a true trade barrier rather than a subsidy offset.”

“As the world’s top producers, the United States and Brazil need to lead by example in creating a free market for clean, renewable fuel,” said Leticia Phillips, UNICA’s Representative in North America. “That means putting an end to trade distorting tariffs on ethanol.”

Today, the Renewable Fuels Association (RFA) in turn challenged Brazil’s commitment to free trade.

RFA president and CEO Bob Dinneen wrote his own letter to the U.S./Brazil Council and the U.S. Chamber of Commerce. “Please know that while we share your desire for the removal of trade distorting practices between the U.S. and Brazil, we are very concerned about the Council’s singular and biased focus on U.S. ethanol policy, and its failure to address more timely recent trade distorting practices engaged in by Brazil,” wrote Dinneen, pointing out specific actions taken by Brazil that limit U.S. access to that market.

“Recently, the Brazil government reduced the volume of ethanol that can be blended in fuel from 25% to 20%. As a result of this mandated reduction in blend volumes, U.S. exports of ethanol to Brazil are being dramatically reduced from levels that would have otherwise occurred had Brazil left the mandate at 25%,” said Dinneen.

“Second, while your letter to Congress is correct to state that Brazil’s 20% import tariff has been suspended, you fail to further explain that this suspension was only on a temporary basis. While Brazil’s Chamber of Foreign Trade (CAMEX) did indeed reduce its tariff in April of 2010, the temporary suspension is scheduled to expire one day after the U.S. tariff is set to expire,” Dinneen added, noting that the tariff reduction instituted in April 2010 is scheduled to end the day after the U.S. tariff is set to expire at the end of this month.

Read the RFA letter here.

A strong supporter of ethanol was honored this week for his efforts to fight hunger and poverty in Brazil.

Former Brazilian President Lula da Silva was recognized with the 2011 World Food Prize for his Zero Hunger strategy, which resulted in Brazil reducing by half its proportion of hungry people (with 93 percent of children and 82 percent of adults eating three meals a day) and also reduced the percentage of Brazilians living in extreme poverty, from 12 percent in 2003 down to 4.8 percent in 2009.

At the same time he was fighting hunger, President Lula was supporting a strong biofuels policy in Brazil, making the case before the United Nations in 2008 that it was possible for a country to produce ethanol and biodiesel to “reduce dependency on fossil fuels and at the same time create jobs, regenerate degraded land and expand food production.”

Brazil is currently the second largest producer of ethanol in the world, behind the United States, and uses sugarcane as a feedstock.

Two companies have signed a joint agreement to develop an improved first generation ethanol process with enhanced performance economics.

The agreement between Codexis and Raizen Energia S.A. announced today focuses on a range of targets, including improving performance of yeasts now used in ethanol production. Codexis is an industrial biotechnology company and Raizen is Brazil’s largest sugar and ethanol producer.

Under the terms of the agreement, Raizen and Codexis will deploy the Codexis CodeEvolver(TM) directed evolution technology platform to improve Raizen’s current process for producing ethanol made from sugar. Raizen produced 600 million gallons of ethanol in 2010. The parties anticipate pilot production at Raizen’s Bonfim mill.

Read more about the partnership here.

Sugarcane is not just for ethanol. Amryis Brasil S.A., the Brazilian arm of Amyris, has announced that it will be supplying 160 city buses in São Paulo with its Diesel de Cana, or renewable diesel produced from sugarcane. Beginning this August and expiring at the end of 2012, buses operated by the Viação Santa Brígida will run on a blend of 10 percent Diesel de Cana, with the remaining fuel blend comprised of biodiesel and petroleum diesel supplied by Petrobrás Distribuidora.

“Following the successful launch of our first industrial scale production facility and the positive results of the fleet testing in Brazil, we are thrilled to be a commercial supplier of renewable fuel for buses in Brazil’s largest city. Over the next year, as we expand our fuel supply agreements with bus fleets in São Paulo, we expect to achieve $10-12 million in annual diesel sales,” said John Melo, CEO of Amyris.

São Paulo currently has more than 15,000 buses that burn nearly 450 million liters of diesel per year. The move to Diesel de Cana signals the city’s commitment to reducing its fossil fuel use by 10 percent each year through 2018.

Melo continued, “Brazil’s growing demand for low-sulfur diesel creates a significant opportunity to highlight the superior performance and benefits of our renewable diesel while allowing the country to reduce diesel fuel imports, which comprised nearly 20 percent of Brazil’s diesel needs in 2010.”

