Abundance of non-food biomass, soil and vast availability of natural resources, a biodiversity almost unmatched anywhere else in the world and a biotechnological and chemical industry focused on innovation, with the biofuel sector as the nation´s spearhead. These are the main characteristics of Brazil´s bioeconomy, making the South American country one of the world´s leading actors in such metasector. Despite the lack of an integrated strategy on the bioeconomy, since the early 70s, when it was necessary to react to the oil shock, Brazil has introduced a set of policies promoting the advent of bioethanol and, more recently, the conservation and sustainable use of its biodiversity for economic purposes.
The role of bioethanol
Brazil boasts over 400 sugarcane factories able to process about 700 million tonnes a year. In 2011, with the institution of the PAISS programme by the Brazilian Development Bank, the country came to prominence for the production of cellulosic ethanol, with two commercial plants and a pilot plant with a production capacity of almost 140 million litres per year, second only to the United States. There are ten more commercial plants in the pipeline for the next decade that will supply production capacities close to 10 billion litres per year of second generation ethanol. Today, Brazil is already capable of replacing almost 42% of its petrol consumption with sugarcane-derived ethanol, thus making petrol the alternative fuel in the country. In 2015-2016, the Brazilian production of bioethanol reached 30.23 billion litres (8 billion gallons). Most of such production is absorbed by the domestic market where it is sold as pure ethanol fuel or blended with petrol. All petrol sold in Brazil includes a blend of ethanol between 18 to 27.5%.
Nine out of ten new cars sold in the Latin American country are flexible in the use of fuel, because most Brazilian motorists prefer sugarcane ethanol for its price and environmental advantages. Such vehicles today represent almost 70% of the country´s whole light vehicle fleet. Since 2003, the combination of ethanol and petrol-fuelled vehicles reduced the emissions of carbon dioxide by over 350 million tonnes. This - the experts say - is as positive for the environment as planting and maintaining 2.5 billion trees for 20 years.
As things stand at the moment sugarcane ethanol is obtained from saccharose present in the sugarcane juice and molasses, a process tapping only one third of the energy sugarcane can offer. The remaining two thirds are still trapped in the cane fibre left over (called bagasse) and in the straw. While part of such energy is converted into bioelectricity, from the remaining vegetable material cellulosic ethanol can be produced, thanks to a process involving hydrolysis and gasification technologies to break down lignocellulose in the sugar. If on the one hand cellulosic ethanol can be produced from abundant and diverse raw materials, on the other its production requires a higher level of processing compared to traditional sugarcane ethanol and thus more expensive. But the market is expanding and at the moment there are two commercial plants producing cellulosic ethanol in Brazil: one belongs to GranBio group and the other to Raizen. Their production capacities is 82 and 40 million litres respectively.
The RenovaBio initiative
In late December the signature by Brazil´s president, Michel Temer gave the bioethanol sector new impetus. The law defines the national policy of biofuels (RenovaBio), promoting the production of ethanol and biodiesel and setting annual objectives of reduction of greenhouse gas emissions. The law is part of the series of commitments subscribed by Brazil within the Paris global agreement on climate, mandating a 43% reduction of greenhouse gases, considering 2005 as the base year.
The programme should spur the increase of the country´s biofuels production with a set of rules regulating the purchase of "decarbonation" bonds (CBIO) issued by producers and importers. Analysts and specialists estimate that, by stabilizing a strongly indebted sector that has shut down several production units over the last years, RenovaBio could attract new investments in the industrial sector, while encouraging a fusion and acquisition movement.
Such measure could also promote stock exchange listing of new sugarcane processing factories in a sector where companies such as Cosa, Biosev and Sao Martinho are already public.
"The programme creates a clear long-term policy for biofuels, paving the way to achieve the targets for the reduction of CO2 emissions so as to curtail global warming and contribute to the supply of fuel in Brazil," stated to the Brazilian press Luis Roberto Pogetti, Cupersucar´s Chairman of the Board, a world leader in trading sugar and ethanol. "We support RenovaBio and we are committed to its regulation since environmental and supplying issues demand urgent political decisions," added Pogetti.
The target of the new law is doubling the consumption of ethanol in Brazil. And yet, binding targets have not been defined in order to estimate the overall impact of the programme.
The BioFuture platform
The strategic importance of bioethanol is testified by the BioFuture Platform initiative. In 2016, during Marrakech COP22, Brazil launched together with other countries including Italy, Finland, United States, China and Argentina such platform with the aim of speeding up the development and trading of low-carbon fuels, the techniques for their production and upgrading of the byproducts. The project strives to contribute in its own way to the commitment subscribed not just with the Paris Agreement but also with Rio +20 and the elaboration of the UN Sustainable Development Goals. One of the platform´s pillars is represented by advanced biofuels, or more precisely those obtained from wood biomass.
Last October, Sao Paulo hosted the first conference of the platform which produced a Vision Statement aimed at introducing the low-carbon sustainable bioeconomy into the global agenda as an urgent solution to fight climate change while sending a strong signal to markets and investors on the expected role for the next decades. "The Biofuture platform is a fundamental part of a necessary effort to reinstate bioenergy into the global agenda," claimed Rasmus Valanko from the World Business Council for Sustainable Development (WBCSD). "It is a mechanism whereby the private sector and academia are able to cooperate in a very dynamic way."
With bioethanol as the spearhead of Brazil´s bioeconomy, surely this cannot be the main business of the large-scale Brazilian active industry: Raízen, Braskem and GranBio are the main protagonists of this sector and play a leadership role at global level.
