The constant fluctuation in oil prices and the growing concern with carbon emissions is forcing the world to look for cheaper and greener energy sources.
Brazilian sugarcane-based ethanol has long been championed for its environmentally friendly features as well as the possibility for large-scale production, but the sector faces numerous challenges including shortages in stock, market interference in gasoline, and problems with seasonal variation.
To understand more, BNamericas spoke with Carlos Henrique de Brito, scientific director of the São Paulo state foundation for research support Fapesp.
BNamericas: What makes Brazilian sugarcane-based ethanol more attractive than the corn-based ethanol largely produced in the US?
Brito: Sugarcane-based ethanol is more competitive in many ways. To produce nine energy units of sugarcane-based ethanol, you only use one fossil energy unit. In the corn-based case, for each fossil energy unit used in production, you only produce 0.8 to 1.4 energy units. That makes sugarcane ethanol the champion in the reduction of greenhouse gas emissions. Another advantage is that sugarcane is cheaper than corn.
BNamericas: The current harvest season has suffered with drier weather with lower sugarcane production predicted. What can be done in order to mitigate risks like this?
Brito: In my view, a major tool would be the creation of mandatory ethanol stocks. Stocks would regulate the market, making it possible to avoid shortages. Problems for the ethanol sector in Brazil are not only caused by lower harvest seasons, but also from gasoline prices being artificially fixed by the government. That is a turn off for those who want to invest in ethanol production.
BNamericas: Domestic demand for ethanol has been growing fast, driven mainly by the larger use of flex-fuel cars, which can run on either ethanol or gasoline. Brazil has even been forced to import ethanol over the last year. Do you think more sugarcane plantations should be developed? What can be done to guarantee higher productivity?
Brito: Undoubtedly, ethanol production must be expanded. It has been increasing over the last decades, but we need to see some more advances. The main challenge is how to accelerate productivity growth. There is R&D being conducted in this respect, some of which is financed by Fapesp in the sugarcane molecule biology area. Another challenge is production sustainability, in terms of using less water, fertilizers, and in a manner harmonious with the environment. In my view, we need to see more sugarcane planted, but also the implementation of better and newer technology to improve productivity.
BNamericas: What are the main obstacles for Brazilian ethanol to become a global commodity?
Brito: For a given item to become a globally traded commodity, it needs to be produced and bought by many parties. So we need to see more countries producing ethanol in larger volumes. Nowadays we see most nations producing for the internal market, like Brazil does. Some two years ago I started to think that ethanol was close to becoming a major commodity, led by Brazil's sugarcane-based sector. However, obstacles started to appear for national production with, as I said, gasoline prices being fixed, some instability in the internal market and the lack of stock.
BNamericas: Do you see a conflict between ethanol and food production?
Brito: We don't have this kind of danger in Brazil at all. There is a lot of available land in this country for sugarcane production to be expanded with no risks to forests or other plantations. There are many detailed studies on the matter. Research carried out at Unicamp [Universidade Estadual de Campinas, in São Paulo state] shows that it would be possible for Brazil to expand ethanol production to the point of replacing 5% of all the gasoline used in the world with no threat to forests or food production.
BNamericas: How do you evaluate ethanol policies from Brazil's current government?
Brito: The federal government has been contradictory on ethanol policy. It says it wants the creation of mandatory stocks and to develop measures to boost production levels. But the government also keeps gasoline prices fixed, sending the markets mixed signals.