The fuel has been tested by SPTrans, Mercedes-Benz, Petrobrás Distribuidora, and Viação Santa Brígida and the results show that when a 10 percent blend of Diesel de Cana is added to a B5 S50 blend, the fuel can lower smoke up to an additional 40 percent. Commercial vehicle manufacturers, including Mercedes-Benz have issued warranties for the B10 Diesel de Cana blend.

There has been speculation for several months that Brazil might reduce its country-wide ethanol fuel requirement. This has now become official. Brazilian President Dilma Rousseff has announced that in an effort to subdue inflation, the ethanol mandate will be reduced from the current blend level of 25 percent to either 18 percent or 20 percent and the final decision on the blend level will be made before the end of the month. Implementation would occur in August. The action is a direct result of rising prices for sugar that have been caused by back-to-back lower than expected sugarcane harvests.

The Vancouver Sun published a quote from an anonymous source saying, “The effect of ethanol prices has been very negative for inflation and inflation expectations … and the President has decided to act.”

Fuel accounts for 2.5 percent of the weighting within the main IPCA price index and experts predict the reduction could ease inflationary pressure.

The sugarcane harvest is currently underway and it is not yet known what the final harvest numbers will be. Should they come in higher than expected, sugar mills may produce more sugar versus ethanol, or some may decide to produce the ethanol and export it to other markets including the U.S. Energy ministry officials are expected to meet tomorrow to discuss the potential consequences of reducing the ethanol blend.

If you missed the Ethanol Summit this year, no worries. It is now available online via a dedicated YouTube channel. Sessions available online include all panels, plenary sessions and ceremonies from the event held this past June 6 & 7 in Sao Paulo, Brazil. The summit was hosted by UNICA, the Brazilian Sugarcane Industry Association and as the keynote speaker featured former U.S. President Bill Clinton.

Here is a little navigational help: all specific sessions can be accessed from the “webcasts” page. From this section, you can find specific sessions based on where they were held. For example, the opening and closing ceremonies as well as the main plenary session is housed under the “auditorium” tab while the 15 panels are stored by themed room names including technology, sustainability, markets and investments.

According to UNICA Corporate Communications Director Adhemar Altieri, the YouTube channel provides a historical record of the Ethanol Summit and serves other useful purposes. “It disseminates the information presented at the event to a much larger audience than could be accommodated at the event venue in two days and it allows event participants to view sessions they could not attend in person. With five theme-specific rooms offering sessions simultaneously, this is the only way to take it all in.”

In addition to the 2011 Ethanol Summit, the YouTube channel also houses the 2009 event.

LS9 has been making news with the announcement that they will collaborate with MAN Latin America to test their renewable diesel in both stationary engines and operational fleet vehicles in Brazil. The testing will cover performance, emissions, fuel consumption, and engine durability testing, as well as field testing of the company’s biofuel in Volkswagen trucks and buses.

“Our collaboration with MAN Latin America reinforces our commitment to producing cost-effective, high-quality biofuels and making renewable, sustainable biodiesel made from sugarcane and other renewable sugars widely available to global consumers,” said Ed Dineen, CEO of LS9. “Through this alliance, we intend to further demonstrate the high quality of our drop-in biofuels for the Brazil market, and to move closer to the commercialization of LS9 UltraClean Diesel.”

According to LS9 their UltraClean Diesel has been custom engineered to meet or exceed relevant diesel fuel standards while providing compelling economic and environmental benefits relative to petroleum diesel. The company also says their current fatty acid methyl ester (FAME) product has achieved the key parameters of B100 (100 percent biodiesel) – ASTM 6751 (United States), EN 14214 (European Union), and ANP 7 (Brazil) standards. LS9 believes its biodiesel overcomes several challenges inherent in first-generation biodiesel including a higher cost of production, poor oxidative stability and/or poor cold flow.

In other LS9 news, Bloomberg has reported the company is considering building Brazil’s largest biofuel and specialty chemical plant. While plans have not yet been finalized, current plans include a plant that could produce up to 200 million gallons of biodiesel and chemicals per year. This size plant would be two-thirds bigger than the country’s next largest facility.

“Brazil is going to be a focal point for us,” said Dineen in the Bloomberg article. “We envisage multiple production units there.”

He stressed that since the plans are not complete, the final plant could be smaller and the decision will be made based on feedstock availability and offtake interest. In addition, they are considering building a 75 million gallon per year plant that only produces biochemicals.

