Brazil’s biofuel programmes viewed <strong>from</strong> <strong>the</strong> <strong>WEL</strong>-nexus perspectiveAbbreviationsALVANPATCATRBNDESCEIBCINALCNALCNPEFAOFFVGDPGHGIEAIGBEISGLCALDCLDVMNCMTPNEPNPBPROBIO-DIESELPTR&DSPTRS<strong>WEL</strong>Average Leasing ValueNational Petroleum AgencyAverage Total CostAverage Total Revenue<strong>Brazilian</strong> National Development BankInter-Ministry Executive CommissionInter-Ministerial Commission for AlcoholNational Alcohol CommissionNational Council for Energy PolicyFood and Agriculture OrganizationFlex-fuel VehicleGross Domestic ProductGreenhouse GasInternational Energy Agency<strong>Brazilian</strong> Institute for Geography and StatisticsInclusive and Sustainable GrowthLife Cycle AssessmentLeast Developed CountryLight-duty VehicleMultinational CorporationMato GrossoNational Energy PlanNational Programme for <strong>the</strong> Production and Use of Bio-diesel<strong>Brazilian</strong> Bio-diesel NetworkWorkers’ PartyResearch and DevelopmentSão PauloTotal Recoverable SugarWater–Energy–Land6
Brazil’s biofuel programmes viewed <strong>from</strong> <strong>the</strong> <strong>WEL</strong>-nexus perspective1 IntroductionThe successful inclusion of biofuels in Brazi’s fuel structure was <strong>the</strong> result of a combination ofleverage mechanisms (CNPq, 1980; BRASIL, 2005, 2007a; MAPA, 2006) which actedsimultaneously and comprehensively in <strong>the</strong> different parts of <strong>the</strong> ethanol and bio-diesel valuechains.The <strong>Brazilian</strong> National Alcohol Programme for <strong>the</strong> production of ethanol – Proalcool – wasbased on enormous state intervention that included: shaping agricultural and industrial policiestoward <strong>the</strong> goals of <strong>the</strong> programme; investing public resources in research and development(R&D); regulating and giving incentives to <strong>the</strong> private sector to pursue innovation and invest inethanol-related activities; and giving incentives to car owners to shift to ethanol-fuelledvehicles (ANP, 2010a). As <strong>the</strong> programme evolved, <strong>the</strong> increased production of ethanol <strong>from</strong>2003 was based on a technological innovation. The intensive use of electronics embedded inadvanced systems for controlling <strong>the</strong> fuel mixture and ignition made it possible to launchvehicles with ‘flexible’ (flex-fuel) motors. Such motors, without any interference on <strong>the</strong> part of<strong>the</strong> driver, can use gasoline (with 20% to 25% of ethanol) (ANP, 2011a), pure hydratedethanol, or even mixtures of <strong>the</strong>se two fuels in any proportion, in accordance with efficiencyand drivability requirements and compliance with <strong>the</strong> legal limits for exhaust emissions(Joseph, 2007).Most new vehicles sold in Brazil are equipped with such motors. 1 Consumer acceptance comes<strong>from</strong> <strong>the</strong> fact that <strong>the</strong> ‘flex’ car gives drivers greater freedom to choose fuel at <strong>the</strong> pump, so<strong>the</strong>y can opt for <strong>the</strong> cheapest. For this reason, besides <strong>the</strong> compulsory addition of anhydrousethanol to gasoline, 2 ethanol production has practically doubled in Brazil since 2003 (see Table1.1).Initially launched with <strong>the</strong> compulsory addition of 2% in volume to diesel oil (B2), since 2008<strong>the</strong> National Programme for <strong>the</strong> Production and Use of Bio-diesel (PNPB) has made it obligatoryto add a fixed percentage of bio-diesel to mineral diesel, currently 5% volume (ANP, 2010a).To a large extent, it was possible to bring forward <strong>the</strong> use of B5 by mobilising bio-diesel’svalue chains. For instance, in 2010 total bio-diesel output in Brazil (2.4 billion litres), as well as<strong>the</strong> present production capacity of <strong>the</strong> 67 authorised plants (5.2 billion litres per year) (seeTable 1.1) is significantly higher than <strong>the</strong> captive demand, taking as a basis total dieselconsumption in that same year (ANP, 2011c).Table 1.1 Biofuel production in Brazil and its share in final energy consumption,2003 and 2010Ethanol production(million litres)Bio-diesel production(million litres)% biofuel in final consumptionby energy source2003 2010 Change 2008 2010 Change 2003 201012,623 25,130 +99% 1,167 2,397 +105% 3.4% 6.3%Source: The authors based on BRASIL, 2010, 2011; UNICA, 2011a.Ethanol may be obtained <strong>from</strong> any biomass containing significant amounts of starch or sugars.The process for sugar-based production, such as sugar cane, is simpler and involves one lessstage since <strong>the</strong> sugars are available in <strong>the</strong> biomass. Normally, <strong>the</strong> process is based on <strong>the</strong>extraction (by grinding or diffusion) of sugars, which go directly to <strong>the</strong> fermenting process.After fermentation <strong>the</strong> resulting liquor is distilled, just as in <strong>the</strong> case of starch-based1 Introduced in Brazil in March 2003, flex-fuel type vehicles represented approximately 2.7% of <strong>the</strong> total produced inBrazil in that year. However, approximately 80% of <strong>the</strong> vehicles produced in <strong>the</strong> country in 2009 were of <strong>the</strong> flex-fueltype (ANFAVEA, 2010).2 Added to gasoline in a range of 22% to 24% since 1998, <strong>the</strong> mandatory addition has been fixed at 25% since 1 July2007, and this is still in force (ANP, 2011b).7
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