Domestic Fuel

In an effort to showcase decades of renewable energy use, the Brazilian Sugarcane Industry Association (UNICA) will be participating in events during the United Nations Climate Change Conference (COP-16) and the World Climate Summit (WCS) which are taking place in tandem in Cancun, Mexico from November 29-December 10.

According to UNICA, nearly 50 percent of all of Brazil’s energy comes from renewable sources. This is three times the global average and UNICA believes this gives Brazil a leading role in the search for solutions for global warming and climate change. To demonstrate their technologies, UNICA will conduce a seminar on alternatives to minimize emissions from transportation in emerging countries on December 6 at the Cacao Room in Hotel Moon. The organization will also at the Brazil Pavillion with support from the Brazilian Export and Investment Promotion Agency (Apex-Brasil, who will also be at the upcoming AG CONNECT Expo in Atlanta, GA on January 7-10, 2011).

Marcos Jank, UNICA’s President, points out that Brazilian greenhouse gas emissions measured in 2006 would have been 10 percent greater without the contributions from the sugar and ethanol industries. “Over the 35 years of large-scale use of biofuels in Brazil, more than 600 million tons of CO2 were kept from the atmosphere while the country saved US $240 billion that didn’t have to be spent on foreign oil,” said Jank.

He also notes that ethanol is moving beyond the fuel tanks of cars and buses and is also being tested as fuel to power generators, farm implements and machinery, as well as to fly planes. In addition, ethanol is used a replacement for fossil fuels in resins, fine chemicals and “green” plastics. The result, says Jank, is a significant reduction in greenhouse gas emissions.
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Brazilian energy company Petrobras officially began work this week on a $3.3 billion ethanol pipeline that will be able to transport 21 million cubic meters of ethanol per year from north central Brazil’s Goias state to the Minas Gerais and Sao Paulo states.

Once complete, the pipeline will replace daily delivery runs by 1,500 tanker trucks. At present, 95 percent of ethanol transport is done by tanker trucks. The pipeline is expected to be completed by 2014 but the first phase of the project is scheduled to start operations in 2012.

Brazilian President Luiz Inacio Lula da Silva inaugurated construction on the project Tuesday by soldering the first pipe joint of the 202-kilometer (126-mile) pipeline. “I managed to sell the idea that humanizing the work in the sugarcane fields was important for selling ethanol to other countries,” the president said.

In other ethanol news from Brazil, the Brazilian Sugarcane Industry Association (UNICA) reports that eight Brazilian sugarcane processing mills have already completed the paperwork required by the Environmental Protection Agency for ethanol to be accepted into the United States as an “advanced renewable fuel,” under the Renewable Fuel Standard (RFS).

According to UNICA’s Joel Velasco, the effort by Brazilian mills is very important because without prior registration, exporting to the United States becomes more complicated and unnecessarily delayed. “Ideally, mills should be prepared for this opportunity, because U.S. ethanol demand projections are increasing year after year, and Brazilian ethanol has been recognized by the EPA as an advanced biofuel, thanks to its 61% greenhouse gas reduction compared to gasoline. This recognition makes sugarcane biofuels desirable in the U.S. market and beyond,” he explains.

The mills that have already complied with EPA requirements and are eligible to classify their ethanol as an “advanced renewable fuel” in the United States include Cargill Cevasa, Della Coletta Bioenergia, Açúcar Guarani, LDC Bioenergia and four mills linked to Copersucar S.A.

Today, Butamax Advanced Biofuels, LLC, a partnership between BP and DuPont to develop biobutanol, announced the opening of a biobutanol technology laboratory in the city of Paulínia, São Paulo state, Brazil. Butamax CEO Tim Potter joined Ricardo Vellutini, DuPont do Brasil’s President and Vice President of Agricultural Products for Latin America, for a ribbon cutting ceremony. Media were also welcome to tour the facility.

“The new laboratory was built to accelerate the path to commercial market entry for cane-to-biobutanol production,” said Potter.

Butamax believes that sugarcane is the most efficient feedstock for the production of biofuels and the lab will focus on optimizing the cane fermentation process. The company’s technology can be used with a range of feedstocks including starch-based crops such as corn, and in the future, cellulosic feedstocks such as energy grasses. The company also feels that Brazil’s strong economy and existing expertise in the biofuels industry makes it the perfect strategic location for producing biobutanol and adds some diversity to its biofuels mix.