Earlier this week, the Senate compromised on some ethanol legislation that would eliminate the ethanol blenders tax credit (VEETC) at the end of this month. The agreement also eliminates the ethanol tariff on July 31, 2011, five months ahead of the original expiration date of December 31, 2011. The bipartisan Ethanol Reform and Deficit Reduction Act was submitted by U.S. Senators John Thune (R-SD) and Amy Kobuchar (D-MN) and sought to transition to a more sustainable model of renewable fuel incentives.

The Brazilian Sugarcane Industry Association (UNICA) was pleased with the news and has been lobbying for several years to eliminate the ethanol tariff. Brazil eliminated its ethanol tariff early last year. Leticia Phillips, UNICA’s representative in North America said, “As the world’s top producers of ethanol, the U.S. and Brazil should lead by example in creating a free market for clean, renewable energy.”

Phillips noted that last month, the U.S. Senate voted to end ethanol subsidies and UNICA looks forward to continue to work with Congressional leaders to accomplish that goal.

“We thank Senator Feinstein for her leadership on this important issue and urge Congress to pass it as soon as possible,” continued Phillips. “Ending the 30-year-old tariff on imported ethanol will help lower fuel prices and provide Americans with greater access to clean and affordable renewable fuels like sugarcane ethanol.”

She concluded, “Consumers win when businesses have to compete in an open market, because competition produces higher quality products at lower costs. The same principle holds true for renewable fuels. Allowing other alternative fuels like sugarcane ethanol to compete fairly in the U.S. will save Americans money, cut dependence on Middle East oil and improve the environment.”

Ironically, earlier this week Bloomberg reported that the Brazilian government is considering lowering the country’s ethanol requirement from 25 percent to 18 percent due to several back-to-back reduced sugarcane harvests.

The Brazilian Sugarcane Industry Association (UNICA) recently launched a new website to promote “clean solutions from sugarcane.”

SugarCane.org was launched during the 2011 Ethanol Summit in São Paulo, Brazil. “We decided to launch this new site to share knowledge and information with a growing global community of people who want to know how their food and energy choices affect our environment and people worldwide,” said UNICA’s President and CEO, Marcos Jank. “Today, sugarcane is the basic input for a diverse and growing range of value-added products, including sugar, ethanol, bioelectricity, bioplastics, bio-hydrocarbons, among others being developed. Sugarcane by-products are efficient and sustainable solutions that can replace gasoline, diesel, plastics and beyond that. Just imagine. Solutions from sugarcane,” Jank said.

Amyris is on the move the week announcing today that the company is expanding into Asia via a collaboration with Wilmer International Limited. The partnership will focus on the development and worldwide commercialization of a family of surfactants derived from Amyris Biofene for use in a multitude of products including personal care and consumer packaged goods. Biofene will be designed as a replacement for nonylphenol ethoxylate surfactants (NPEs), a $1 billion per year market. The chemical is becoming highly restricted due to global health and environmental concerns.

“This collaboration represents an important step in the additional geographic diversification of our renewable products business,” said Amyris CEO John Melo. “Wilmar is the leading agribusiness group in Asia. Its integrated business model, rapid growth mode and Asian presence and distribution footprint combined with our breakthrough technology will provide a powerful platform for capturing a portion of the large global surfactants market.”

In other Amyris partnership news, their partnership with Cosan S.A. is moving forward with the creation of a joint venture called Novvi S.A. This Brazilian-based company will develop, commercialize and produce renewable base oils, also using Amyris Biofene geared for the lubricants market. The execution of the Joint Venture Implementation this week is the last step before Novvi S.A. begins operations.

“The formation of Novvi provides another important channel for commercialization of Biofene, and we are pleased to have Cosan as our partner in this,” said Paulo Diniz, chief executive officer of Amyris Brasil. “We expect Novvi to introduce its first products starting next year.”

Nelson Gomes, head of Cosan Lubricants added, “We have completed the market studies and production capabilities assessment and are now ready to operate our joint venture with Amyris. The combination of Amyris’s Biofene infrastructure and technology platform with our feedstock capabilities and supply and distribution infrastructure creates the foundation for Novvi to become the leader in high-performance renewable synthetic base oils.”

This month, Brazil has resumed exporting ethanol to the United States, at the same time the country is struggling to meet its own country’s demand for ethanol to fuel is flex fuel vehicles (FFVs). Ethanol producers in the country have expanded exponentially – there are more than 115 ethanol plants many of which have come online since 2005. However, despite massive investments by foreign companies into the country’s biofuels industry, nary a five new ethanol plants are expected to come online the remainder of this year.