The result of a joint venture between Cosan and Shell, Raízen is one of Brazil´s five largest companies in terms of earnings and the third fuel distributor. It is also Brazil´s sugarcane and ethanol producer and the world´s largest sugarcane exporter. Raízen Combustíveis, the branch distributing fuel, manages a national distribution network of over 6,000 Shell filling stations, 960 shops and 67 distribution terminals, as well as the fuel distribution service for the aviation industry in 64 airports. Raízen Energia produces annually over 4.1 million tonnes of sugar and 2.1 billion litres of ethanol both for the domestic and the international markets. Its plants have a generation capacity of 940 MW of energy from sugarcane bagasse.
Braskem, the largest petrochemical colossus in the Americas, is also working in the field of ethanol and it´s the world´s largest biopolymers producer. Braskem - besides producing resins in polyethylene (PE), polypropylene (PP) and polyvynicloride (PVC) as well as basic petrochemicals such as ethylene, propylene, butadiene, chloride, benzene, toluene etc. - also uses sugarcane to obtain biofuels and a bioplastic known as "I´m Green." It is a polyethylene from renewable sources produced since 2010 and it has allowed the company to become world leader in the sector of bioplastics.
The innovation produced by Braskem relies on the business carried out in two modern centres of technology: the first is located in Triunfo, Brazil, regarded as the largest and most modern centre in Latin America; the second in Pittsburgh, Pennsylvania in the United States. Moreover, since 2010, the Brazilian company has had its own facility for research in biotechnologies and renewable products in Campinas. The eight pilot centres study the polymerization processes and the production of renewable monomers. In 2008, the company signed a cooperation agreement with Campinas State University (UNICAMP) and the Foundation for the support to research of Sao Paulo State (FAPESP) for the development of research for the production of biopolymers or polymers from renewable sources. In 2009, it subscribed a technological cooperation agreement with Novozymes, a Danish biotechnology company. The latter is the world´s leader in the production of industrial enzymes to develop a new competitive strategy for green polypropylene, which Braskem had already obtained on a laboratory scale in 2008. In 2012, it started a partnership with WR Grace & Co., world leader for catalysts, to develop new process technologies and catalyst solutions to obtain chemical products from renewable sources.
Alongside the petrochemical giants is a purely biotech company, GranBio, developing solutions to turn biomass into renewable products such as biofuels, biochemical, nanomaterials and nutrients. Incorporated in June 2011 by Bernardo Gradin, GranBio manages in Brazil the first commercial plant in the Southern hemisphere for second-generation ethanol (2G). The factory, called Bioflex 1, has been operational since 2014, in Alagoas. The production of biofuels from sugarcane straw and bagasse, the raw material that up until then had been discarded or burnt in the field, places the company amongst the most sustainable on the planet in its sector. Selected in 2013 as one of South America´s most innovative companies by American magazine Fast Company, GranBio boasts a research centre in synthetic biology and an experimental station for the development of new biomass sources. Since 2013, it also has a holding in the American company of clean technologies, American Process Inc., API. In the sector of biochemical substances, it is a partner of Rhodia - a company of the Solvay group - in a pioneering project at world level for the production of biobased N-butanol, used in the production of paints and solvents. GranBio is a subsidiary of GranInvestimentos S.A., a holding by the Gradin family, and has BNDES PAR as a partner, the investment branch of the Brazilian Development Bank, as a minority shareholder, with 15% of total capital.
The role of the Brazilian Development Bank
The large development characterizing the biofuel industry in Brazil owes a lot to the support offered by the Brazilian Development Bank (BNDES). In 2014, BNDES and the Fund for Financing Innovation and Research (FINEP) announced a new programme to encourage agricultural innovation for the Brazilian sugarcane industry. The aim is to stimulate innovation and research able to increase productivity while reducing production costs, such as the development of new technologies for agricultural machinery and genetic improvements of plants. The new plan complements PAISS launched by BNDES and FINEP in 2011. Between 2004 and 2013, the Brazilian Bank invested a staggering US$23 billion to support the national biofuel industry. According to economist Elizabeth Farina, Chairperson of the Brazilian association of the sugarcane industry (UNICA), 60% of production costs of ethanol and sugar goes in agricultural production. "Agricultural costs are already high and are on the rise, unlike industrial processing costs of sugarcane, which were reduced thanks to research and investment," explained Farina.
UNICA´s data show that over the sugarcane boom years, between 2002 and 2010, the agricultural production cost amounted to $15 per tonne while today it has almost doubled to nearly $30 per tonne.
A strategy for the bioeconomy
Over the last years, besides PAISS, Brazil has put in place a number of projects to support the development of the advanced biofuels industry, green chemistry and biotechnology.
Within the national Strategy on Science, Technology and Innovation 2016-2022 ample room is devoted to support all those economic activities based on the use of renewable biological resources instead of fossil fuel raw materials for the production of food, feeds, materials, chemicals, fuels and energy, health and wellbeing of society. So, Brazil decidedly aims at a sustainable use of resources.
The specific goal of the South American country, which is struggling to come out of a strong recession and where even for 2018 the unemployment rate should be higher than 10% according to the analysts´ estimates is to promote the development of the circular bioeconomy starting from scientific research, putting in place a set of integrated actions involving the agrifood and water sectors as well as the industry. The Ministry of Science, Technology, Innovation and Communication has pointed out measures including the setting up of a national observatory on the Bioeconomy inspired by the European model.
"Many areas of the bioeconomy are regulated and have dedicated policies," tells us Bernardo Silva, ABBI´s Chairman (Brazilian association of industrial biotechnologies). "But a consistent framework, a long term vision and objectives that may be considered a strategy are still lacking" he adds. "Without a clear understanding of where we are, where we want to go and what we need to achieve it, i.e. without a governance implementing, monitoring and assessing a strategy, the bioeconomy will hardly carry on."