Butamax believes that biobutanol complements the success of the ethanol industry and offers several key advantages including its ability to be blended at higher concentrations than ethanol delivering twice the renewable energy in every liter of gasoline. Another advantage over ethanol is that it can be used in vehicles with no modifications and can be transported via pipelines.

The company believes that its proprietary technology is a game changer and as such, has focused across the biofuel value chain. They have been researching the technology on a global scale in anticipation for their commercial launch.

“As the dust settled on a midterm election that significantly altered the political landscape, voters sent a clear message that cutting the deficit and ending wasteful government spending should be top priorities for Congress. Americans will be watching closely to see if lawmakers got the message. Eliminating ethanol subsidies and trade protection would be a good way to indicate that they did,” writes Joel Velasco, UNICA Chief Representative of North America in response the the Mid-Term Election results that took place across the U.S. on November 2, 2010.

Similar to two years ago when President Obama was elected, Americans asked for change. Only this time, its wasn’t Democrats they were asking to help make it. Republicans made a strong gain in this election with their promises of balancing the budget, cutting wasteful spending, fixing the economy, and creating jobs.

Along these same lines, UNICA has been heavily campaigning in recent months to end the ethanol tariff and open up the marketplace for ethanol. They argue that this will help save Americans money at the pump, create greater diversity, and provide access to cleaner alternatives like sugarcane ethanol.

Velasco continued in his blog post, “Democrats and Republicans have vowed to work together on this issue, hinting that the days of $6 billion per year in ethanol tax credits could be over when they expire on December 31. Senator Saxby Chambliss (R-GA), the top Republican on the Senate Agriculture Committee told Bloomberg News that “[t]here are folks who ideologically don’t want to see the tax credit,” noting that the election results were sure to strengthen that viewpoint.”

The U.S. corn ethanol industry may be getting the message on competition and the need to remove trade barriers on cleaner, more affordable energy,” writes Velasco. “During a conference call with reporters this morning, the president of the Renewable Fuels Association [Bob Dinneen] reiterated his support for setting the ethanol tax credit and import tariff at the same amount – a concept industry insiders refer to as “parity”.

Velasco concluded, “The next several weeks will be an important litmus test in determining whether or not Congress has truly heard the American people. Tough decisions will be need to be made to cut the deficit and restore fiscal responsibility and bipartisanship to Washington. Ethanol policy is a good place to start.”

Archer Daniels Midland Company (ADM) is increasing its biodiesel presence in Brazil with its announcement that it will be constructing a second biodiesel plant in Joaçaba, Santa Catarina. The new plant will be adjacent to the existing ADM soybean crushing and refining facilities and will more than double ADM’s biodiesel production in the country. Construction is set to begin in March 2011 and be completed sometime in the first half of 2012.

Once the biodiesel plant is completed, it will become the first in the state of Santa Catarina. The state has an ample supply of soybeans produced mainly by small family farms.

“We see exciting opportunities for ADM within the Brazilian biodiesel industry. With strong support from the government, biodiesel is poised to play an increasing role in meeting Brazil’s growing demand for renewable fuels,” said Patricia Woertz, chairman, chief executive officer and president of ADM. “By locating the plant adjacent to our Joaçaba soy operations, we’re able to leverage our origination, transportation and processing assets.”

ADM purchased the Joaçaba facility back in 1998 from Sadia. Currently, these operations process nearly 475,000 metric tons of soybeans and can refine approximately 73,000 metric tons of soybean oil annually. Once the biodiesel plant is operational, the facility is expected to increase the oil refinery capacity to nearly 110,000 metric tons per year.

“Brazil has been a global leader in creating a robust domestic renewable fuels industry that supports both social and environmental goals. And the recent implementation of 5 percent biodiesel blends in 2010 –– three years ahead of schedule–– demand for biodiesel in Brazil continues to grow,” said Domingo Lastra, president of ADM do Brasil Ltda. “With the Joaçaba biodiesel plant and our facility in Rondonópolis, ADM will play an important role in meeting that demand.”

The Brazilian state of Mato Grosso is looking at producing ethanol from the state’s excess corn to reduce the miles Brazilian sugarcane ethanol would travel. On Wednesday, a combined industry and governmental committee that has been formed to study corn, announced that it has commissioned a study by state researcher Embrapa to look at the viability of producing corn ethanol.