Some may remember that last year due to a decreased sugarcane harvest caused by excessive rains, the country reduced its minimum ethanol requirements in the country’s fuel. Then this year, threat of another reduction circulated when once again the sugarcane harvest was lower than expected. In response, the government has cited ethanol shortages due to poor long-term strategic planning by the industry. The ethanol industry countered that the cause of problems lies in lack of uneven taxes, vague plans for future regulation and lack of investment incentives.

“As long as there is no clarity about the policy for fuels, there is a risk for investments,” said the president of Sao Paulo-based Datagro consultants, Plinio Nastari in a Reuters article.

Yet on the flip side of this bickering between the Brazilian government and Brazilian ethanol producers, the industry has once again begun exporting fuel to the U.S. over the past few months. According to brokers quoted in a recent Soyatech article, the ethanol industry has exported 1.9 million barrels to the U.S. as a result of fuel retailers needing to meet the requirements of the Renewable Fuels Standard.

Brazilian sugarcane ethanol has been considered an advanced biofuel as designated by the U.S. Environmental Protection Agency (EPA). Since there is a shortage of advanced biofuels being produced in the U.S., sugarcane ethanol has become a premium fuel for the obligated parties. Ironically, the exportation of ethanol was an abrupt change as earlier this year Brazil imported ethanol to meet its country’s mandates – the first time since 1994.
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Regulatory approvals have come through for Shell and Cosan’s partnership to called Raizen. The new company’s goal is to produce low-carbon biofuels from sugarcane. This Brazil-based multi-billion dollar venture is one of the largest to date. Raizen will produce and sell over 2 billion litres per year of ethanol produced from Brazilian sugarcane through the more than 4,500 Shell stations throughout the country. As part of this new venture, Shell has transferred its shares in biofuel company Codexis to the new company Raizen.

“We are building a leading position in the most efficient ethanol-producing country in the world,” said Peter Voser, Shell Chief Executive Officer. “Low-carbon, sustainable biofuels will be increasingly important in the global transport fuel mix.”

While Shell has invested in biofuel development and sells biofuels at the pump, this announcement marks the first time the company will be active in producing biofuels. Shell says this venture is part of a larger strategy for growth in the fuels business. Right out of the gate Raizen is the third largest fuels company in Brazil and long-term plans to export ethanol. Today, Raizen’s 24 mills can process up to 62 million tonnes of cane into sugar or ethanol with the flexibility to increase production based on demand.

“This is a turning point in the search for alternative energy sources. Raizen is one of Brazil’s largest companies and is ready to offer international markets a clean, renewable and economically viable solution,” concluded Rubens Ometto Silveira Mello, Cosan’s Chairman of the Board.

Typically flex fuel vehicles are a combination of ethanol and gasoline or diesel and biodiesel. But inroads have been made to create flex fuel vehicles that use a combination of ethanol and diesel fuels. Iveco, FPT Industrial and Bosch officially debuted the Iveco Trakker Bi-Fuel Ethanol-Diesel vehicle at Agrishow last week in Ribeirão Preto, the country’s largest agricultural show.

The Takker contains an FPT Industrial Cursor 9 engine that can run on an ethanol and diesel mixture and is geared toward sugarcane and ethanol producers in the country. In early tests, the vehicle has successfully been using a 40 percent ethanol / 60 percent diesel blend and providing a 6 percent reduction in fuel costs. Development of the bi-flex vehicle began in 2010 with support from UNICA, the Brazilian Association of Sugarcane Producers and part of an ethanol industry “green policies” program.

The next step is for the prototype to be tested by Raizen, a joint venture company between Cosan and Shell during the 2011 harvest.

“We are still at the early stages of development and certainly we expect to reach a higher Ethanol-Diesel substitution rate bringing even lower operational costs,” said Renato Mastrobuono, Product Development Director for Iveco Latin America.

The Iveco Trakker Bi-Fuel prototype is a 6×4 truck used for 63 ton GCM that can be used in several applications on the sugar-cane plantations, such as articulated liquid tank transport. It uses a 360CvCommon Rail Cursor 9 engine. The truck has two tanks – one for ethanol and one for diesel- as well as an electronic control unit for each fuel, a pressure pump for the ethanol system and a lambda sensor for the exhaust manifold.

The ethanol is injected directly into the intake manifold during the admission stage. After the compression stage, the diesel is injected to promote combustion, and the system does not need any anti-knock additives.

“Another plus of the Bi-Fuel technology is that the engine can be fully reversed to diesel only application, which will make it easier to resell the vehicle after its use in the sugar-cane environment,” added Mastrobuono.