Ministry of Agriculture, Livestock and Food Supply - Embrapa

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Current scenario and prospects The sugar & alcohol industry currently capitalizes on a set of favorable factors both domestically and internationally. In the domestic front the economy's recovery and the new jobs being generated have resulted in sugar consumption increasing in excess of the natural growth rate of the population, although Brazil has one of the highest sugar consumption rates in the world (close to 54 kg/inhabitant/year). As regards alcohol, consumers are again interested in alcohol-fueled cars because of the increased domestic gasoline prices, the prospects of more increases in the international petroleum prices and the new dual fuel vehicles. Barely two years after their coming into the market dual fuel vehicles account for 70% of new vehicle sales in the country. Consequently, hydrated alcohol is once again very good business, especially in the cities located in the sugar & alcohol regions. Nevertheless, if the sugar & alcohol industry raise fuel alcohol prices, it would have a deleterious effect on dual fuel vehicle sales, as befell alcohol-fueled cars in the past, which became practically unviable. The government, therefore, should watch the market carefully. It is estimated that the market will absorb at least one million dual fuel vehicles per year during the next few years, which would represent a hydrated alcohol18 demand increase in excess of 1.5-billion liters p.a. and an estimated demand of 25-billion liters by 2013. After adding the predicted alcohol sales in international markets, it is possible to imagine an overall ethanol demand of close to 30-billion liters by 2015, which could be easily met by the Brazilian sugar & alcohol industry. These projections lead to an estimated domestic sugarcane demand leap from 240-million tons (70-million tons of sugarcane for sugar production and 170-million for alcohol) to about 334-million tons (84-million tons of sugarcane for sugar production and 250-million tons for alcohol) in the next five years, a production increase of practically 100-million tons for the domestic market. In the international markets the situation is also heartening for sugar, which in Brazil competes with ethanol for the same raw material. A world consumption increase of about 2% p.a. would help the growth of Brazilian exports. Moreover, the expected reduction in sugar production that should take place in several countries investing in fuel alcohol production without the 18 Assuming that the vehicles' average annual consumption is 2,000 liters and subtracting 500,000 liters/ year on account of the alcohol cars in the fleet growing old. 75
possibility of increasing their overall agricultural production must also be taken into account19 . In the European Union changes in the sugar policy resulting from a recent decision of the World Trade Organization, together with internal budget pressures, have reduced expectations about future total sugar production. Even if the picture is modified after the incorporation of the Eastern European countries into the EU- 25, sugar production is expected to decrease throughout Europe for two basic reasons: the high financial cost of sugar and alcohol production from beets and the low energy consumption to energy production ratio for that crop. The international market is also adjusting to India's reduction of sugar sales, which was motivated by a forceful revision of its sugar policy and by sharp drops in sugar production in that country and in Thailand. Furthermore, both countries have ample possibilities of producing and using fuel alcohol, with the resultant decrease in sugar sales. These reductions of the sugar sales on the part of some of our main competitors occur when the Asian market is becoming increasingly dependent on foreign countries for the most part on account of increased per capita consumption and the urbanization phenomenon, particularly in China. According to specialists this additional demand on the world supply could cause an increase of up to 10-million tons in additional sugar exports in the next 6-8 years. Thus, it is estimated that Brazil will be exporting 25-million tons p.a. in eight years, which added to a domestic consumption of approximately 11.5million tons, total 36.5-million tons of sugar. These numbers are very important because of the interrelation between alcohol and sugar; they also ascribe additional competitiveness to fuel ethanol. Although international alcohol sales are still small, they are growing rapidly. The strategic nature of the product, however, should bring about some degree of protectionism, which would make access to Brazilian alcohol sales more difficult and delay purchases from important countries or groups of countries, such as the United States and the European Union, which will turn to domestic production before importing20 . 19 In the European Union, the possibility of producing alcohol from beets, the need to change its sugar policy to comply with the OMS decision, and internal budget pressures concur to reduce estimated total sugar production in the future. Even if this picture were modified due to the incorporation of Eastern Europe countries into EU-25, the expected reduction would still be maintained for the whole Europe. 2`0 Although the USA is the second largest alcohol producer in the world, its alcohol production is equivalent to only 3% of its gasoline consumption. Even so the expensive production of ethanol from corn is sufficiently protected to prevent imports from Brazil, although the Brazilian product is much more competitive. Something similar will probably occur in the European Union, as they cannot increase their agricultural production. The EU will have to make changes in some traditional production chains, such as those of beets and wheat, in order to meet their commitments under the Kyoto Protocol. 76
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Ministry of Agriculture, Livestock
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Translated from the 2nd revised edi
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Contents Executive Summary ........
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the possibility of earmarking new l
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systems and the quality of life. Th
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solar radiation and plentiful manpo
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Figure 2. Agroenergy production cha
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a) Achieving sustainability of the
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• Funding sources. The RD&I activ
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Cross sectional actions There are d
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• Developing technologies to add
Page 25 and 26: of the systems and replacing fossil
Page 27 and 28: • Improving the biodiesel quality
Page 29 and 30: Biogas • Developing and evaluatin
Page 31 and 32: Institutional Partnerships in Agroe
Page 33 and 34: Creation of Embrapa Agroenergy The
Page 35 and 36: International Biofuel Market Ethano
Page 37 and 38: The purpose of these actions is to
Page 39 and 40: Supplying lines of credit adequate
Page 42 and 43: Annex 1 Current Energy Scenario and
Page 44 and 45: Figure1. International price of the
Page 46 and 47: Furthermore, the actual possibiliti
Page 48 and 49: This scenario of increasing scarcit
Page 50 and 51: produce approximately 4,500 EJ2 of
Page 52 and 53: Figure. 4. Area of expansion of ene
Page 54 and 55: The considerable variations in CO c
Page 56 and 57: • The growing energy demand and t
Page 58 and 59: Energy supply and demand scenarios
Page 60 and 61: The most promising of all fossil so
Page 62: Table 9. Evolution of biomass costs
Page 65 and 66: Agroenergy Production Chains The ag
Page 67 and 68: Alcohol is used mixed with gasoline
Page 69 and 70: Consequently, alcohol fueled more t
Page 71 and 72: in the sugar & alcohol production c
Page 73 and 74: uncertainties still remain: the cor
Page 75: medium-size farmers by favoring sug
Page 79 and 80: in Brazil's share of the internatio
Page 81 and 82: it would be necessary to set up at
Page 83 and 84: those biodiesel plants has been app
Page 85 and 86: Table 11. Characteristics of oleagi
Page 87 and 88: until the 17th year, in a productiv
Page 89 and 90: Using agricultural zoning Embrapa h
Page 91 and 92: A useful reference is an Abiove stu
Page 93 and 94: Production and productivity indicat
Page 95 and 96: the charcoal for the steel industry
Page 97 and 98: The anaerobic digestion process (bi
Page 99 and 100: The average electric power consumpt
Page 101 and 102: sizable proportion of the residue i
Page 103 and 104: Figure 14. Atmospheric carbon dioxi
Page 105 and 106: carbon from a CDM project varies fr
Page 107 and 108: Emission Reduction), a differentiat
Page 109 and 110: • Direct substitution of fossil f
Page 111 and 112: SCHERER, E. E.; AITA, C.; BALDISSER
Page 113 and 114: DOHANYOS, M.; KOSOVA, B.; ZABRANSKA
Page 115 and 116: ROBIN, P.; SOULOUMIAC, D.; OLIVEIRA
Page 117 and 118: Printing and finishing Embrapa Publ
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Ministry of Agriculture, Livestock and Food Supply - Embrapa

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