“It’s very embryonic, only an idea. It would make use of corn, which is widely available in Mato Grosso, which is very distant from the south,” said Cesar Borges de Sousa, chairman of the joint committee known as the “corn sector chamber” in Rueters.

While nearly all the cars in Brazil are flex-fuel vehicles and are able to operate all the way up to 100 percent hydrous ethanol, sugarcane ethanol is not always the cheapest at the pump, especially in outlaying states. Variables include sugarcane harvest, sugar prices, oil prices, and transportation costs, among others. Another unusual strategy of the Brazilians is all flex-fuel vehicle purchases come with a spreadsheet that details when using ethanol and at what blend, is most cost efficient. Yet even when it costs more to blend ethanol, many consumers still purchase it at the pump because they understand the security and economic benefits.

According to an article in Reuters, the corn committee’s idea is to make cheaper ethanol locally to power cars and agricultural machinery as well as give corn producers another option for sale. The corn would be processed at several of the cane ethanol mills in the state during the month that all sugarcane mills are offline.

“It would add value right there in the place where it is produced,” de Sousa said, stressing the idea would only move forward if it proved financially and technically viable.

Brazil’s largest state-owned energy company made another play today to become a world leader in biofuels. Petrobras announced a $1.23 billion deal with Tereos International’s Brazilian Branch, Acucar Guarani, to supply up to 2.2 billion litres of sugarcane ethanol to Petrobras’ fuel distribution subsidiary, BR, over the next four years.

Petrobras said in a statement today, “The contract ensures commitment in the supply to BR, access for Guarani to BR’s distribution system for part of its hydrated and anhydrous ethanol production, besides greater synergy between production, marketability and logistics.”

Petrobras has made several strategic moves in just the past few months including partnerships with Novozymes and KL Energy to develop second generation ethanol from sugarcane bagasse. In addition, the Company is converting several of its gas turbines to run on ethanol, and in other news an ethanol pipeline has received environmental permits.

Brazil is the second largest global producer of ethanol and is preparing to double its ethanol output over the next decade to meet the growing global demand for renewable fuels.

Brazil’s sugarcane growing areas went from too little rain earlier this season to too much rain in September, putting a damper on harvest activity, according to the latest report from from the Brazilian Sugarcane Industry Association (UNICA).

Heavy rains, nearly 60 percent higher than average for the month, hampered cane crushing for second consecutive two-week period, but reportedly favored ethanol production in the South-Central Brazil region. UNICA Technical Director Antonio de Padua Rodrigues says they are experiencing “another exceptional year” in terms of weather conditions. “From April to early September, the amount of rain was well below the historic average, reducing the availability of cane. Already in September, especially at the end of the month, rainfall returned with greater intensity than expected, hampering the harvest and, more importantly, reducing the quality of cane that will be crushed in October,” he said, adding that these factors should impact the overall production of sugar and ethanol at the end of the harvest.

UNICA reports that total ethanol production has reached 20.30 billion liters, an increase of 22.59% compared to the same period in last year.

Brazil’s Petrobras and international enzyme development company Novozymes are working together to develop a new route to produce second generation biofuel from sugarcane bagasse.

According to a company release, the agreement covers the development of enzymes and production processes to produce second generation lignocellulosic ethanol from bagasse in an enzymatic process.

The commercial potential of cellulosic ethanol in Brazil is substantial due to the great amount of sugarcane bagasse, a fibrous residue of sugarcane production, available in the country. Brazil is the world’s largest sugarcane producer with an extraction capacity of approximately 600 million tons per year, currently yielding 27 billion liters (7 billion gallons) of ethanol. It is estimated that bagasse-to-ethanol technology can increase the country’s ethanol production by some 40% without having to increase the crop area.

Since 2006 Petrobras has been carrying out research on integrated biochemical processes for converting sugarcane bagasse to ethanol.

According to the Associated Press, General Electric has announced that it has received a contract from Brazil state-owned energy company Petrobras to convert a second gas turbine to burn sugarcane-based ethanol. The turbine is at a power plant serving the city of Juiz de Fora, northwest of Rio de Janeiro.

Back in January, Petrobras’ plant became the first in the world to generate electricity from ethanol, but possibly more unique, it became a “flex-fuel” turbine in that it can run using either ethanol or natural gas. With a successful testing period, the second turbine at the facility is now being flex-fuel converted as well.

According to a Petrobras press release from this past January, the thermoelectric plant, which is one of 14 operational thermoelectric plants running on natural gas in the park, is comprised of two 6,000 GE LM aero-derived turbines. One turbine provides half of the electric plant’s 87 megawatt capacity. In addition to the thermoelectric plants, the park also has 15 small hydroelectric plants and 12 that run on oil for a total of 7,028 megawatt capacity for the entire park.

The conversion of the turbine involved the replacement of the combustion chamber, of one of the injector nozzles, and the installation of peripheral equipment (receipt system, tanks, pumps and filters) which allow the receipt, storage and flow of ethanol to the turbine, according to the release.

Petrobras is Brazil’s largest energy company.

This year’s Brazilian sugarcane crush figures are being revised downward, but still are higher than last year at the moment. Meanwhile, ethanol production is up from last year but exports are down significantly.

That’s according to the latest report from the Brazilian Sugarcane Industry Association (UNICA).

The new forecast projects that crushing will reach 570.191 million tons, 3.70% less than the estimate released by UNICA at the start of the harvest in April of 2010 (595.89 million tons), but 5.88% higher than the 541.96 million tons crushed in the 2009/2010 harvest.

Dry weather in the key growing regions is the reason for the lowered forecast, with rainfall significantly lower in some areas, affecting the harvest and reduced the overall availability of cane for crushing by 47 million tons. The State of São Paulo, where more than 60% of all of Brazil’s sugarcane is located, was the most affected region. The dry weather has also resulted in an early end to the harvest season.

According to UNICA Technical Director Antonio de Padua Rodrigues, “the dry weather has persisted through August and if the usual rainfall patterns for this time of year are not resumed in coming months, we will probably have an even deeper harvest failure, which may require a new, revised projection of the amount of cane available for the current harvest.”

Brazilian ethanol production is expected to reach 26.39 billion liters, down 3.66% from the original projection, but 11.40% higher than last year. However, ethanol exports remain below historical values and nearly 46 percent less than this time last year, while domestic use is up 50 percent.

Brazil-based Cosan S.A. has announced a partnership with Shell to form a $12 billion joint venture for the production and commercialization of ethanol and power from sugarcane. According to company sources, the venture, which must receive regulatory approval, would create the 3rd largest ethanol producer in the world, manufacturing 440 million gallons of ethanol per year, and result in more than 4,500 global retail stations selling ethanol blends.

“While there is still plenty of integration planning to do before we launch the proposed joint venture, this is an important milestone in our effort to create one of the world’s most competitive sustainable biofuels companies,” said Rubens Ometto Silveira Mello, Cosan’s Chairman of the Board and non-executive Chairman-elect of the proposed joint venture.

As part of this partnership, Shell will contribute its 16 percent equity interest in Silicon Valley-based advanced biofuels company Codexis, Inc. They will also offer up its equity interest in Canadian celluosic company, Iogen Energy.

“The proposed joint venture is set to pool our complementary businesses, enhance our growth prospects in ethanol production globally and support our growth platform for our retail and commercial fuels businesses in Brazil,” said Mark Williams, Shell Downstream Director.  “Over the next 20 years, sustainable biofuels are one of the most realistic commercial solutions to reduce CO2 emissions from transport.”

But what may be most interesting about this venture, is that Shell and Cosan are competitors, both selling ethanol to consumers via retail stations. Could this pave the way for more oil-to-oil industry ventures?

KL Energy Corporation and Brazil-based Petrobras have announced a new joint development agreement to optimize KL Energy’s cellulosic ethanol process technology for the conversion of sugarcane bagasse feedstock to ethanol. As a component of this partnership, Petrobras will invest $11 million to adapt KL Energy’s demonstration facility to use bagasse. The money will also be dedicated to validating the company’s optimized process.

In addition, the technology will be integrated into one of Petrobras’ Brazilian sugarcane mills and is scheduled to go online sometime in 2013. Once the plant is operational, it will produce approximately 15 million liters per year.

Miguel Rossetto, CEO of Petrobras Biocombustivel, said, “Petrobras views cellulosic ethanol as a very promising technology to substantially increase the ethanol output by some 40% without increasing the planted area output and further improve the carbon footprint of its sugarcane mills. This agreement with KLE will considerably accelerate this development effort and we are optimistic about the commercial potential of the optimized technology platform.”

The initial agreement is for the two companies to work together for 18 months and provides a mutually exclusive agreement to jointly develop cellulosic ethanol from bagasse. The agreement also gives Petrobras the option of securing a technology license for the use of KL Energy’s technology within the Petrobras Group.

“Brazil is the global leader in the production of affordable biofuels and biomass, and we believe that bagasse is a perfect feedstock for our process. KLE plans to be at the forefront of the emerging cellulosic ethanol market in Brazil,” said Peter Gross, President and CEO of KL Energy Corporation. “We are very excited about this opportunity and we can think of no better partner for this endeavor than Petrobras, a company globally recognized for its technological competence, social and environmental responsibility and its investments in clean energies.”

This partnership marks yet another American company to partner with a Brazlian-based company with the intention of developing biofuels.

Novozymes has announced that is has acquired Brazilian microorganism company Turfal in order to obtain direct access to the Brazilian bioagriculture market. Turfal develops and manufacturers microbes that stimulate the growth of crops, such as soybeans, by fixating nitrogen. These microbes allow growers to use less fertilizer and save money.

Turfal’s operations are located 25 miles from Novozymes’ Latin American headquarters in Curitiba and will become the platform for all of Novozymes’ sustainable agriculture business in Brazil.

“The main reason for the acquisition is that we want to expand Novozymes’ position within the market for sustainable agriculture,” said Thomas Videbæk, Executive Vice President, BioBusiness, Novozymes. “We see exciting growth opportunities on the Brazilian bioagriculture market, and Turfal will give Novozymes direct access to this market.”

Novozymes is stepping up its game as the company continues to position itself as a worldwide player to help meet the challenges of feeding a growing global population. Experts estimate that global agricultural production will need to increase by 73 percent in order to feed more than 9 billion people by 2050. One sustainable agricultural challenge is to increase yields without increasing the number of acres of cropland.

“The nitrogen-fixating inoculants from Turfal and Novozymes can help farmers reduce their need for nitrogen fertilizers by up to 80 percent on leguminous crops. This is a unique value proposition in a world where farmers are under pressure to increase yields in a sustainable manner,” said Videbæk.

The sugarcane harvest in Brazil is running ahead of schedule and the U.S. corn crop is progressing well, according to the latest reports.

The cane crush in Brazil so far this year is running about 20 percent ahead of last year, which is not necessarily good news according to the Brazilian Sugarcane Industry Association’s (UNICA). Technical Director Antonio de Padua Rodrigues says the additional crushing observed so far can be attributed to the early start of the current harvest. Drier weather this year compare to last year has increased the harvesting pace, but it also may reduce the biomass potential of the cane yet to be harvested.

About half of the Brazil harvest is going to ethanol and half to sugar. UNICA reports that sugar production totaled 2.50 million tons in the first half of July, 25.75% higher than in 2009 during the same two-week period. Ethanol production also increased by 25.28% over the same period, reaching 1.86 billion liters.

Ethanol exports from Brazil are down this year, but domestic use is strong, according to Rodrigues. “The demand for ethanol fuel is rising, as flex-fuel vehicle sales remain high. Moreover, domestic ethanol consumption for other purposes will set new records during this harvest, mainly because of higher demand for the ethanol as a raw material for chemicals production.”

Meanwhile, here in the U.S., ethanol production was up 14,000 barrels per day in May, according to the Energy Information Administration (EIA), at more than 846,000 barrels. Ethanol demand, as calculated by the Renewable Fuels Association, also reached an all time high at 847,000 b/d in May, up from 713,000 b/d a year ago.

On the import/export side, EIA reports that U.S. ethanol imports were up slightly from April at 1.6 million gallons, but exports were down dramatically – from 40.8 million gallons to just over 17 million. As of May, the U.S. has exported a total of 141.4 million gallons this year, but RFA notes that export figures represent the sum of “Ethyl alcohol and other spirits, denatured, of any strength” and “Undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher.” As such, the figures likely include ethyl alcohol exports for non-fuel industrial purposes, so RFA ethanol demand calculations are for domestic use only, providing a comparison to domestic ethanol production.

The U.S. corn crop continues to look good and some farmers are expecting to start harvest earlier than normal. According to the latest USDA report, 93% of the crop is silking, compare to 86% on average, over 30 percent in the dough stage and 7% dented, both ahead of normal. Despite the heat, the condition of the crop is holding steady at more than 70 percent good to excellent.